Tabell’s Market Letter – December 23, 1960

Walston &Co. ……;..;…;,;;;;,,;; Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADElPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER December 23, 1960 Last year at this time,' despite the almost unanimous bullishness expressed in business and financial circles, this letter turned pessimistic on the stock market UCU'I of its unfavorable technical action, particularly on the breadth-of-the-market indices. The Dow-Jones Industrial average closed the year of 1959 at 676.97 and reached the peak for 1960 on the first trading day of the new year at an intra-day high of 688.21. At the October low of 564.23, the Industrial average had declined 180/0. At this Friday's noon average of 613. 79,the Industrials were almost 10 below the 1959 year-end price level. I am much more optimistic on the 1961 stock market outlook than I was a year ago on the 1960 market. In fact,for the last two months I have privately expressed the opinion that stock market action in 1961 will be the reverse of 1960.By that I mean that in 1960 the high was reached very early in the year and the low in the latter part, and in trast I believe that in 1961 the low will be reached in the early part of the year and the will be reached very late in the year. This indicates that 1961 will be a good market However, I do not expect a runaway market on the upside. The business trend is still downward and will probably continue so until Spring. The Industrial Production in- dex, now at 160, will probably reach a low around 155, compared with a January 1960 high of 168. The dip in business has been relatively mild so far and indications are that it will remain mild. As the dip in economy continues, recession talk will grow louder and more exaggerated. The stock market acts as a barometer rather than a thermometer and should reflect a change in the business trend before the reversal shows up in the actual business indices. While I am bullish on the 1961 market outlook, I do not anticipate a large percent- age rise. The market is too high on the fundamentals dividends to ex- pect another sharp rise on top of the 300 rise from 1949 t 1 5&)JHo ever, many indi- vidual issues today are undervalued. I visualize around 700 at the end of 1961, or an advance of abo . I ave at somewhere fro esent levels, and about f!-om tlJ–e Qc.to!Jer ,.1962 lows. 1), a ce will be.selective and many issues will do much better m will do much worse. As for the immediate mai a t , ,ustrial average has bettered the November intra-day high of a 33, but is still below the downtrend line extended from the . of 8. This downtrend line is now at the 633 level. The Rail averag a t t l omparable November high of 130.82, but is very close to doing so. r ' e in the Rail average extends all the way down from the July, 1959 high 0 1 4 and now stands at 134. On several of the other averages, comparable downtren es have been penetrated on the upside. I expect these down- trend lines in the Do -Jones will also be broken on the upside early in 1961. The selectivity in evidence for a long time will continue. On October 28th,this letter recommended eighteen issues for purchase. They are enumerated below. This list has appreciated, on average, 11.1 while the Industrial average has risen 6.10/0. 10/28/60 12/22/60 10/28/60 12/22/60 Anderson Clayton 363/4 37 1/2 No.Amer.Aviation 41 1/2 473/8 Columbia Pictures 217/8 22 1/4 Panhandle East.P 477/8 49 Dome Mines 25 1/8 233/4 Richfield Oil 84 89 Freeport Sulphur In,'r,,,,,, Products 24 7/8 56 29 3/8 63 Seaboard Finance 22 1/4 Swift & Co. 44 1/2 22 1/2 46 1/2 Louisiana-Land 50 1'/2 58 1/2 Thompson-Ramo 573/4 693/4 Martin Company 52 1/2 61 Twentieth Cent,Fox 363/4 42 1/4 McCall Corp. 297/8 393/4 United Airlines 30 3/4 35 1/4 Microwave Assoc. 33 1/8 35 7/8 Varian Assoc. 40 3/4 48; 3/8 All of these issues show above average relative strength and indicate higher Callumbia Pictures, Panhandle Eastern, Seaboard Finance and Swift & Co. ear attractive at these levels. Next week, this letter will feature a broad list of sues that are in uptrends and could be the market leaders of 1961. A VERY MERRY CHRISTMAS TO ALL 613.79 EDMUND W. TABELL Gr and the fUl'ntshing thereof –'.,,-, C'.,' opminitoenresatreInstuhbejescetcutoritciehsanllglentWlOintheodut an1 not as a complete analySIS. Add,,,,,,,,