Tabell’s Market Letter – February 17, 1961

2 ,/Uil- -' FILE COpy Walston &- Co. ———Inc——— Mem bers N e10 York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER February 17,1961 The stock market, as measured by the various averages, continues to back and fill in a wide trading area. For the past three weeks, the Dow-Jones Industrials have ranged between an intra-day high of 657.20 and a low of 632.81. In the meanwhile, many individual issues have continued to move ahead. Even on Monday when the Industrial aver age reached its three-week low there were 56 new highs and only 4 new lows. On Wednes day, 114 issues reached new highs as against 1 low, and on Thursday, the ratio was 123 to 1. It was anticipated that the Industrials would meet supply in the 660-640 area, and this has occurred. There are two ways of interpreting the action of the past three weeks. One interpretation is that the market is meeting a terrific supply of stock and must have a siz able technical correction. The other is that the market is absorbing a heavy supply of sto without reacting and, when the supply is absorbed, the market will move ahead and cross the 1959-1960 high of 688.21. A glance at the various technical indicators reveals a continuing constructive pat- tern. Our breadth-of-the-market has continued to advance and moving totals of upside and downside volume, odd lot indices, ratio of low-priced stocks to high-priced issues, and other technical graphs, remain favorable. It has been a characteristic of modern markets that once an advance of import- ance has started it continues without a worthwhile correction until the top has almost bee reached. In the October, 1953 to April, 1956 advance, the Industrial average moved from 254.36 to 524.37. The first decline of importance was in September of 1955 when the ave – age declined from 489.94 to 433.19 and reached its high six months later at only 7 abov the September 1955 high. In the October, 1957 to August 1959 advance from 416.15 to 688.21,the market suffered its first decline of of 1959 when it dropped from 683.90 to 613.30. The ultimate high was r a h fi\.onths later in January, 1960 at just a shade above the August There is no certainty, of course, that the p e t mar ove will duplicate – -either the appreciation-or the timing of the – s of-the past-ten years.As far as the percentage appreciation 'is emely doubtful that the present market will duplicate the over 100 1 3- , or the 64 rise of 1957-1959. A rise to 750 from the would be about 300/0. The timing might follow more closely, wfi 0r work, it would appear that the present a i ut equivalent of the April-May 1958 stage of the October, 1957 to ' This, of cou e, 0 ot preclude a decline at this stage greater than already witnessed. A decline e 630-620 area would come within the bonds of a normal one- third technical corr ctlon of the advance from the October lows. Our recommended list is probably showing above average action. Some of the issues have risen quite sharply in the past two or three months. American Potash has advanced from a recommended level of 42 7/8 to 51 3/4. Carn ation Co. from 66 1/4 to 80. Diamond National from 35 3/4 to 43 3/4, Gerber Products from 56 to 84 3/4,Insur- ance Co.of No.Amer. from 78 to 96 1/4, Johnson & Johnson from 74 3/4 to 95,Louisiana Land from 50 1/2 to 68, McCall Corp. from 297/8 to 54 1/4,Microwave from 331/8 to 50 1/8, Thompson-Ramo from 573/4 to 817/8, 20th Century-Fox from '363/4 to 473/4 and Varian Associates from 40 3/4 to 57 3/4. However, there are only two changes sug- gested at this time. We are dropping Coca Cola (91 5/8) and Westinghouse Elec. (45) from thelist. Both were recommended in May 1959 when the Industrial average was just about at the same level as it is today. Coca Cola was recommended at 47 on an ad- justed split basis. Friday's high was 95 1/2. The stock has reached its first upside po- tential and probably will need a rather lengthy consolidation before a new move. West- inghouse Electric was originally recommended at 44 on an adjusted split basis. It sub- sequently reached a high of 65 in 1960. Recent news developments brought the stock back to 40 3/4. While it probably has reached its low for the move, a long time may be needed to form a new base. There is heavy overhead supply and other issues in our recommended list may offer better appreciation opportunities. A new compilation of the recommen- ded list is available for perusal at the desk of your Walston customers' representative. Dow-Jones Ind. – 651.67 Dow-JOpeS Bails – 144 32 EDMUND W. TABELL WALSTON & CO. INC. ThiS market letter is not, and under no circumstances IS to be eonstrued as, nn offer to ell or a BohcltatlOn to buy any secUrlttes referred to herem The mformatIon contained herem is not guaranteed as to accuracy or compteteneS8 Ilnd the furrnshlng thereof lS not, and under no Cllcumstnnces IS to be construed as, Illeplesenta- Hon by alston & Co, Inc All expressIOns of oplmon are subJect to change v.lthout notice Walston & Co, Inc, nnd Officers, Directors, Stockholders and Employees thelcof, purchase, lIell and may have an mterest in the secUrttws mentIOned herem ThiS mllrket letter IS mtended and presented merely ns a general. Informal commentary on day to day market news and not as a complete analysIS AddItIonal mformation With respect to nny SecUrltles rcferrC'd to herem Will be ' r r \VN 301