Tabell’s Market Letter – March 24, 1961

Walston fTCo . Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER March 24, 1961 After moving ahead sharply on Monday, the Dow-Jones Industrial average showed little change on Tuesday and Wednesday, and after flirting with a new high at Wednesday' peak of 685.32, turned reactionary to close the week at 672.48. The most noteworthy feature of the week was the action of the Rail average which, on Tuesday, managed to reach a new high for the period since early 1960, touching 152.72 on Wednesday. An upside projection for the Rails is difficult to figure. It is possible to count a technical objective of 178-180, but there is heavy overhead supply all the way from current levels to 170, which will definitely slow any upside movE.. . Overall, te-chnical indicators- continue to- show positive–action and there appears no reason to change the constructlVe attitude toward the market suggested by this letter for the past few months. There has been a good deal of talk in financial circles about increased public participation in the equity market. There is, unfortunately, no concrete definition of who the pUblic is. In fact, it has often been suggested that the puJlic is anyone who buys stocks after analysts who think stocks are too high have sold. At any rate, it seem to be universally agreed that public participation constitutes somE; sort of a danger signal. Actually, if we are to define the public as the mass of individual investors and speculators who are clients of New York Stock Exchange member firms, there is little evidence to suggest that public activity has been excessive in recent months. One re- liable indicator of public interest in the market is net debit balances in individual margin accounts maintained with NYSE members. This figure totaled some 3,426 millions at the end of February 1961, about 10/0 of the total market ratio having been fairly constant over the past few A'8ars. t securities; this est to note that net debit balances are still some 100 million Is arly 1959. In addition, the recent increase has not been en compared to past ex- perience; For example, from 1-949 to ncreasedsome r680/0,followea — by a 1320/0 increase from 1951 to as s 400/0 through 1958 to the 1959 high. So far, they have the 1957 low. rw- e low of last July and just 340/0 from Figures substantial rise' f in accounts also fail to give any indication of a c y 'nce May 1960, the number of such accounts has in- creased moderate to 315,000,a figure well under the December 1958 high of 325,000. Perhaps the 0 ndicator of public activity that shows any substantial increase is the total of customer's free credit balances. As might not at first be suspected,this figure tends to rise along with rising markets, probably due to an increasing inclination on the part of customers to leave funds in brokerage accounts for reinvestment during periods of bullish sentiment. This figure has risen rather sharply and has reached new high territory some 480/0 above its 1960 low. However, this increase is small compared with a 1949-51 increase of 800/0 and a 1953-55 increase of 660/0. Another interesting facet of both the debit balance and credit balance figures is their long history of leading the general market. For example, net debit balances reached their peak ten months prior to the averages in 1945-46, almost two years prior to the averages in 1951-53, and four months before the averages in 1959. The net debit balance figure started to turn up seven months before the averages in 1953, three months ahead of the averages in 1957 and three months ahead of the general market in 1960. Figures on free credit balances have shown a similar tendency. Thus, the cur- rent nse in these figures, in addihon to being moderate, is less of a cause for alarm than a lrotra cted decline would be. . In short, increased public participation is a fine high-sounding phrase, but one which appears hardly to be borne out by available statistics. Dow-Jones Ind. 672.48 Dow-Jones Rail.s 148.18 ANTHONY W. TABELL WALSTON & CO. INC. ThiS market letter 18 not. Rnd under no circumstances is to be construed as, an offer to sell or n Bohcitntion to buy any securities r.eferred to herem The informatIon contmned herem IS not guaranteed as to accuracy or completeness nnd the iurnL!!hlng thereof IS not, and under no circumstances lli to be construed as, 11 rcprCtlenLa tlOn by Walston & Co. Inc. All expressIOns of opinion nre subJect to change Without notice Walston & Co, l.ne , and Officers, Directors, nnd Employees thereof purchase sell and may have an interest In the securities mentIOned herem. ThiS market letter 18 mtended and presented merely HS 11 general. wWmformal commentAry on day to day market news aDfJ. not ne; n complete analySIS. AdditIOnal mformatlOn with respect to any securities referred to herem . . .