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FILE COpy Walston &CO. —-Inc —- Membej's N e1V York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER November 24, 1961 Nlixed markets predominated in the past week's sessions with declining stocks outnumbering advances. ;.fter the sharp rise of the past three weeks, the current ir- regularity is a normal technical development. Of longer term significance is the fact that the breadth index is still below the high reached six months ago in May. It is possible of course, that the breadth index will reach new high territory in the near future. This, however, will require a change in leadership. The rise in the early months of the year featured the glamour issues. This,in a an escape fr.om reality. 3upport a ' prices, so companies with-a strong trend of earnings growth were bid up tii rather ildi- — culous levels on the theory that future earnings would be sharply higher. This overspecul tion resulted in rapid declines of 30 to 60. Many of these stocks now have reached a level of at least temporary stabilization, but very few have formed sufficient reaccumu- lation areas to suggest a rise of any importance. More recently, a much higher-quality category of stocks has taken over the leadership. In the past few months, among the groups showing the best market 'action have been electric utilities, foods, finance, tobacco, drugs, and retail stores. These groups had been noted for their defensive qualities and usually sold at rather low P /E ratios and high yields. The recent rise has brought most of these issues to levels of 30 or more times earnings o.nd yields under 3. At these prices, they have lost a great many of their defensive characteristics. Moreover, from a technical viewpoint, most of them have reached the upside potentials outlined by their 1959-1960 base patterns. At least a lengthy period of consolidation appears indicated. Thus, if both the market and the breadth index high territory, new groups must take over. Most remaining f ture and a sharp rise in 1962 earnings will be necessary to bring 0. S1 e y. Most economists predict 0. higher level of business in 1962, bu whe this e will be sufficient to cause-,-. significantly eo.rnings 'in –s — s-is-stitl uncertain. Technio..- cally, there are a number of sufficient bases to indicate higher levels, including pipelines, rails, rubbers and textile. Oils also are showing 'mpro ca\pn1terns. From a i 0 plower-priced, speCUlative issues have been the features of the 1 market. 1;i hether this will again hold true is problem atical. Over a yea g, t' etter recommended twenty stocks selling below 20 a shar and early this l\r,arch d an additional five issues. 1,-ie strongly stressed the point that these i es should be bought as a package rather than concentrating on one or two issues. The reason for this stipulation is brought out by the diverse price action of this group in the past year, as shown in the complete list below. On an overall basis, the list has shown a rise of 28 as compo.red with a rise of 20ih-the Dow-Jones Indus- trial average from the time of purchase of each issue. Retention of the list is advised. marked are suggested as a package purchase for a possible sharp final up- swine in speculative issues with the proviso that they will be abandoned quickly if br8adt1 action does not improve. Price Price Price Price 11/4/60 11/24/61 Allied Faper 10 5/8 18 3/4 (3) Lmerican Standard 14 1/2 (1) 16 7/8 L'n vco 13 7/8 24 Eurlineton ffidustries 18 3/8 (1) 23 1/2 Camp'lell Chiboug. 5 7/8 6 5/8 Jt.lo.ul & P 15 1/- 15 7/8 cial Solvents 19 36 1/4 11/4/60 11/24/61 Kaiser Industries 8 -3/4 . 7/ Lear,Inc. 16 1/2 21 3/ McCrory Corp. Manhattan Shirt 13 19 (1) 22 1/ 29 3/ National Can 83/4 (2) 14 3/ Northwest lUrlines 15 3/4 Pacific Petroleum 10 1/4 29 3/ 12 1/ Ooayonier 16 3/8(2) 20 3/ ayne Plying Tiger Foote Eineral '-railer Gettv Cil 17 1/8 143/4 (1) 19 13 3/1 14 1/- 16 1/4 13 1/2 19 23 3/4. 15 1/2 Rohr Aircraft Servel Sun Chemical Victoreen Instrum. 15 12 1/8 13 5/8 165/8(1) 22 1/ 13 1/ 17 1/ 10 1/ k 'dhibd..t11;r,'no clrcums' es s tt4)C construJ-;t, nn offer to sell or 11 mn., contmned herem is not guaranteed na to Ilccuracy or completeness and the furnlshmg thereof IS Eo1, a d er 15 to as, tlon by. Walston &,C0-j InG-, AIJ.. eXWASSlOns of OPInion IITC subJcct to Without notilf'la'l.h toll.; QJl;.IlQnltSOIUHil.elJ1;eflls,as)cI..hbM, 8n nettna- Ed hllc an mterest III the securities mentIOned herem ThiS market letter IS mtended and presented merely as n general, . commentary Ol)t S t!'I.IiJ. new.s an1 not us 11 com plete analysls Addrtiannrl. ,infDW'(Iatlion W;lth J;urtllCS referred to herein will he ie J.-.D.L!JJ…I . ' \\'N.301 . .