Tabell’s Market Letter – January 26, 1962

Tabell’s Market Letter – January 26, 1962

Tabell's Market Letter - January 26, 1962
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Walston &Co. Inc. Membe's N elO YOl'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER January 26, 1962 ,At least insofar as the averages are concerned, the market is approaching a critical stage. The last major upmove in the Dow-Jones Industrials started on September 25, 1961 from an intra-day low of 688.87, and culminated in a newall-time high on No- vember 15th at 741.30. ,At the intra-day low of 689.11 on F ri day of this week, that advance had just about been cancelled out. However, the decline was not accompanied by inferior action in the breadth index, and, as of last week, both the longer-term and shorter-term breadth indexes had managed to remain above their September lows along with the avera1;esA's-has this-is'at-least negatively -' .At this stage, either one of two eventualities may take place. A decisive penetration of the September lows by both the averages and the breadth indexes, would, as has previously been mentioned, suggest a possible decline to the 650-635 area. This is, after all, not too far below present levels, and, at the moment, it is difficult to read top patterns which indicate any lower figure for the Dow. The other possibility is that the averages will hold around current levels, breadth will remain level or improve, and a new advance will be started from the present area. The extent of this advance would, of course, depend on how much of a base forms. . This is, of course, all very well, but it does little to suggest a specific invest- ment policy. Since late last year this letter has pointed out the high degree of risk in- herent in the market and has advocated reduction of risk exposure in investment accounts Based on the possibilities above, there is no reason as yet to change this suggestion. However, risk exposure may be reduced in many ways. way is the outright sale of equities in order to reduce debit balances, or to d l'his may be ap- propriate in conservative accounts. However, r' K be accomplished by the elimination from portfolios of fully ations ng at a high price in ' Lelation g.pd their th raJle and technical patterns which are has been pointed up by the past dec! 0b 1h ric 'n relation to earnings. This securities such as Swift &. , North American Aviation higher at their lows of last week than at their highs er-N It beco 0 vident that today's markets are characterized by shifting preferenc ' . rather than by all-encompassing bull and bear markets, and there appears to e' reason to expect that this type of pattern will not continue to obtain. An inter g example of this type of shifting preference is shown in the following table giving prices of eight securities at their September lows and their January 24th lows. It will be recalled that on each of these dates the Dow was approxi- mately at the same level. Low 9/25/61 Low 1/24/62 Low 9/25/61 Low 1/24/62 American Motors Brunswick Fairchild Camera Great \Vest. Financial 18 1/8 57 5/8 1/2' 55 3/4 Adjusted 15 1/4 39 1/2 , 59 1/2 37 .- Armour Daystrom TXL Oil Pacific pete 42 34 1/4 14 7/8 10 1/4 – 51 3/4 40 23 14 3/4 The above figures speak for themselves and emphasize again the importance of considering downside risk as well as upside potential in investment decisions. Even with the sharp drop that has taken place thus far in the market, a large number of issues are still vulnerable to agonizing reappraisal. In other situations, as fundamental and technical analysis can show, risk is relatively small and potential, over a period of time, can be great. It is such issues that should form the backbone of any investment portfolio, regardless of what course the averages may take. Dow-Jones Ind. 692.19 QQ'lT TQ,p j9 Pails 14 6 86 ANTHCNY W. TABELL WALSTON & CO, INC, ThiS mllrket letter IS not, and under no Circumstances IS to be construed as. an offer to sell or II sohcitatlon to buy any secUrIties referred to herem The mformatlOn contnmed herein IS not guaranteed as to accuracy or completeness and the furnlshml'' thereof IS not, and under no Circumstances is to be construed as, a reprcsenta- tlOn by Walston & Co, Inc. All expressions of oPinIOn are subJect to change WIthout notice Walston & Co, Inc, and OffIcers, Directors, Stockholders and Employees thereof, purchase, sell and may have an mterest In the securitaes men boned herem This market letter is mtended and presented merely as n Stel'!ernl. informnl commentary em da to dn market news and not as a complete anah'sls AddItIonal mformallOn WIth rc;pcct to nny SeCurltles referred to herem wlll be furnished upon request .. . .. \\,N 30t

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