Tabell’s Market Letter – November 16, 1962

Tabell’s Market Letter – November 16, 1962

Tabell's Market Letter - November 16, 1962
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Walston &- Co. Inc o MCIII!e Xell' -n!'!.' Stnc/; Euhanfle NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER November 16, 1962 The performance of the stock market over the past month has been, to say the least, impressive. In 16 trading days the Dow-Jones Industrial average has risen almost 16 with advances bemg scored on 11 trading days out of the 16. In all but 4 days, the number of advancing stocks exceeded the number declining, usually by a considerable margin. Thus, where we had originally projected a target of 650-685 for the Dow, to be reached some time in the Spring of 1963, it now appears more likely of attainment in January or February. Whether this is the sharpest rise for such a period on record is a matter of conjec- ture, but it is certainly one of the sharpest. What is even more interesting is the dramatic change in Wall Street-psychology that has taken place. -A few weeks ago, points lower, it was practically impossible to find a bullish voice being raised in the financial community. At that time this letter said, It is our belief that the low of the market will occur very shortly and it will be followed by an advance that will carry above the August high ….. by the early part of 1963. Declines between now and the end of the year….. will be the last opportunity to establish a long-term position before the start of the advance. It was a voice crying in the wilderness. Most of the seers who have now swung sharply to the bullish side of the fence now claim that the successful confrontation in Cuba has, in some magical way, made stocks wort more today than they were a month ago. This is, in our opinion, tenuous at best. The rise in stocks that followed Khrushchev's backdown is another one of a long chain of examples of the market's finding an excuse to do what it was in a technical position to do in the first pIa more valid explanation for both the magnitude and tic amounts of money that were, at the end of October, poi lies in the fantasto enter the equity market. The following items are of interest. (1) – Time deposits in Federal Reserve ban\ il, by t nd of September, in- creased almost 6 1/2 billion since the end figure, it is only necessary to say that it is s t current average prices. t 'ilea of the magnitude of this i 1 t to chase 150 million shares of – — — – – — (2)-Mutual funds, increased their liquidity. When a -n r.9R,hlr in sales in August and September, had showed an increase, which is believed to be the case, a a ore 'n s nt pressure came from this source. (3) – By 0 1 0 terest had reached more than 6 million shares, and the ratio to daily vol ar ed 1.98, a level which, since 1932, has occurred only close to major bottoms -n arket. The average investor was, to use the vernacular, caught with his pants d or, perhaps more accurately, with his shorts down. What, however, does '111 this mean for investment policy at the moment This depends largely on the current position of the investor. If he had the courage to take a largely invested position at the end of October, ther is very little problem. It is only necessary for him to maintain this position. The rapidity of the rise, however, is a guarantee that most investors are not in such a position. holdings on any minor decline. The They are, indeed, great difficulty is t waiting hat with fsoor the opportunity to add to many potential equity buy- ers in this position, any decline is not likely to be drastic. Certainly, with the averages now above the August high, the 620-600 top area of that period should provide support for any de- cline. Even the very unlikely contingency of a return to the 550 low should be of little consequence to the holder of well chosen equities. It is much more probable that a correction, if there is one, will be minor in scope. Meanwhile, the upside objective of our technical work continues to be 650-685 on the Dow. A large number of stocks have higher percentage upside potentials and, above all, it is probable that a large portion of the potential equity money mentioned above is still waiting to enter the market. In view of all this, those investors still having cash reserves are probably best off committing them at the present time. Dow-Jones Ind. 630. 98 Dow-Jones Rails 131. 03 ANTHONY W. TABELL WALSTON & CO. INC. 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