Tabell’s Market Letter – November 30, 1962

Tabell’s Market Letter – November 30, 1962

Tabell's Market Letter - November 30, 1962
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I Walston &Co. Mrm!er. Xrl(' York Stork Exchan/e NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO I TABELL'S MARKET LETTER OFFICES COAST TO COAST AND OVERSEAS November 30, 1962 At the week's intra-day high.of 655.95, the Dow-Jones Industrial average reached deeper into the lower part ofoUr'650- 685 upside potential. The Rail average, at 138. 69, was also close to the overhead supply in the 140 -150 area. However, most technical indicators show no signs of intermediate-term deterioration. Profit-taking might result in a moderate decline but, at this stage of the market pattern, such a correction would probably be limited to the 640-630 area. The advance from the October 24th intra-day low of 549.65 has been extremely rapid. In the short period of twenty-five trading days, the Industrial average has advanced 106 points or almost 20. In addition, the recovery from the June low has been quite dramatic. In five months, the average has recovered-60 of the 216-point decline from the November, 1961 intra-day high of 741. 30 to the June intra-day low of 524.55. The recovery in the Dow- Jones Industrial average, and in the Standard & Poor's Industrial index, points up the advan tage of owning quality stocks during periods of market uncertainty. Both of these averages consist of better grade companies which have outperformed the general market during most of the year. While General Motors, Standard Oil of New Jersey, duPont, and other blue chip issues, are near the year's highs, many overexploited glamour issues have staged only rela tively minor recoveries from their lows. While the advance from the June lows has been extremely rapid, it fits into the histo- rical pattern. However, it is necessary to go quite far back into stock market history for comparison. The 29 decline in the Industrial average from November to June was the steep est decline since the 50 decline twenty-five years ago in period from 1949 to 1961 was all part of a broad twelve-year bull market with m modest declines. The worst decline was the 20 drop in 1957. Also, a u r i n, t ntire 1949-1961 pe- riod was the wave of a very long-term, five-wa e war ement that will eventuall carry to much hIgher levels. The market d ajor top in 1961 and is now in the second wave of the broad long-term up Thi cond wave is a consolidating and phase that ec It must be compared to the self, was a long-term correctr e of the 1929 to 1949 period which, in it- There i s twenty-year period between 1929 and 1949. In the table below we v recent decline and recovery with the initial decline an recovery in 1929-19 1 3 38 and 1946-1949. High Date L Date Decline High Date Time Recovery 386.10 Sept.1929 195.59 Aug. 1937 Nov. 1929 50 297.25 April1930 5 mos. Mar. 1938 50 158.90 Nov.1938 8 mos. 53 60 213.30 May 1946 160.49 Oct. 1946 25 194.49 June 1948 20 mos. 64 741. 30 Nov. 1961 524.55 June 1962 29 To date 655.95 Nov. 1962 5 mos. 60 The 1929 declipe of 50, and the 53 recovery of the decline in 1930, was followed by a sharply lower low.' The Industrial declined to 40.56 in July, 1932. We believe the entire 1929-1932 phase can be excluded from our comparison. The background and stage of the market pattern are not in any sense comparable with the present situation. The other two examples are much more comparable to the present pattern. It will be noted that the per- centage recovery from the low is about the same as the present recovery. The 1937 decline was, of course, much.more severe .than ,.which is more comparable to the 1946-1949 pattern. The subsequent action of the market after each recovery was com- pleted, also is informative. In the 1946-1949 period, the low of 160.49 reached in the initial decline was never violated, but it was tested at 160.62 almost three years later in June,1949 Somewhat comparable action occurred in the 1937-1938 phase. The low of the initial decline held for four years and even then was broken only moderately in April, 1942 after Pearl Harbor and the initial bad war news. The 1942 low was 92.69, compared to the 97.46 low four years earlier. This action, on two comparable occasions, leads to the conclusion that the next correction in the present market will hold above the 1962 low of 524.55. Consider- ingthe market pattern, it may not go below the 600-550 level. However, a somewhat larger consolidation periodis''PrababiYi.lI1eedeu,before the start of a new major bull market. Dow-Jones Ind. – 649. 30 Dow-Jones Rails – 138.97 EDMUND W. TABELL WALSTON & CO. INC. Th1'l nlurkct letter \'1 not, nnd undel no Clrcumbtnnce; 18 to be ns, un offet to sell 01 R !whcltntwn tn llllY nny t dell cd \0 he! em The lnfm mahan ('ontnmcd herein IS not f,runrrml(''d ns to UCI'Urnl)' or Rnli the the eof \.. nut, anrl und(i nil ('11 ('tlllh.tnnl c… hi to be (,lint-tilled ab, n relll hun hy Wnillton & Co Inc, All expreSlon f tlPlDlUn nre to rhHIl).'(, wlthut 1IlitHe Wahtn & CII, 1m', IInl1 OFTlcel'll, DIlCdI!!, Stoclholdcl!l nnd Employce!; thcreof, plilchnse, sell und may ha\'e un lDt(,lcst 111 the IIc(,lIrillCH mcntll)ncr1 helem Thlb milihet JettCI II! mtendcll nnd .)rellented merely nl! a lo!cnelnl, Inrolmnl cummentnry on (luy to (In) mnrket ncwl! nnd Ilol a complete Ilnllly.. A,i,litlrlllfli mfUlmntlon …. Ith IC-IIIClt to !lily ..(Clll'.tICI! I cf('1lC' to hClcm will he fUl u,pon rcqucst \\), J01

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