Tabell’s Market Letter – December 14, 1962

– –,– Walston &- Co. Memher. SfIC rod.. Siock Euha1lJe NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER December 14, 1962 The market, for the first time since the advance started on October 23rd, failed to reach a weekly high for the move. As we noted in the last letter, our rate of change index has been moving slowly downward and is indicating a loss of upside momentum. The index is now below zero. However, would not expect the market to move much lower at this juncture. A further decline to around the 630 level would bring this short term rate of change index down to an oversold area. This week's intra-day low was 638.88 on Tuesday. Such a development would be normal technical actionafter the steep rise otover 100 points from the October 23rd low. –The market will probably move up-ward again toward the later part of the month,and the rise should continue somewhat deeper into the 650-685 area which we consider to be the upside objective for this stage of the advance. While the favorable outcome of the Cuban crisis undoubtedly furnished the spark for the advance from the October 23rd low, the basic groundwork for the advance was being laid between July and October. Many investors, both institutional and private, increased their liquidity during this period by selling stocks. As a result, there was a sizable amount of money awaiting equity investment when the Cuban crisis reached an early stage of development. This was indicated by the favorable technical pattern of the market. However, when the rise started, it was so sudden and broad that probably a sizable portion of these funds remain uninvested. This will be a prop under the market during December and January. Another factor that has contributed toward the cut in 1963. Some cold water has been thrown on pos I bring about a tax revision until a later date would appointment, but the outcome will not be known untiIing tbe possibility of a tax ly. Failure to es m some market dis- The outlook for the market remains e a few individual issues indicate higher been, from a technical build up enough of a base to indicate a major advance. Such a devel . a further consolidating period. At the mo- ment, it would t 1 e inside year and that neitte r the high or low of 1962 will be reac .n act, in our opinion, the probabilities favor a trading area that will hold tfi c nes of, roughly, 575 and 700 for the entire year. This is merely an extension 0 ou mion that the market reached a major top in 1961 at 741. 30 and a major bottom in at 524.55. These levels may not be penetrated for a consider- able period of time. n fact, it is possible that the 525 level may never be penetrated. In the meantime, the market will remain in a broad trading range and eventually, in our opinion, will break out on the upside of this reaccumulation area. We are continually repeating this projected pattern because we believe it should be in the background of every investment decision regardless of whether the individual is main ly interested in an intermediate-term six-months capital gain, or a long-term investment. To those interested in intermediate swings, we would expect excellent trading opportunities with the market probably swinging back and forth in a relatively wide area during the year. To the longer-term investorJthe implication is somewhat different. 1963 may present the last opportunity to build up a long-term investment portfolio at a price level fairly close to the levels reached over six years ago when the average sold at 525. To the in- vestor, our advice for 1963 is buy on weakness in contrast to our admonition to sell on strength in 1962. As for the stocks to buy, probably the sound, blue chip equities of the largest and strongest companies will prove to be the best vehicles in the early stage of the long-term advance. Dow-Jones Ind. 648.09 Dow-Jones Rails 137.64 EDMUND W. TABELL WALSTON & CO. INC. mnrkct ctlA!r ,,, !lul and unde. 10 CirCtlm.. tnnces Ib tu he cnn'-tillcd \…. nn IIffcl Itt !-('II I n ..IILIt.1111J1l til huy ,In CCI11 II ……. 1('fci 1('II 1 hel Cll\. The mfu! Ill.lt,,,n (Olnltllned herem Ib nut !.U'lrantccd n… tu nCCllrlll (11 'lnd the fUllllhlllj.! IhN ('r ,.. 1101 nnd IIn,I(1 111 ClIllll11-tnnt c.. ' 10 he On..tlIlCc! 11 I eJlI t!m b' \\ IIb,ton &. Cu, In(' All .. of OPiIIIln fll e -'\1I1J('('t tu (h,lIll.!' \\ Ilhl'lIt nII((' &. C .. , 1m .lI1tl 0f11('('1', DII cdI' .L11d lher('Of 11IIIch,\-.e m,IY h.I\(' fln mtelClt In the -.ellllltlC-' mC'lItlt.ne,1 h(I('1I1 '1111-' 111nl1..('t \('ItCI 1-. Hlten.lct\IIIH\llle-.ente.\ melc!) II J.!Cllel.1i In COl m.ll cmnmentnlY n In to elll 11l1lrkct .HIII not 1\.. n 'uml'lclc ,\.1.1111111,11 Infl I1wllun \\Ith lC'-l'C(t ,,, 1,1\ IcfulC,i tll hCICl1I \\111 be fUI m-.hcU tlJ)on I equCloI \\ \ ,01 –