Tabell’s Market Letter – January 25, 1963

Tabell’s Market Letter – January 25, 1963

Tabell's Market Letter - January 25, 1963
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Walston &- Co. Inc MemiJe.'il SeIC Yn1i, SIne E,fchal1ge NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO COAST TO CO….ST AND OVERSEAS TABEll'S MARKET lETTER January 25, 1963 There is not much to add1olast'week's letter. Since the Cuban crisis in October, we have beeri suggesting an,advance to the 650-685 level in the Dow-Jones Industrials with a possibility of a somewhat higher pote,ntial of 700. For the past ten trading days the average has been hovering around the 680 level, hut our breadth indices and other technical indica- tors show no signs of deterioration. The only immediate reason for caution is the fact that the averages are reaching their upside potential. Also, there appears to be little fundamenta reason to expect a broad extension of the advance from present levels, Earnings estimates for 1963 on the Dow-Jones Industrials center around the 37,50 – 38, 00 level as compared to a 35.60 estimate for 1962. However, at 680, the industrials are selling at 18 times esTiinateo'l1J'63earnings an — — The general market has reached a stage where it is fairly close to its upside potential and a new pattern must form before a sizable move in either direction is indicated. This will take time. It must be remembered that it took almost a year to form the distributional top in 1961 that indicated a 200-point decline, and it took about five months to form last year's May-October accumulation base that indicated the present advance. At the moment there is no indication of wide price swings like those which occurred in 1961 and 1962. The situation today is quite different than it was a year ago. A year ago at this time the market was not much above present levels. It was approaching the 686.89 January low just prior to the final rally that carried the industrials to an intra-day high of 727.14 in March. This was followed by the 200-point decline in May and June. However, the technical pattern was quite different a year ago than it is today. A year ago the in a speculative binge with so-called growth issues of third and fourth grade qua y u if'llg most of the activity. The market was forming a broad distributional top ani breadth index and other technical indicators were slihw;' s I 0 tial of 550-525. The eriorating action. The May-June decline corrected a large part 0 t exc es. The downside potential was reached with the dreamboat issues , but pulling the entire market 'down with them. There were . June wh.,ich .a' b 'n investment-quality issues in May- e market has -;; good-por- tion of the 1962 losses in the there have been comparatively few ex- cesses. The and gambling parti aiW, 'nl'n l'nvestment-quality issues, and the speculative t 1961 has been absent. No distributional top has been formed and the bre .i other indicators have as yet shown no signs of a danger- ous pattern. On the 0 r h ,the market has almost attained most of its immediate ob- jectives and probably n a mild correctionary move in order to enlarge the base patterns and indicate ultimatel ighe r levels. The present pattern suggests that the action of the averages over the foreseeable future will be much less important than the action of individual issues. This area of the mar ket is covered by our supervised recommended list. The last compilation was made at the year-end and is available from Customers I Representatives. On the last list, most issues were marked Hold, but a goodly number were given a Buy- Hold rating. The'list of the Buy-Holds in the Price -Appreciation Group is reprinted below Close 12/28/62 Close 1/25/63 Alside 27 1/2 29 1/2 Atch, Top. S. F. 24 5/8 26 11 8 Close 12/28/62 Close 1/25/63 Kern County 735/8 77 McDermott, J. 23 1/4 26 3/8 Beaunit Burlington Ind, Cluett Peabody Consol. Coal Ex-Cell-O Intern'l Minerals 203/4–26 453/8 35 41 3/4 41 23 118 281/4 461/4 39 118 453/4 43 5/8 McKesson, R -40 1/4 Reynolds Met, 23 3/4 Schlumberger 66 Stevens, J. p. 29 5/8 Union Bag 35 1/4 US Plywood 45 42 26 67 3/8 30 5/8 36 3/4 47 7/8 Intern'l Tel & Tel 423/8 47 5/8 Universal Oil 39 5/8 38 5/8 In cases where the price rise has not been too steep, the Buy- Hold rating is still in effect. Remember, these are recommendations for long-term holding and not for trading vehicles. EDMUND W. TABELL Dow-Jones Ind. 679.71 WALSTON & CO. INC. 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