Tabell’s Market Letter – April 11, 1963

Walston &- Co. —–Inc —– Memilfl'R Xell' l'n', Sinek NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST ANO OVERSEAS TABELL'S MARKET LETTER April 11, 1963 The market, as measured by the averages, reached new high territory for the ad- vance from the June lows. The Dow-Jones Industrials reached an high of 710.50, compared with the 1961 peak of 741. 30, and Standard & Poor's 425-Industrial Stock index reached 72.35 as compared to the 1961 high of 76. 69. Both averages have slightly exceeded the upside potentials mentioned by this letter late last year. Both averages are also now in the heavy overhead supply area where the market topped out from April, 1961 to March, 1962 Despite these cautionary signals, there has been no change in the favorable action of our breadth indices. These breadth indices gave warning signals in 1957, 1959 and 1961- 1962 quite some time before the averages reached their actual highs. This has not yet hap- pened in the present advance. Also, neither the averages nor most individual stocks have as yet formed top patterns of importance. Thi.s will take time. In addition, quite a few industrial issues have not yet reached the upside potentials outlined by the May- November base patter The net result of this diverse technical pattern will probably be an extremely selective mar- ket. It is difficult to envision a new, roaring bull market so soon after the 290/0 decline of 1962. Less than 250/0 of the technical graphs of individual issues indicate enough of a base pattern, or strong enough relative strength, to indicate new highs above their individual all- time highs. The balance of the list probably needs a rather lengthy time period in order to broaden the now existing potential base patterns. As readers of this letter know, we turned quite bearish in August of 1961 and advo- cated a policy of selling on strength. This policy was sharply reversed in May-June and October of last year when this letter believed the market gs downside objective and was a sound, long-term buy. We believed, however, t ing area was prob- able before the market advanced on a broad scale.!! t ar 1S now probably near the top of this trading area. Selective strength may c n . ue so at longer, but we would use such further strength to lighten x ths or longer) trading ac- counts in anticipation of a somewhat more fa reb . g period at a later date. —-The advance from the J.une vi usly selective. -The leaders of the ad- vance have been the big, issues. The speculative favorites of 1961 have done little marketwise. In our e d Certainly the drop in prices has resulted in bringing high quali the decline has brou t ir E n to much more reasonable prices. In some cases, ratios back to the average of the past ten years. For long-term investors in r in growth, these issues represent a most interesting purchas For those individuals' up with losses in second and third rate growth issues, still selling at high PiE ratios, it would seem sound investment policy to upgrade accounts by switching into the group below. Reprinted below is the suggested list, together with ten lower-quality growth issues that already had suffered severe price declines. The high quality group has advanced 420/0 from the lows prior to June 25th while the other list has declined 1;G!jfi, 97 ' Stock Corning Glass Eastman Kodak Dow Chemical General Electric Hercules Powder Intern'l Bus. Mach. Minn. Honeywell Minnesota Mining Procter & Gamble Rohm & Haas Low 112 86 42 56 28 300 76 43 60 73 Now 165 117 63 76 40 447 105 62 78 110 0/0 Change 47 36 50 36 43 49 38 44 30 51 Stock -Lo-w Now American Photo 17 11 Anken Chern. 34 27 Brunswick Corp. 22 17 Crowell-Collier 19 15 Fairchild Camera 32 35 Foxboro Company 27 27 Hewlett- Packard 16 20 Lionel Corp. J,g 6 Transitron Elec. 7 6 Universal Match 13 15 0/0 Change – 35 – 21 – 23 – 21 9 25 J.;'- – 14 15 Dow-Jones Ind. 708.45 Dow-Jones Rails 156.87 EDMUND W. TABELL WALSTON & CO. INC. Thl- market l(!l\;.er Ii not. no 19 to he contll1crl as, nn offel to ,,('II 01 H HuhCltntlll tn lHl) lny Idell cd tn hel em The m(m millIOn Cmtamcd I not lXunrnntecd no; to tlCCllrllCY III .. Rnd the fUI thel cuf N not. nnd unclel 110 Ul Ib to be lOllbtllled al, II relll (,entn- tll)n hy \Vnlston & Co Inc All e,,preS;IOI1S uf 0)1111011 are suher't to chun,,;c \Hth,.ut nuliee Wnl..tol1 & C. Inl IInel Stud.hulelel'; nnd theroof, Il\uchlille. sell nnl! mlY hnve In lIltCl('st m the lCrm!tlC mentlne.1 helelll Thl'l mal)et let tel mten.etl amll\lecllted merely lI n Informnl cnmmentulY on dn)' to dny mnrket news nnd nut lib a complete annhl Ad,llllnnnllll(lmntloli \\Ith Ie-pel't tu Ilny Idellcel to hCICl1i …. ,11 be urm… hl'd uPon request \\., 'lll