Tabell’s Market Letter – June 28, 1963

Tabell’s Market Letter – June 28, 1963

Tabell's Market Letter - June 28, 1963
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Wdlston &Co. – – – – – I n c – -……- .11rm/(,I Xrll' III'!.' St()rk E'rlwll.QC FILE NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFfiCES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER June 28, 1963 After holdmg for forty-four trading days in a narrow range bounded by the May 31st high of 732.97;' and ,the' early May low of 708. 16, the Dow-Jones Industrials moved lower this week and reached an intra-day bottom of 702. 42 on Thursday. As noted in last week's letter, the downside objechve of the top at 710-730 on our point and figure chart of the Dow is somewhere in the 685-675 area. A decline to this area now becomes a probability. This would hardly be any great catastrophe, Were the averages to reach the lower part of this range, at 675, the correction would be less than 8. This would not be a great deal sharper than the 5. 4 correction experienced m February, and certai'11y must be count ed as normal afterosqm\, Based on what has taken place so far, the chances of a decline 'much below 675 -'-' at thIS point – – appear rather small. We have, nonetheless, reached a rather important stage for the market analyst. In our letter of March 1, 1963 which, coincidentally, was written on the day the market hit its bottom after the February correction, we pointed out that, since there was little chance of the decline's developing into anything serious, that the important thing to worry about was not the extent of the drop, but the character of the next rally. We suggested, indeed, that the downswing, which had reached a low of 656. 66, presented a rather attractive short-ter buying opportunity. The question about the character of the rally was answered when our breadth and volume indicators moved ahead along w1th the April-May rise in the Dow. The market, at the moment, 1S at the same sort of juncture, and thus the type of action to be displayed over the next few weeks becomes In broad outline, a number of courses are p'ESible. One is that the awe COl d form a new base slightly under current levels and move on into new i 0 Y w' onfirmation in breadt and volume figures. This would mean simply that the u end w' began in October had not yet run its course. Another possibihty ov new highs in the averages not confirmed by the various ind1ces of market b a . T' ould constitute a repeat of what st -aH-itude-of-ext-reme-CRution-,- . While either one of would be for the market to re a more probable course of action ughlf. the 675-730 range with our breadth index acting about the same s . 5 would be consistent with the sort of long term consolidation peri W I as repeatedly insisted must be the precursor of a new major bull mar t beg ter m the 1960's. It is pOSSible, in terms of the averages, of course, that a decli e 5 followed by a rally to a pomt below 730 could broaden the top and produce an ultim lower downside indication for the Dow. Th1S, however, is largely academic as a scrutiny of indlVidual stock patterns must inevitably show. As we have previously pointed out, a large minority of individual stocks made their lows not in 1962, but in 1960, and have been spending from four to five years forming bases, bases whiCh, in the recent move, have been penetrated On the upside. Some of these, es- pecially some which have been market leaders in the latest upswmg, have made short term tops. If the averages are to move somewhat lower, these quite ObvlOusly could reach the downside objectives of these short term tops which are, in most cases, close to major sup- port levels. However, since they have already completed long term bases, any such declin would constitute an extremely attractive buying opportunity. On the other hand, in those stocks which have not completed the1r longer term base formations, broadening of the short term tops could indicate considerable risk. All this is another way of saying that in any long range accumulation area, such as the one now taking place, action will be highly diverse. We have consistently pointed out that the excessive concentration on, the averages is, especially at this stage of the market, largely futile. An accumulation area is, after all, the prelude to an eventual major upswing. In a great many stocks a decline from current levels may well produce one of the last major buying Dow-Jones Ind. 706.88 Dow-Jones Rails 173.66 ANTHONY W. TABELL WALSTON & CO. INC. 1 hI 111111 i(!ttci h Itut ,Ind unlll!l nu U\l.l11l, …UIIlCC' h to he (llhli ltC ,11\ lTe. In ,,\,1 II H (llll'I(.,111I I.u .'n) 'Cf,lll…1 l .. llCIC11I The ,nf'l1lo,tll' ( nt.,illl''' I! lIul j.!IIHll1nt-'(',1 n' tu IICCU' IItY III (.('ml,klcllt… ntl.1 thc I c.,f I…. 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