Tabell’s Market Letter – July 12, 1963

Walston &- Co. – – Memhel''' XCII' York Stock E.'rCliallge NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER July 12, 1963 The market appears tobe-in the process of testing the July 1st low of 698.06 on the Dow-Jones Industrials. The holiday week rally topped out at 719.02 last Friday, and the market drifted lower during most of the past week. Friday's intra-day low was 705.21. The decline has been selective with a fairly large number of new highs for the year reached on each day, despite a decline in the averages. Most of our short term technical work indicates the probability that the July 1st low will not hold. The downside pqtential of the MayJune top of 685-675 was possibly broadened a bit by the retracement to 719.02 and the downside potential is now indicated as a possible 685-665. A decline to the lower part of this range would be approxima.tely a .one.;;third.correction oJ. the ag,,1ince .from the Cuban crisis low of 549. 65 of last October. This would be a normal technical retracement. If such a decline occurred, it would place the market in an oversold position and would present, in our opinion, a worthwhile buying opportunity. The shorter-term technical pattern has been slowly deteriorating since early June, but the longer term pattern remains favorable. It has been the contention of this letter that the market is in the process of a broad reaccumulation area that will eventually result in a much higher level of prices. These long term accumulation patterns are extremely trying on the patience. They consist of a series of up and down price movements during which stocks slowly pass from weaker into stronger hands. All of this requires time as witness the 1946-1949 accumulation base which was the foundation for the 1949 to 1961 bull market. The basic investment policy during such long term ness just as selling on strength should have been the basic v be to buy on weak- . tolicy in the 1961 – 1962 distributional market. The action of our long term breadth index at om t' uite interesting as com- pared to its action in the 1961-1962 market PiOto ra In April of 1961, the Dow- Jones Industrials reached a new high of 714. at tame time, the breadth index also reached a.new high. 0 ued high of 741. 30 in December, 1961, ct\f0.hde;O'ailed to better its April high. This diver- gence was one of the factors t is turn extremely bearish in August of 1961 and suggest a 0s to the pattern not b . s n . In the present market, there is no resemblance e een no divergence between the action of the averages and the breadth inde e a oth moving up and down together. It is true, of course, that such a divergence a cur at a later date, but in such an event, plenty of warning would be given. In mo ases in the past, the divergence has occurred several months before the market averages reach their high. If the market declines to the 685-665 area, we believe it should be welcomed as a buying opportunity. In last week's letter we mentioned twenty stocks that we would add to our recommended list during periods of market weakness and indicated possible buying ranges. In our recommended list, there are a sizable number of issues in which we would add to holdings in the event of a price decline. In stocks mainly for long term capital gains we would suggest the following. Stock Buying Range Air Products (62 5/8) 60-55 Cluett Peabody (48 1/4) 45-43 Copper Range (21 3/8) 20-18 Disney (Walt) (39 5/8) 37-35 First Charter Fin. (40 1/4) 38-36 Stock Buying Range Fruehauf Corp. (28 7/8) 29-27 Intern'l Minerals (54 1/8) 50-48 McDermott, J. R. (24 1/2) 24-23 Reynolds Metals (33 5/8) v. S. Plywood (56 7/8) 31-29 52-50 Dow-Jones Ind. 707. 70 Dow-Jones Rails 174.00 EDMUND W. TABELL WALSTON & CO. INC. ThiS mnrket letter not. Rnd under no circumstances IS to be I'on..t. ued as. an offer to ell 01 a solicltatton til buy any secUiltiC!l referred ttl hel em The mCclI'mllllon contamed hert'lo IS not Iruaranteei as to Reel' racy or completeness nnd the (UI nihhln)! thcl(of 1 not, nnd Ilndel no dl I to be ('uobhucd 88, n I epi c..entn. tlon by WHiston & Co., Inc All expresll4lm; of opinIon arC' hubJNt to chanl-(e Without Il1llll'(' Wa';ton & Co, Inc, and OfTlcels. nnll tmploy(!(S thereof. lieU and may ha\e nn Interest In the I.ecurihe'l mentHU1cil herein 'fhls mnrl.et letter IS mtemled ond Ilre..ented merely all 0 I-(cnerlll. Informal commentnry on cloy to day mnrket news nnd not a9 a complete nnnlYhh At!htwnnllllfolmnhon \\lth le'lleet tl) ony lleculltle8 lefciled to helem Will be (urnLshed USlon request \\), JOI