Tabell’s Market Letter – April 24, 1964

Walston &Co. —–Inc —– .I1em!e,. Xell' 'ol'!. Stock Euiw!Ile FILE NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER April 24, 1964 The uptrend channels that have been in effect since December 23rd on both the daily price range of the Dow-Jones Industrial average and the daily breadth index have finally been broken on the downside. The uptrend channel was bordered by an uptrend line connect- ing the December low of 752, the January low of 767, and the successively higher lows since that time. An almost parallel line connected the December high of 769, the January high of 780 and the successively higher highs since that time. Both of these parallel lines have, of course, been moving upward and at the time of the downside breakout, had outer limits of 844 and 823. The lower limit of this range has been decisively penetrated on the downside during the past week. Asimilar uptrend channel in our daily breadtil index since the December 23rd low. This uptrend channel has also been penetrated – the downside during the past week. These uptrend channels have been remarkably steady, but relatively moderate. The steady advance from the December 23rd low in the Dow-Jones Industrials had lasted for ninety-one trading days without a worthwhile correction. This is quite unique from a time element. However, the advance has been only slightly over 10. This is a magnitude con- siderably less than many previous rallies of shorter time duration. The downside breakout has, in our opinion, considerable intermediate term signifi- cance. It indicates the probability of an end to the type of market action that has been in effect since December. The advance from the December lows has, in the main, featured the blue chip investment issues that comprise the Dow-Jones Industrial average. This has re- sulted in a steady rise in the averages while the bulk of done comparatively little ma rketwise. We would expect considerably more se e ti here on. As yet, neither the averages nor individual e k a e for mportant tops. In terms of the Industrial average, it is difficult to rea ch w an the 800 level on the first stage of the decline. A rally from ad eve! to a point below the recent intra-day high of 831. 63 would result oad g of the potential tops. This letteFhas 10 -25 in long term capital appreciation catil't'inue this policy on strength, if you have not already done so. \ The pattern t t 0 ving fits into the concept outlined in our letter of April 17th. The b k n e action of the thirty stocks in the Dow-Jones average since 1956 indicates f t at market made a major top in the period between 1956 and 1961. If all stocks rea he eir highs on the same day, the average would have reached 911 instead of 741. We fu r believe that the market made a major low in the period between 1960 and 1962. Every stock in the Industrial average suffered a severe decline from what- ever high made in the 1956-1961 period to the 1960-1962 low. The average decline was 45 and the low, if each stock had reached its low on the same day, would have been 504. This decline, in our opinion, corrected the entire advance from 1949 to 1961 and resulted in a major low. The advance from the 1962 low is still within the confines of the 1956-1961 high of 911, and the 1960-1962 low of 504. If all stocks reached their 1963-1964 highs on the same day, the high would have been 863 which is still below the 1956-1961 high of 911. Only nine of the thirty stocks in the Dow-Jones Industrials have reached new highs above the 1956-196 highs. If we take a!l NYSE listed stocks)nto consideration, probably 80 are still in the 1956-1962 trading area. This, to us, means several things. (1) The market, despite the recent new highs in the average, is still in a broad reaccumula tion area that will result in much higher levels in the late 1960's. (2) The advance from the 1962 lows is not the start of the broad advance. Probably one more decline is needed before the market advances in a broad overall scale. (3) The market as a whole is not as high as the averages indicate. (4) The next decline will be the last opportunity to buy stocks in the 1956-1962 range before they advance to much higher levels in the late 1960's. (5) The above applies to the general market. There are plenty of individual stocks that are ahead of the general rna rket pattern and are already in major uptrends. These 'stocks,should be bought and held. Dow-Jones Ind. 814.89 Dow-Jones Rails 196.18 EDMUND W. TABELL WALSWN & CO. INC. — Till., Innl ket ietltr IS not /lnt! unltel 11 en cumlltullce; Lb te) he m!(1 os. nn lItre! t ..ell 1 ,J .,,,lIcltatl1l tn Illl ,In)' -'('CI1111(!-. 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