Tabell’s Market Letter – May 08, 1964

Walston &- Co. —–Inc —– 1embe,',. Se,,. rod, Stock Euhm,ye NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER May 8, 1964 Five consecutive advancing days wiped out the decline from the April 17th intra-day high of 831.63 on the Dow-Jones Industrials and moved the average to a new high of 836.06 On Thursday. The advance ran out of steam on Friday with prices trending off from their early morning peaks and the average closed off on the day. Despite the fact that a new high was posted, the advance was not impressive. It moved just to about the point one might have expected it to reach, i. e. to around the lower limit of the uptrend channel that had contained the average from the late December low until two weeks ago. Those familiar witn technical analysis are aware that a return to the lower limit of a channel after a downside penetration is a normal phenomenon. More significant was theaction of thedaili breadth index which reacned'a peak of 154 in early April and was unable to advance beyond 149 on the recent rise. A comparison 0 advance-decline figures for the April 20th-27th decline and the Maylst-7th rise, shows the reason for this behavior. Date Advance Decline Difference Date Advance Decline Difference 4/20 488 582 94 5/1 695 381 314 4/21 482 608 126 5/4 643 431 212 4/22 484 593 109 5/5 600 496 104 4/23 474 610 136 5/6 574 481 93 4/24 288 846 558 5/7 593 472 121 4/27 346 744 398 The failure of the general market to generate weakness shown is obvious. There appears, then, little reason to April 24th when we suggested (a) the market had ent r W qual to the previous dvo d in our letter of a new se, (b) that this new phase might involve the building of tops in n many stocks, and (c) that the pollcy is probably s11ll r rv rfuture buying q — – – – — — – – — — There are, however, a possibility of a correction in the stock market. The pessimist iews sib1itly as cause for alarm and worry. The optimist (and it is at least arg '\ s ssful long term investor must, at heart, be an opti- mist) views the d – 3 nity to buy attractive stocks at bargain levels. This letter adopted such a ie ril 24th when we said The next decline will be the last op- portunity to buy stocks i e 1956-62 range before they advance to much higher levels in the 1960's. T, e are plenty of individual stocks that are ahead of the general mar- ket pa ttern and are already in major uptrends. These stocks should be bought and held. 11 With this in mind we have issued a new recommended list which can be obtained from your Walston Account Executive. Varbus stocks have been removed from all three categories on the list as they have reached upside objectives or relative strength has dete- riorated. Holders of those stocks might well consider switching them into other issues on the list. We have also added five issues Scoville Mfg. (35 3/4), Riegel Paper (39 3/4), Vornado (25 1/4) in the Price Appreciation List, and Mohasco (13 3/8) and Vulcan Materials (14 1/ 8) to the Low- Priced Speculative List. These will be reviewed in subsequent issues of the letter. Among individual stocks that are !till in major uptrends are most of the internation oils. This group is represented in our Quality-Long Term Growth list by three stocks Gulf, Royal Dutch and Standard Oil of New Jersey. The latter has been a market leader since the 1962 lows, and recently reached a newall-time high of 90 7/8. Despite its strength there is no sign that the uptrend has abated, and its objective is above current levels. Investors con- sidering new purchases, however, may find Royal Dutch currently attractive. On a per share basis this company has a cash generation almost equal to that of Jersey and reports earnings which are more than 750/0 of Jersey's 4.74. Despite this fact, it sells for little more than half the price. This discrepancy can be traced to the fact that Royal Dutch is a foreign company, but it is nonetheless true that its representation in North America is greater than that of its American colleague. It appears attractive for new purchases on any minor decline. Dow-Jones Ind. 828.57 Dow-Jones Rajl s 199 3.5 ANTHONY WTABELL' WALSTON & CO. INC. ThiS mllrkct letter not. and undel no circumstances IS to he con-tL lied liS. nil trel tn ..ell 01 II bohcltntlUn t'l lollY 1111) CClllltlC.. 1erCl1 to hel ('III The InrOl millIOn 'ontnmcd ib nul to aCCUracy Ul nnrllhe flu nlbhllll-! theleuf 1' nut. and IS to lH,' ( .. a tlun by Wnlston & Co, Inc All of Pinion lite bubJC'Ct to chafil.!c Wllhllt nHIl(e Wnh.ton & Cu, Inc, IIntl lhlcctUI\., and Employees thereor, and may hu\e nn mterest In the M!C'llrttlell mentllne,! helelll 'fhl mnll..et lettel I IIIlen.\ed III11illlecnted mereJ) Il'! 11 l-!encr,ll, mfurmu/ commentary nn rillY tu dny market news lind nut rtll rt cnml,lctc anlilysh Ad(/Itluntd IflUlflt.ltwn \\Ith lejlcl't tu lIny beclIIlltes lefel led (0 heleln WI!! he rUI nt8hed upun request \\), 01