Tabell’s Market Letter – October 23, 1964

Tabell’s Market Letter – October 23, 1964

Tabell's Market Letter - October 23, 1964
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Walston &Co. Inc – – – – – Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER October 23, 1964 A year and a half ago, on March 15, 1963, we wrote a market letter which elicited some comment at the time. The letter was an attempt to explain the extreme diversity of action of individual stocks that had existed ever since 1956. In it, we broke the Dow-Jones Industrial Average down into three groups of ten stocks each. The first of these groups we called Early Peak Stocks, stocks that had reached their highs in the 1955-57 period. The second group we called Middle Peak Stocks, stocks that reached their highs in the 1959-60 period and the final group, Late Peak Stocks, those that reached their highs in 1961. C —- –, – – '– We then compared the relative performance of these three groups by taking an average of each one and adjusting the divisor so as to produce a figure of 524.37 at the 1956-57 high, this figure being, of course, the actual high reached by the Dow three times in the 1956-57 period. The results of this comparison were instructive. Investors will remember that the Dow exceeded its 1957 high in 1959, reaching 688.21, and then reached 741. 30 in 1961. The ten Early Peak stocks, however, were lower in 1959-60 than in 1955-57 (485.68), and even lower in 1961 (424.46). The so-called Middle Peak stocks reached a high of 736 in 1959-60, two years before the average itself reached that figure, but were lower in 1961. By contrast, the Late Peak stocks acted about the same as the average in the 1957-59 period, but by 1961 had advanced to a high equivalent to over 1000 in the Dow. Looking back at this study today, one thing aett hat was perhaps not obvious in 1963. Most observers of the stock at,after a stock reaches a major peak and declines, a long period of a form' is necessary before the stock again advances. This base su ta ime. It is, therefore, interesting that the so-called Early Peak tha de their highs in 1955-57, also, for the Even more interesting, Standard 011 of New Jersey a ,illlt . stocks, stocks such as Chrysler, M;lh-; have been the market leaders in the most recent advance. e average of ten stocks in the Dow that made their lows in 1960, an e t 962 low of 524, we find that these stocks have ad- vanced to an equiva t ov 00 in the Dow versus an actual high of 886. .. – In other word tocks that reached their peak early in the market cycle bad more opportunities t form bases in the late 1950's and early 1960's. Having completed these bases early, they have been the market leaders so far. A look at the technical pat- terns of many of these stocks, however, indIcates that some, at least, are close to their upside objectives, and a few have even reached these objectives. While there are still many investment opportunities among the stocks that peaked out eight years ago and are now in a upward cycle, i.t would .be logicaLfor the .inv.estor to begin tolook-for other groups tbat might, at some future date, take over market leadership. – In this connection, it is interesting to observe'the action of that group of stocks tba t made their highs in 1959. This group generally has turned in a performance inferior tR that of the average since the 1962 lows. However, a look aLthese stocks, mo st of them in the heavy industry-capital goods area, indicates tba t, by now, they have formed sufficient base patterns to indicate considerably higher upside objectives. One good place, therefore, to look for the leaders of the next upswing might be among those stocks that made their highs in mid-1959. Conversely, a good many stcks which were late in reach- ing their highs and did not make new peaks until 1961 may well require more time to com- plete the ir ba se patterns. Dow-Jones Ind. 877.62 Dow-Jones Rails 224.28 ANTHONY W. TABELL WALSTON & CO. INC. ThIS mlll kct letter is not, nnd under no cIrcumstance!! is to be construe liS. nn offer to sell or a soliCItation to huy any secUrities referred to herein The informatIOn ('ontalncd herem IS not gUllrnnteed liS to BCCUraC)' or and the furnishing thereof IS not, and under no clrcumstancC' IS to be construed as, B representa- tll)n hy Walston & Co, tnc All e,cpresslOns of OPIniOn arc subJect to change Without notice Walston & Co, Inc, and Officers, Dlrcctors, Stockholders lind ther('Of, sell and may have an Interest in the SeCUTltIes mentlOned hereIn ThiS msrket letter IS Intended and presented merely LS a genern, mformal comm..ntnry Oil tht) to da market IU'WS and not as a complete AddltlOnal mformatlOn ' Ith respect to any SeCUTltIes referred to herein be fnntsh('(lupon r('(1uest l\; 3Dl

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