Tabell’s Market Letter – November 01, 1965
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Walston &Co. —-Inc —INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock and Other Principai Stock and Commodity Exchanges TABELL'S MARKET LETTER OFFICES COAST TO COAST AND OVERSEAS November 1, 1965 Most major market indices continued their surge into new high territory last week after weakness on Monday which saw the Dow-Jones Industrials close off 4. 28 and reach an intra-day low of 944.30. The rest of the week was strong and an intra-day high of 966. 47 reached on Friday. The Rails, while following the action of the Industrials, failed to follow through into new high ground and last week's intra-day peak of 238.05 was below the high of 238.70 reach ed last Friday. The Utilities also continued the irregular trend which has characterized their action since mid-September. Despite the market strength, there are, from a technical pOint of view, a number of negative items'in the Th-ese items may be summed up as follows. At this week's high, the Dow has, apparently, reached all upside objectives. The same is true of a great many individual stocks including many of those that have heretofore been market leaders. It should be noted that reaching an objective is not the same thing as forming a top. The former simply indicates that a new pattern must form before it is possible to project a major price change one way or the other. The latter indicates some degree of vulnerability, and it is significant that most stocks which have reached objectives have only formed the tentative beginnings of potential top formations. As the market moved ahead to new highs this week, volume was sharply reduced. Volume for the week was 35,980,000 shares vs. over 43 million shares last week and 44 million the week before. Thus, some loss of momentum Perhaps the most important negative feature has b tfttued deterioration of market breadth. The market has now posted a new i h in 3 secutive weeks and it is 5 weeks since the May intra-day high of 944 lle. ,in all this time, our longer term weekly breadth index has failed e igh in the Average. On a shorter term our daily breadth .index h a ally in a slight downtrend since mid negative acter of market leadership an was obvious heavy speculation going on in a number of compare the pres . factor has led a number of analysts publicly to e t peculative binge of 1961. This, of course, is ridicu- lous. It is quite true un eek ago, a great deal of market activity centered on growt favorites, many of Whl h selling at high levels based on recent earnings. However, to compare this activity the level of speculative frenzy and over-valuation that existed in 1961 is clearly unrealistic. What is worthy of note is that the market leadership may very well be slowly changing. In this connection, the following table is of interest. It shows the prices of five major market favorites and five investment quality issues at their highs of a week ago, at this week's low, and at Friday's close. It will be noted that despite the Dow ral- lies into new high ground, the five glamor issues have failecHCachieve new high territory while the investment issues have, by and large, shown similar performance as the Dow. High Low Close High Low Close 10/22/65 10t.l5-29i65 10/29/65 10/22765 10/25-29/65 10/29/65 Fairchild C. 1437/8 Nat'l Video 145 Syntex 1367/8 Litton 1217/8 Magnavox 70 1/4 1151/2 96 1191/8 1131/2 65 5/8 1221/4 1141/4 –130 r/2 1167/8 69 1/8 Amer..Tob. 41 1/4 Alum.Amer. 705/8 Minn.Mining 61 1/4 Honeywell 75 Std. of Calif. 77 7/8 403/8 70 1/2 60 1/8 737/8 77 1/4 415/8 733/8 62 3/4 763/4 77 3/4 It is obviously too early to state that a shift in leadership in the direction of blue chip issues has occurred, but such a development would hardly be abnormal at this stage of the market. Certainly it would seem appropriate for many investors to consider upgrading the quality of some of their holdings in order to improve market performance in the months ahead. Dow-Jones Ind. 960.82 ANTHONY W. TABELL WALSTON & CO. INC. Dow-Jones Rails 235.86 This market letter is pubhshed tor your convenienee And mformatlon and i8 not an offer to sell or II. solicitation to buy Ilny IlE(!Urlties diecUSM'd. The m tormatlon wall obtained from sources we believe to k reliable. but we do not gulLrantee Its accuracy W,fllston & Co, Inc and Its officers, directors or eml'Ioyee8 may have an mterest In or purchase and sell the seCUrities referred to herem ———-