Tabell’s Market Letter – January 07, 1966

Walston &- Co. —-Inc —-INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS January 7, 1966 The Dow-Jones Industrial Average rolled ahead to a newall-time peak last week, reach ing an intra-day high of 991. 59 on Friday. Wednesday's session was particularly impressive with a rise of over twelve points being recorded. There was, actually, little reason not to anticipate such a move in the first week of the new year. As last week's letter pointed out, the combination of year-end selling and January reinvestment demand has caused such a rally in everyone of the years that the Dow-Jones Industrial Average has been available for inspection. This week's phenomenon, therefore, was simply the sixty-seventh annual recurrence of a familiar seasonal spectacle. The rally, however, had a different flavor than the others in the series of upswings which had brought the-market to tliis 'week'speaIC-fro-m theJ'ii'ne low'of 832 Perhaps the — – following table best tells the story June Low DJIA 832.74 Delta Airlines 37 1/4 Boeing 63 1/4 Polaroid 51 1/8 Magnavox 355/8 Texas Instrum. 981/4 Parke Davis 27 3/8 U. S. Steel 46 Bethlehem Steel 341/2 Alum. Co. Amer. 69 1/8 Swift & Co. 443/8 Berkey Photo 155/8 Chromalloy 12 3/4 Kaiser Ind. 67/8 .. Nov. High 969.98 697/8 1401/2 119 84 1847/8 31 7/8 525/8 40 743/4 517/8 31 1/8 29 3/8 /0 Change 16 88 122 133 136 88 15 14 16 8 /(n 1/6/66 Close 985.46 67 1343/4 113 1/4 78 1/2 166 1/2 34 55 1/4 0 99 I.J . 33 111/8 ;! /0 Change 2 -4 -4 -5 -7 -10 7 5 5 5 4 26 12 . 20 .-'..-, As every rs during the last six months of 1965 were stocks in the airlines, e, o' and color TV fields, and the first 'five stocks shown in the table as rep. h 0 ose fields all appreciated five or more times as much as the Dow from June intQ ov er. Yet, as of Thursday night's close with the Dow in new high territory, all wer mewhat below their November peaks. Meanwhile, the ext five stocks in the table, typical investment-grade blue chip issue, most of which had advanced somewhat less than the Dow in 1965, all participated in the most recent rise and were, as of Thursday, above their November highs by a bit more than the Average. Yet, the weakness has not spread in many cases to the extremely speculative portion of the list. The latter five stocks in the table are all in the high r i s k category and all ad- vanced much more than the Dow from June to November. However, they have continued their strength and their technical patterns at the moment show no sign of deterioration. This trend, if it continues, could pose a serious dilemma for investors, espec ially those heavily committed to stocks which had been market leaders in 1965 and which now . may be in need of consolidation. Such an investor has the choice of either upgrading his I holdings in the hope that performance of hitherto laggard blue chips will improve, or of downgrading in an attempt to continue to achieve above-average capital gains performance with, of course, greater attendant risk. Such a choice actually is not new, but one which generally confronts equity buyers in the rnatu,e stages of a bull rna rket. It is, of course, the province of each individual to decide on the amount of risk he wishes to take. There are a number of secondary and tertiary quality situations which still have good technical pattern and could sell somewhat higher. However, those moving into such stocks at this late stage should do so with their eyes open and fully aware of the accompanying risk. Otherwise, they are perhaps better off in seeking capital protection in higher grade issues. Dow-Jones Ind. – 986.13 Dow-Jones Rails – 248.20 ANTHONY W. TABELL WALSTON & CO. INC. This market Irlter IS published for your convenumce lind IDformation and IS not an offer to sell or II. solicitAtion to buy Rny 8e'CUritlt'!; dlseu!lsed. The In. formation wns obtamed from sourCe!! we believe to k' T4hable. but e do not guarAntee Its accuracy. Walston & Co., Inc. and Its OfficelS dIrectors or emJllloyees may have an Interest In or purchase and sell the securltJcs to herein. ' I .. -..';—.,.,.MI 1