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-tiLE TABELL'S MARKET Walston &Co. —-Inc —MUNICIPAL BONDS UNDERWRITERS MUTUAL FUNDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS LETTER October 14, 1966 With activity having quieted down somewhat, it is now possible to sort through the rather astonishing market behavior of the last few weeks and draw some tentative conclu- sions therefrom. As a start, some recapitulation of the last two weeks of activity is perhaps in order. First of all, in the week of October 3rd to 7th, the Dow-Jones Industrial Average stag a rather severe slide, declining on four of the five days of the week and posting a net decline of just under 30 points. The intra-day low, reached early Monday morning, was 735.74, a figure slightly below the intra-day bottom of 759.52 which had been posted over a month earlier on August 30th. The Rails, generally paralleled the action of the Industrials, also posting a modest new low early Monday. However, the Utilities proved staunchly resistant to the decline, and their Monday low of 121. 66 was sharply above the low of 117.57 scored on August 30th. – This setback was followed by a dramatic rally. FromMonday's low point the Dow chalk ed up a 10-point gain, followed it with a 4-point advance on Tuesday and then, in what started to be a quiet holiday market with most major investing institutions closed on Columbus Day, racked up a 19.53 point advance – the biggest single rise since 1963. Irregularity on Thurs- day and Friday wiped out some of the gain, but still left the Average with an impressive plus for the week. The Rails again followed the pattern of the Industrials, but the formed almost as well on the upside as they had on the downside and advanced sharply on all five days of last week to reach an intra-day peak of 129.42 on Friday. While the above describes the market in terms of the it is hardly descriptive of what took place in a great many individual stocks. In wei weeks ago, a great many of the trading favorites of early 1966 took the a ti e – red to any group of issues in recent memory. A glance at the list of t – e stocks for the week of October 7th is a virtual horror story, with decline/!oJ'i31 – s in Fairchild Camera, 42 points in Xerox, 6 points in Sperry Rand and roughs tjypical of the action. The climactically oversold condition e to the leaders in the early stages of the aBY is week they had, in most cases, re- gained half or more of their Thus, we ie O'f what has happened in the stock market during the past week — t – ec ' 'ng to new lows by a small amount, and the glamour' stocks undergoing a ' ac rom which they have only partially recovered. Yet, even this does not tell the 01 . During the week of October 3rd through 7th, 756 new lows, !for the week were recor along with the low in the Dow. This figure is high enough, but is significantly lower than e 1020 new lows chalked up in the end of August. It means, quite ob viously, that at least 264 issues failed to follow the Dow into new low territory, a phenomen often symptomatic of a decline running out of steam. Equally interesting was the continuing decline in most downside volume measurements, a downtrend that has been in effect since April of this year. This sort of action lends credence to the belief that the worst of the sell- ing pressure in a great many st0cks may well be over with. What does all this mean for investment policy First of all, the technical damage done by the recent market to a great many of the so-called glamour issues is immense, At best, a considerable period of time will be required to form bases in these issues and, at worst, there is considerable further risk present. We have warned the investor against the use of issues of this type previously, and we reiterate this warning at the present time. At the same time, it is difficult to ignore the fact that a great many highgrade stocks have reached major downside objectives and at present levels represent their best value in a great many years. It is our view that the investor should upgrade his portfolio accordingl y. Dow-Jones Ind. – 771. 71 ANTHONY W. TABELL Dow-Jones Rails – 191. 92 WALSTON & CO. INC. '1' We are happy to announce that Mr. Harry W. Laubscher has joined our staff effective this week. Mr. Laubscher, a member of the N. Y. Society of Security Analysts, has been a writer on stock market subjects for the past eight years and is the author of numerous articles. He will, on occasion, assist in writing all or part of this letter, but his main function will be to supervise communication between the Technical Research Department and Walston & Co. In Account Executives. It is our hope that his addition to our staff will help the Walston Accoun Execut ive better to serve his clients with technical research material. A. W. T. This market letter Is publillhed for your convemence and Information and is not 1\0 offer to sell or II. sohcitatlon to buy aoy eeeuritiea diseu8Sed The In. formAtion was obtained from 80urces we bt!lleve, to be reiJl'lble, we do not guarantee Its accurACy Walston & Co. Inc Rnd lis officers. dl;eetors or eml'loyees may have an mterest In or purchase and sell the securItIes referred to herem.