Tabell’s Market Letter – March 03, 1967
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W—-a–l-s-Itnocn—&–C–o–. MUNICIPAL eoNDS UNOERWRfTERS MUTUAL FUNDS Members New York Stock Exchonge and Of/,er Principal Stock and Commodify Exchanges omen COA.ST TO COAST ANO OVEJSEAS TADELL'S MARKET LETTER March 3, 1967 The past three weeks have seen the stock market lose a portion of the vigor that has characterized it since the first of the. year. It is now fifteen trading since the Dow- Jones Industrial Average last made a new high on February 9th at 871. 71, and the drop to an intra -day low of 827. 95, reached last Tuesday, is the steepest since November-December The point on the Dow (871) from which the decline started, is not without significance. We have suggested for some time that the major te!lt for the Dow-Jones Industrial Average was going to come when it entered the lowest area at which major overhead supply existed , from the 19j35-66 top – that is, the 860- 900 area. It is quite normal for an advance, especially as steep as this 'one has been, to hesitate when such a supply of stock is encountered, and this, in fact, appears to be what is taking place at the moment. The importance of this supply area was stressed by this letter three weeks ago when we said – The broad 860-900 area on the Dow constitutes an area in which a good deal.of stock previously changed hands on no less than three separate occasions in recent market history – May-June 1966, June-August 1965 and October 1964-March 1965. It is the first major test of any sort of supply which the averages have had to undergo since making their lows in October. As might be expected, a great many invididual issues are also now test- ing similar overhead supply areas, although it must be admitted that in the case of indi- vidual stocks the supply in a number of cases does not exist or has already been success- r\' .fully breached. 0 Since last August this letter has stressed a ard the stock market. Throughout the ,Fall of 1966 we repeatedly we ss to commit reserves to favorably situated individual issues. By len the bullish eVidence becam more pronounced, we suggested an es' attitude toward common stock purchases. Obviously, implicit in i 'haD een recognition of the possibility that October 7, 1966 constituted market was embarked on an upward swing of cyclical impor nee. 1S possibility still exists, and the eVidence continues to accum e l' yone. A successful test of the 860-900 area, therefore, seem , e than passing importance, for the penetration of this level would, in our ove one of the few major question marks remaining on the stock market scene. There are persuasive reasons for believing that such a test will ultimately be success fuI. First of all, a great many of the more broadly-based market indicators, including the Standard & Poor's 500 Stock Index, have already moved above comparable supplyarea,s. So, likeWise, have a number of individual stocks. A great many of the so-called lagging market indicators which are designed to turn positive four to six months after a maJor market bottom are, at the present time, close to doing so, and could, in fact, move to the plus side sometime in April or May. In other words, despite the questionable economic picture; there is, at the moment, little or no bearish evidence being provided by market action. For the shorter term, the possibilities are difficult to assess. Ability to hold above Tuesday's lows would be constructive and would probably indicate a further attempt at the overhead discussed above. A new downward move would meet important support at the 820-810 area, and the behavior of the market on reaching that area would be an important clue as 'to intermediate-term market action. Meanwhile, we continue to suggest an aggressively-invested position until such time as the market indicates that such a position entails more than it does at the moment. Dow-Jones Ind. – 846. 60 Dow-Jones Rails – 229.08 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb Tbl. letter is PllbUIbed fot FOUr ftnd infoM'nallon I'Ind Is not 1I.n to or to buy Won) !Ie'\U'llIes …hel-Ue(l, in- ttnolmDl.ottl.o.n. m. …, haT. an lufrYolm'eftIOinQroerapwue.ehbueeliA..ndto-.eblleth,eliable, bllt we do ntoot IlIlflrnntE'l' ttl! ,.eeur/lley, Wftlllton & Co 1ne nnd it Qffiuls. dlrwtor. or -.ll\E