Tabell’s Market Letter – September 15, 1967

Tabell’s Market Letter – September 15, 1967

Tabell's Market Letter - September 15, 1967
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Walston S-Co, …;..;..,;;.;.;;;.,;;.. 1n c, FILe MUNICIPAL BONOS UNDERWRITERS MUTUAL FUNDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 15, 1967 With a rather astonishing burst of strength, the equity market came to life on Wednesday of last week with a jump of 12,02 points in the Dow-Jones Industrial Average. The strength carried through on Thursday morning and, although the advance was pared by profit-taking that afternoon, the Dow posted new highs for 1967 both on a closing and on an intra-day basis. The rebound was on considerable volume with 12,400,000 shares changing hands on Wednesday, and this figure was nearly equalled on Thursday. Friday's session was relatively lackluster throughout most of the day, but late strength brought a 4.04 point advance to an intra-day high of 938.51. The rise on Wednesday brought renewed repetition of what is probably the most '''''pointless of all stock marker questions, that is, Why Clid themarket which bounced about the financial community was that the reluctance of Congress to pass the tax increase stimulated the market upswing. This was, to say the least, an interesting thought. Earlier in the year, of course, we had be,en told that the market was going up due to the imminence of the tax increase and the consequent easing of pressure on the money market. In other words, if the pundits are to be believed, the market went up in August because we were going to get a tax increase and then went up again in September because we were not going to get'one. It is all, of course, simply one more example of the market's seizing upon an excuse to do what it was going to do any way. We have been in the long-term uptrend since last October, and there is, as yet, no evidence that this uptrend has peaked out. Indeed, the probabilities, as we have continually indicated, point to higher levels before it does, in fact, peak out. Under these circumstances, the fact that Bccasionally goes up 12 points – – – which, with the Dow over 900, is oC\ly a bit – s ould hardly be sur- prising or, for that matter, even particularly nt. As to the short-term outlook, there are bot dAis and us factors to be con- sidered. On the minus side is the disapPoinEreai a – on Thursday and Friday. Yince our daily breadth index is still shor! 0 0 . mi e new peak in the Dow, would hope to see better advance-decline 01'-' e rally tops' out. Also on the minus side is the rather desultory On the plus side ho e a as compared to the Industrials. of other factors. First of all, it is possible to read a sh t e LV 945 for the Dow. selling pressure continues to dry s ances and, most important, upside volume measure- ments would appear e room to expand before the rise is completed. Under these circumstances, our be s as to the immediate course of the market would be a few days of hesitation to st the rapidity of the rise, followed by renewed strength to around the 945 level. All of this would be within the cpntext of a longer range uptrend which obviously remains intact. Actually, if the recent market upswing has any particular significance, it is probably as a leading indicator of what the 1968 business picture will be like. As of the moment, there appears to be a standard forecast for the 1968 economy developing. This calls for gross national product and industrial production to rif!e moderately starting with the third quarter of 1967, but with sluggishness in corporate,pro,fits due to wage demands and possibly, with the tax increase, little or no increase in post-tax profits. If the market is telling us anything at all, it is indicating that this forecast may, indeed, be on the pessi- mistic side and that the profits for 1968 may actually be somewhat better than many analysts now foresee. '-.' – -',' — – In this sort of environment there would appear to be plenty of room for the sort of security this letter has been recommending, e. g., the moderate-growth or semi-cyclical type of issue still selling at a relatively low pIE ratio, to show better earnings and con- siderably better price action. Studies of recent short-term relative price action continue to indicate that it is, indeed, this sort of issue which is quite obviously outperforming the market at the present time. Meanwhile a great many of the glamour issues which were leaders of the earlier phase of the advance, shape up as being,. at best, dull and, at worst, potential disaster areas. There appears, however, no reason at this point to question the continued existence of an overall favorable investment climate. Dow-Jones Ind. 933,48 Dow-Jones Rails 261. 42 ANTHONY W. TABELL WALSTON & CO., INC. Thill market Jetter iI!I published for your convenience and Information And II not an offer to sell or a soUdtation to buy any securities discussed. The In- formation ftIlplOYe!8 mwaays obtained have an rom Inters eources t In or pwupeehbaealieevaendtoseblle n!liable. the seeur\tJes rweeferdroedntoot guarantee herein. 1t8 accuracy Walaton Co.. lne. and Its Omei!ra, directors or WN.aol

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