Tabell’s Market Letter – November 24, 1967

W—a-lIsntocn.-&–C-o-. MUNICIPAL BONDS UNDERWRITERS MUTUL FUNDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OFFICES CO….ST TO COAST AND OVERSEAS fABELL'S MARKET LETTER November 24, 1967 Last week was one of those in which the doings of the world's financial markets, generally restricted to their own little section in the back of the paper, burst forth in banner headlines on the front pages of the world's press. Over last week-end, of course, Great Britain announced the devaluation of the Pound Sterling. The response of the U. S; stook market, in terms of the Dow-Jones Industrial,Average, was as follows. On Monday, a wave of panicky selling hit the New York Stoc\ Exchange, and, at its worst level during the first hour, the Dow was off more than 16 points, at which price it had returned to the 845-840 level which had provided support on three previous occasions. It was difficult-to-resist-the impressionthat th-eiJulk'of'the selling came from those who had- the least idea of just what, if anything, the devaluation was all about. Throughout the rest of the day a sharp rally prevailed and by the closing, three-fourths of the losses were can- celled out. The rally continued on Tuesday with a 13-point advance and through the first hour of Wednesday's trading. Starting at noon Wednesday, a mild correction cut the day's gain to 3 points. Following the Thanksgiving Holiday, news of pressure in European gold markets caused minor weakness on Friday morning, but the decline was halted in later trading and the Average wound up ahead by 3 1/2 points. Now it is an article of faith with 99 of those who follow the stock market that the market moves in response to news, and it is certainly obvious that the frenzied pace of the weekls trading was touched off largely by the devaluation. Yet, the technician cannot resist noting how often an unexpected news event does nothing more than provide the market with an excuse to do exactly what it was going to do in the first in one sense, a perfect example. This letter lays no claim 'th market was, cience or to privity to the secrets of Whitehall, yet it is interesting f t ast.few weeks have, in essence, followed a technical pattern the outline 0 'ch ear as long as three weeks ago. As an example, let us take ten ue events involved, from a purely technical point of view, in the -t- -Ctownswirig-and to the market action of the past few e!t objective is reached. This occurred when, on he D formed. This took pla e level for the first time. 2 A base is vember and last Tuesday, during which time the Average held betw remes of 872.98 and 839.40. (3) An upside break- out from the base ta ce is had happened by Tuesday afternoon. (4) A test of the support afforded by the kes place viz., the trading of last Wednesday and early Friday. (5) The rally continu 0 its ultimate upside objective — in this case somewhere in the 880-895 area. This last phase, of course, has not yet taken place. It is not, of course, all that simple. For example, it would not be unheard-of, tech- nically, for the Dow to return at the moment to the 840-870 trading range and thus broaden the base in preparation for a wider move at a future date. It would not even be impossible for the Dow to break through the 840 level, thus casting some real doubts on the future out- look. For the moment, however, a short-term upswing must be regarded as the most likely course of events. As this upswing continues, some real questions about the market's future will be raised. Three weeks ago we said…. The immediate picture is one of a bottom that may have been seen or should be seen fairly shortly. We also said … '.' The October decline has caused some rather serious technical damage. None of this damage is so serious that it cannot be repaired. Still it must be repaired in fairly short order if a continued upswing is to be predicted. The present upswing will, it seems to us, do a great deal toward proving or dis- proving the vigor of the market and its ability to repair the damage done in the month of October. The really difficult investment decisions, it seems to us, will be made not at curren levels, but as the market moves ahead and tests the overhead supply which now exists. The final results of this test will probably not be in until early 1968, but a great many clues shoul be afforded by the market's technical action over the next two to three weeks. It is this res- ponse that will be important in trying to forecast the course of the market in 1968. Dow-Jones Ind. – 877.60 Dow-Jones Rails – 231. 31 ANTHONY W. TABELL WALSTON & CO. INC. AWT'a mh Thl. market letter 1& pubUshed for 'OUr convenience eo..formation wu obtained from sources we believe to and information And 18 not an offer be reliable, but we do not guarantee to sell or a aoIieltatlon to Ita accuracy. Wabton & buy any Ine. IleeUrttiei di8cuaed. The inand Its ofBeera. dlreeton or emJflo7ee. m&7 have an inters! In or pupcha.se and sell the securities referl'1!d to herein. WHSOl