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Walston &Co. Inc. Members New York Stock Exchange and Other Principal Stock 'and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND oveRSEAS TABELL'S MARKET LETTER October 18, 1968 Continuipg optimism over indications that a potential bombing.haltmay be in the offing in the Vietnam conflict was reflected in the market's moving to a new 1968 closing high. Whether the market call close the gap that now remains between the present level and the all- time closing high of 995, 15 without being subjected to a selling phase, remains to be seen. Any selling phase that does enter, should it do so, would be contained, in our opinion, within reasonable limits and not do harm to the presently bullish stance of the .market itself. This letter has referred repeatedly, over the course of the Summer, to the obvious shifts in leadership taking place in equity markets. The changes, of course, have been dra- mati e-enoughto stru wMt–t(oi-'H,,-J be taken of the market upswing which began last April. Meanwhile, as the upswing progresses, cross-currents begin to be more pronounced. great many industry groups and stocks, which have above-average attraction on a long-term have passed through, are passing through, or may shortly pass through, short-term downswings which will provide attractive opportunities to establish or increase positions. We are, therefore, commencing this week a review of individual industry groups which will be continued in subsequent issues until all groups have been covered. Aerospace issues have, by and large, been in downward or, at best, neutral trends since the September 1967 highs, and, while risk appears low at present depressed levels, there is no indication of any immediate reversal. By and large, issues in the group should be switched, Exceptions to this rule might be Northrop, Martin-Marietta — which benefits from its identification witli the building industry — and the s. Airline stocks constitute a dilemma for the time. From the of 1967 to the Summer of these were genal stocks entire Board, with ma-rkdowns of 500/0 being the ru the exception. A sharp .nH.lV from the ensuing deeply oversold – di the past few weeks, and in- are that this rally could continue before running its course. While convinced,that.the prese '''''I'' confidEmcein the– meaningful uptrend. We confess to no uldlp'!'ef'er continued avoidance of the group and IW(JUl,a utilize further' positions or leftover long-term holdings. perfect example of a fairly common cla'ss in today's pa,tentilal is large, but where relative strength is horren- immediate move is indicated. Relative improvement can place very se, as a number of groups have already shown us this year, there is as yet, 'no sign of it here. Patient long-term holders should retain pOSitions, but more aggreSSive 'inve'stors will undoubtedly find immediate upside action elsewhere. Most Apparel issues have done well in recent markets, and would have to be rated strong holds. Bobbie Brooks (25 ) appears most attractive for purchase at the present time. Auto issues do not present clearcut patterns at the moment, but the odd's seem to the -upside, with important moves not at 'all beyond the realm of possibility. ImOl,catlc.rts that the 1969 model year may exceed earlier expectations add fundamental attrac- ss to the group and we would not be adverse to seeing major auto stocks in portfolios at time. American Motors ( 14 ), on our Recommended List, continues to provide an attrac- -speculation on the company's – ability to gain , an increased market share– a…nd, wi-th its high leveraged position, show dramatic earnings gains.' ' Auto Equipments generally reflect the picture in the auto industry on which they de- nd arid thus, in most cases, 'indicate higher levels. Arvin Industries (46 ), on'our Recom- Imended'List, has an upside target of 48 and Champion Spark Plug (34) and Eaton Yale & appear 'attractive for purchase at this time. Baking. American Bakeries (33) continues as an attractive special situation with a over 60. ', Businee;sMacnine issues are now at a pronounced downtrend relative to the market considering the high levels of most of these stocks III relation to current earning power, are probably'better orf'switched into cheaper and more attractive i'ssues. '. Ind. ' 967.4'9 IDc)w,Jones Rails 27, 2.46 ,. '., ;.;.. an ANTHONY W. TABELL WALSTON & CO. INC. and informatIOn and IS not an offer to sell or a SOhClt.ation to buy any be rehable. but we do not. guarantee Its l.ccuracy. Walston & Co. Inc. &ell the securLtJeq referred to helem \ ,r .7 '