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r '. Walston &Co. Members New York Stock Exchange / and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S LETTER March 21, 1969 Last week, 's market action did little to resolve the dilemma which has been facing in- vestors over the past month or so. A smart rally at mid-week took the Dow-Jones Industrial Average to an intra-day high of 926. 16 on Friday, just under the 929.89 peak of early March. The Index then backed away in desultory action late Friday. The Dow has thus continued for almost a month in a sidewaysA;t;ladinglrange bounded by rough intra-day limits between 895 and 930. Indecisive action at the moment is hardly unexpected. The market is approaching a critical juncture, and the events of the next thirty days or so will probably contribute, in a m19a6j9o.r way, to solving the dilemm(l. o(the,,-m. ar-j-et' s di-r.e–c-t-i-o..n for most of the- rema-i'nd–e-r–o-f'– To illustrate this, let us try to separate the action of the Dow-Jones Industrial Aver- age over the past 2 1/2 years into Major, Intermediate and Minor trends. (Those with a chart book handy may want to follow the discussion by reference to a chart of the Dow). First of all, the long-term trend. This can be defined by an uptrend channel containing the Octobe 1966 low of 735.74, and the December 1968 high of 994.65. The market is still within the confines of this channel, the lower limit of which is presently somewhere around the 880 level. Next, the intermediate trend. Until recently, this trend was defined by a steeper up- trend line running from the March 1968 low of 817.61 through the December high. This trend channel was decisively penetrated on the downside in early January. At the moment, there- fore, the intermediate-term course of the market can be regarded as, at best, uncertain. Lastly, the short-term trend. This is defined, obviously downswing between the December high and the February 1969 low of s is still in effect with a current upper confidence limit around 935. To summarize then — the long-term trend re(lYl up, ough close to the lower part of its trend channel; the 1 rtain; the short-term trend is down. Thus,the ba.sisfQJ' the Let us outline the two POSSibi be.reSQlyed. – II l01fl ution. On tpe bullish side, a move to the 935-940 level would do of all, destroy the short-term down- trend which has contain e for ht-'ee months, and it WOuld, secondly, remove, at least for the time b i a 'b of destroying the long-term uptrend by returning the Dow to the middle t n annel. On the other hand, a decisive move to below, say, the 880 level, would short-term downtrend to intermedi8te-term proportions and, more important, call i uestion the whole structure of the basic longer-term upswing channel that has prev . ed ever since the end of 1966. As can be gathered from the discuss- ion above, these forces are now converging and a resolution is likely within a relatively short period of time. Now, this discussion has been confined to the Dow-Jones Industrial Average whiCh, of course, is just one indicator of what the market overall is doing. At the moment, as we have indicated in recent issues of this letter, it is almost impossible to describe the whole marke by the action of a single index. Selectivity is now vicious. Many stocks are in clearcut long term downtrends, and a great many others, despite the poor action of the market, are pre- sently in clearcut uptrends on both a long-term and intermediate-term basis. There is, for example, nothing in the discussion above that will be very illuminating in describing the average paper, oil, aluminum orsteel stock. Mo'st of these issues are,in clearcut major an intermediate uptrend channels, and in some cases (new highs were made in a number of paper issues last week) the short-term trends can be defined as upward as well. We, therefore, continue to feel that the investor'S most SUitable protection at this stage lies in upgrading portfolios so that they consist, almost exclusively, of quality issues such as the ones suggested above, and others on our Recommended List. In the event the current impasse is resolved on the upside — as we think it is likely to be — it is in those stocks that have resisted the decline that the future upside action will be centered. If the downtrend moves into something more dangerous than we have seen so far, these issues will, it is true, be affected, but the decline is likely to be less steep and the rebound all the stronger. Dow-Jones Ind. 920.00 Dow-Jones Rails 243.97 ANTHONY W. TABELL WALSTON & CO. INC. This market letter IS pubhshed for your convenience and mfOrm1l.tlon and IS not an ofTt.r ,to sell or It '1011clt.ntlon to /lny securIties dl;cussed The in- formation was ob4uned from sources we belu've to be rehnl)le, but …. e do not guarantee Its necura!'). ,'alston t.. Co, Jne and Its offieers. hr('(tor; or AWTamb may have an Interest In or purchase and the se('unt.e; refured to herem, WN.!