Tabell’s Market Letter – August 22, 1969

Walston &- Co. Inc –…;.– Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS lABELL'S MARKET LETTER August 22, 1969 The stock market extended its rebound from the oversold position of last July in the past week, turning in what must be characterized as a reasonably impressive performance. Solid advances were chalked up on Monday and Tuesday and after some consolidation at mid- week, the upswing continued in more restrained fashion with the Dow-Jones Industrials reaching a high of..8d3.. July 30th intra-day low of 788. 07. It has been something better than three weeks, now, since that low was made, and as the growl of the bear recedes further into the distance, it is worthwhile to stand back and try to put the current stock market into perspective. The benchmarks are, at the mo- ment, actually rather clear–and;-if we assume by-tbe which characterized the post-war period, a few fairly obvious conclusions can be drawn as to the market's future. .. n The first and most obvious fact is that the action of the last week in July had all of the characteristics of a typical selling climax. More than 1100 Issues, 650/0 of the total number of issues traded, made new lows for the week, and this was followed by two days of a sharp rebound with 700/0 of issues traded advancing on July 31st and August 1st. Similar conditions have occurred at three, and only three, periods in the recent past — in October 1957, May of 1962 and August of 1966. All three of these periods will be recalled as times when the stock market was in the process of making major bottoms. However, lest joy become unconfined at this prospect, let us take a close look at the action of the market in each of these periods. The for each of the three previous bottoms, and for 1969 to date, the w'7rJdy a; '0 I dthe climax was recorded \'y the week in which 1957 1962 6 1969 Week DJIA New Week DJIA New k New Week DJIA Ended 10/25/57 9/;66 11/1/57 432 180 6/8/ 775 420 8/8/69 821 11/8/57 434 0 9/16/66 795 165 8/15/69 809 11/15/57 430 2 / 3 425 9/23/66 791 220 8/22/69 827 11/22/57 432 160 /6 5 620 9/30/66 772 480 11/29/57 435 100 10/7/66 744 780 12/6/57 447 100 12/13/57 438 205 12/20/57 426 325 New 189 238 N/A A few patterns are clearly noticeable. In all cases, a move to or through the initial low took place following the climax. In 1962 and 1966 new lows were posted on the average- in the first instance, four weeks later and 70/0 below the climax lows and, in the second, six weeks later and 30/0 lower. Comparable figures for the current market would be 745 and 778. In 1957, the old low was virtually equalled some eight weeks later. The figures for new lows, however, are interesting. In all three previous cases the number of weekly new lows at the second downward move was considerably less than it had been at the time of the climax. If history is followed in the present case, it would mean a large number of issues saw their lows for the year as of last month. – – – – — For the near term, then, caution should be the watchword. Experience indicates a strong likelihood of a downward move within the next two to six weeks which could bring thb Dow back to its former low and perhaps through that low by a fairly Significant amount. Such action would probably bring about widespread prophecies of gloom and doom. Experience indicates, however, that, Yver,e-new lows to hold below their 1969 peaks, it would probably constitute a major buying opportunity. Dow-Jones Ind. 837.25 Dow-Jones Rails 202.02 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb This market letter is J)ubhshed for YOU) convemellce Rnd InformatIOn and not an offer to sell or II. soliCitation to bu) finy seuntle. dIscussed. The lfl- fonnatlan was obtained from source! we believe to he rehable. but we do not guarantee Its accuracy Walston & Co., Inc. and its officers, dlretorB or employees may have nn ',ntereet In or I)UfChA.Se and sell the .beCuntlCS referred to herem.