, Walston &Co. —.;..;; Inc. Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND OVERSEAS .TAB.EIiL.!L'S MARKET I II LETTER July 24, 1970 The stock market advance — until now a rather healthy and vigorous phenomenon — . took on a certain air of desperation ihis week. After declining on Monday and Tuesday, not unexpectedly in view of the steepness of the previous rise, it spent the latter part of the week finding reasons to go up in the pronouncements of various Oriental potentates. Remarks by Mrs. Nguyen Thi Binh of the Viet Cong triggered a sharp advance on Wednesday afternoon, and, on Thursday, President Nasser's inspirations on Middle East peace brought about another advance. Friday's activity saw prices settling back in quiet trading. . – !IChere -is no 660 to 740 in the Dow and, at the moment, as a result of last week's activity, a potential top with a downside objective of 710 exists. This level coincides with strong support at the top of the May-June trading range, and we would regard a decline to that area as a logical development. We still suspect that the current intermediate-term rally has more room on the upside and would anticipate new recovery highs following the projected short- term weakness. The news which set off the final phase of the advance a week ago had a great deal more substance to it than the somewhat spurious events referred to above. This was the July 17 announcement that U. S. real output held steady in the second quarter of 1970 ., while, at the same time, the rise in prices slowed to its lowest level in two years. These figures, suggesting that the worst of the economic decline may be over while, at the same time, we are achieving some success in the fight on I!!Pparently a surprise' to the market. While admittedly a shade better thm,mi h xpected, the economic figures were certainly not that ho observed the mone- . tary policy of the past year and who had some famiNcr.t;\ty wi e effects of monetary changes on total spending. '.;/ Quite simply, changes in the – powerfUll!' over-tne snort run on-e-c' a i at oney stock tend to act quite 'a'lagged- I effect — III other words, pull on the economy u This lag effect is a ti 'n ta do not, generally, exer,t thelr st!,ongest I, ix months to a year after they take place… – – .J n the area of prices, which have a certain amount of rigidity. Thu . change -is the mone y gr ,most important factor affecting immediate price of the previous year. I Now from the S of 1969 through January 1970, monetary growth in the United States was nil. Sin that time money supply has been growing at an annual rate of I approximately 4-1/2'70. In the light of these figures, it is perfectly possible ,to understand the recent trend of economic data and to make some projections as to the , Iremainder of the year and as to 1971. . On the prospects' of containing inflation, the data suggests a high degree of optimism, !at least for the next few months, The effect of the 1969 clampdown will remain with us for the rest of the year, and money growth, since that time, has' not been excessive. As to Gross National Product, less immediate improvement appears in prospect (real G. N. P. in the third and fourth quarters should remain relatively flat), but improvement in 1971 I,. I is certainly foreseeable. The rate of improvement will depend largely on future monetalY , policy. It would be folly at this date to repeat the error committed at the tai.l end of all -I previous recessions and apply unduly expansionary policies at a time when victory' in the -, – inflation battle appears at hand, In the kind of environment described above, corporate profits will admittedly continue under pressure throughout the early part of next year. This sort of economic environment is totally consistent with the sort of stock market we have been expecting — intermediate-term strength in reaction to the sharp 1969-1970 decline but no sustained uptrend, until the longer term course of economy becomes more apparent . Dow-Jones Ind. 730. 22 Dow-Jones Trans. 130.60 L. LJ I JI AWTmn ANTHONY W. TABELL WALSTON & CO., INC. This market letter III for yOUr convenience and mformatlOn and IS not an offer to sell or a soliCitation to buy an) diSCussed. The in- formation was obtained. (rom sources we behE'Ve to hi! reliable. but we do not guarantee its nccuracy Walston & Co Inc. and lts officers. direetora or employees may have an mterest In or purchase and sell the securltles referred to helem. WNIOI ;!

Walston 5- Co. Inc Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OffiCES COAST TO COAST AND OVERSe….S \ TABELL'S MARKET LETTER July 31, 1970 As the summer doldrums set in, on the stock market as well as on the sweltering New York City streets, it is, perhaps, an appropriate time to recapitulate our thoughts as to the current position of the equity market. Often the most useful format for a fore- cast is to cover separately the long, intermediate and short-term periods encompassing, respectively, the next few years, the next few months and the next few weeks. Herewith, a few notes on the technical outlook for the market covering each of these three time spans. For the long term, the most important question relates to whether the steepest bear market of the post-war period, the 370/0 decline in the Dow which began in December, 1968 and has continued,so far, through May thinUhatit is. We are not, at the moment, able to voice this opinion with 1000/0 confidence in the absence of evidence to the contrary, that investment policy should presume the end of the bear market — that is, cash reserves should be committed during periods of market weakness. This stance can be clarified by pointing out that there are two classes of technical indicators normally used to signal major bottoms. One class has, on the record, seldom, if ever, given a false signal. This sort of indicator, in other words, has almost never turned positive without a reasonably healthy market advance ensuing. In order to achieve this sort of reliability, it is necessary to build in a time-lag, and indicators of this sort generally do not turn positive until well after a bottom has been made. Predictably enough they have not yet turned positive today. A great many other technical series are close to an actual bottom. Their reliability, naturally en g positive fairly less than that of the indicators mentioned above. These hv positive at the moment. As we have pOinted out before, the w' can be defined roughly by a 100-point wide channel on the Dow-Jones, whiyann as declining at the rate of around three pOints per week. The — Sidownswing's end. W The unanswered . at channel is now at around . of the — yo of the bear phase, is what sort of long- term pattern will Still to be define which the base wi! u gy to state that the market needs to form a base. a ower limits of that base and the -time period over . ave expressed the view before that,' in view of the severit of the declining t deal more time will be required to complete a base forma- tion than was the cas ay, in 1962 or 1966. We would not be at all surprised to see the base formation requ re as much as two to three years for its final completion. For the intermediate term, we are more unreservidly optimistic. We think that a retracement of close to 500/0 of the total decline would be normal technical action and would, therefore, set a target of 775-810 on the Dow as the objecth(e of the current rally. Were this objective to be attained, we would tend toward more caution, fearing that the necessary progress of a long-term base formation would require a moderately sizable intermediate-term decline from that level. , The short-term direction of the market will depend in large m, easure on the penetra- tion of the lateral trading area between, roughly, 720 and 740 which has contained the Dow for the past two weeks. A decisive upside breakout would indicate a continuation of the move, perhaps toward the lower part of the intermediate target mentioned above. A-dbwno side penetration, which inCidentally we would regard as more healthy from a technical point of view, would suggest a test of the support at 710-700 and a possible buying opportunity for an extended upswing later in the summer. This will be the last issue of TABELL'S MARKET LETTER under the imprint of Walston & Co., Inc., under whose aegis it has been published for the past 22 years. Durin the author's 16 years of happy association with Walston & Co. , Inc., we have made many friends through the medium of this letter. We want, publicly, to thank these friends for their readership and loyalty in the past and to express the hope that their friendship will continue into the future. Dow-Jones Ind. 734.12 Dow-Jones Trans. 130- 73 ANTHONY W. TABELL WALSTON & CO., INC. This market letter is Jlublished for your convemence Il.nd InformatIOn and l'l not an oller to ;ell or a soliCitatIOn to buy lIny secuntles dlscus;ed The In. formation v.as obtamed from !;ources we hebe,,!.' to be reliable-. but we do not gUarante-e Its aeeurac. Walston & Co. Inc. and Its officers. directors or employees mllY have an mterest In or lJurchase find sell the to benln. …. ;r-

, ,- 't …, . ' ., , …. – ' , 9M srAT ROAD. . 085..0 ;., ' EM.at HEW YORk nOCK ElItCHNU .DlaEft .AIlItICAN aTOQt EXCKAJIK '!'l … …… 4. –f . – . -'1L August 1. '1970 With these we are, at the same time..; startlng a new -Venture and continuing an old tradition. ;'i'-'.k., ,. …. ,S .. '. ;!, ' ,- , . ThIs is 'the first 'lABELL'S MARKET 'the Delafreld,- Harvey, Tabell DivIsion of Montgomery, .scott 6. Co. It represents. however, the continuation of a letter that bas been published weekly since 1944. During this period. the letter has appeared under the imprint of three different firms and under the by-line of two authors, the current one and his late father. Edmund W. Tabell, who founded this publication 26 years ago,and who pioneered many of the analytical concepts stlll referred to herein. We commence our new venture, we confess, with the usual feelings of trepidation which must accompany the launching of any enterprise. Despite this uncertainty, however, we are convinced that the economic and stock market environment for the 1970's should favor our endeavor. It is perbaps appropriate at this politt to begin by sharing our thoughts ,on tbis environment with our readers. We have come through a trying period over the past 18 months., Stock prices have . plunged more precipitously than at any time since the 1930's. Meanwhile. the financial press informs us on a daily basis of the multitude of problems besetting the economy. We are all by now famiUar with the list — decreasing corporate liquidity, deterioration in the quality of profits, rising unemployment, the possibility of a monetary crisis rand still-perni- cious inflation. Nor are our problems confined to ,the financial sector. War in Vietnam and the Middle East, racial tensions and the alienation of large segments of society are hardly factors calculated to produce stock-market or any other kind of optimism. – It Is. in other , — 'I11..t.oO'-easy-tG–FeClte .the-lltany-of problems that beset us and, trembling to slink away from the stock market in order to lick the painful wounds of 1969-1970. Yet, to all of the problems, there is another side. Illiquidity, beyond a doubt, exists,as the recent wave of bankruptcies all too eloquently attests. But what of the companles with balance sheets strong enough to weather any fore- seeable storm which the bear market has dragged down to record-low multiples of proven . earning power' We can all recite the familiar instances of gimcrack accounting. Does thls explain the present bargain prices of a host of issues whose books are impeccably conser-', vative. Unemployment Is rising to be sure — but Is still at low levels comp,ared to the mld- slxties2 And, as to the Scylla and Char1bdis of monetary crisis and we do -not think It incredibly naive to suggest that Incumbent monetary authorities are aware of the problem and have at least some of the expertise and tools required to deal with it. Thus it is hardly our intention to daim that our economic difficulties are not real. They exist — all too tragically so. But, with most stocks having declined anywhere from 30 to from fairly-recent highs, it Is smy to pretend that the market Is salling along totally obllvious to surrounding deterioration. It is our basic thesis, in other words. that the current prices of many stocks provide unique and exciting investment opportunities. ThIs is not to forecast a new bull market. We .frankly do not see one immediately in the offing. It is simply to state the bellef thatJ.ntenslVe investn)ent management can produce above- average results in the months and years al)ead, and in this period, the equity market might be a pretty interesting. place in Which to be. Our technical work, at the moment, supports this view. We have said in the past that iswe think the climactic nature of the May 26 low cannot be ignored, and that probab1l1ties favor the contention that the stock market now entering a new investment phase. The precIse shape that this phase may take is as yet unclear and it wUl be our task In this letter to eomment on it. It Is our beUef, ,bowever, that it will usher In an era propitious for Delafield, Harvey, Tabell and, m. uC,,h,m,o- re importantly, our clients .,'.. DOW-Jones Ind. (llOO a.m.) 722.28 ' ; ANTHONY W. TABELL S&P 500 (1100 a.m.) 77.07 -, ;.\;0;,' ' AWTmn , .;r.,;,' – J/iJ-.,;', 0-/ .r- DELAFIELD, HARVEY. 'TABELL ,,,T —

909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE August 14, 1970 Last week's market was characterized by orderly weakness in the bulk of the list as the Dow moved down toward our short-term target in the 705-690 area. Not unexpectedly, the still- .,…. ' — 'exploited'glamour-segment of ',,, Market action since the Dow reached its intra-day low of 627.46 on May 26 is worth review- ing. Over a nine-week period the index advanced a bit over 16 to a high of 742.40 on July 29. This advance occupied 45 trading days, and the central question for determining investment policy is whether this advance constituted a rally in an ongoing bear market or the initiation of a new market phase. We indicated last week our tentative belief in the latter conclusion. It may be helpful to conSider some of the evidence. First of all, the so-called rally in a bear market is, historically, pretty much of a mythi- cal beast. The 1968-1970 bear market was interrupted by three major rallies on the way down — in February-May, 1969, in July-November, 1969 and in January-April, 1970. These rallies lasted 54, 73 and 47 trading days respectively making them, timewise, similar to the 45-day rally in May-July, 1970. However, none of these three rallies was able to push the Dow up as much as 8 while the recent advance carried the average over twice as far. It seems apparent that some new force not present in the previous rallies was at work in the summer of 1970. Advances of this magnitude within a bear market trend are extremely rare. In the 1966 bear market, the largest rally on the way down was 5 and the longest one 26 trading days. In 1961-1962 a 5, 32-day rally was produced, and, in 1957, a 3, 5-day rally was the best upside effort throughout the entire decline. Going further back in time, a 17 rally punctuated the middle of the 1937-1938 bear market, but that one lasted only 38 trading days. And in the . – – of them all', 1929-1932,- – — –' – ' – – – – — – nO' rallying phase of longer t-ha- n 52 tradin-g- days- — occurred ' after the 1930 advance. A similar pattern emerges in study of bear markets going all the way back to 1900. What we are saying is quite simply that bear markets have a tendency to run their course with very little interruption. Thus, the longer a rallying phase extends and the greater the percentage advance from the low, the greater become the odds that a given rise marks the end of a major downswing. At the end of last month, we were approaching the stage when the advance was unlikely to be part of the bear market continuum, and another assault to and through the July highs would indicate we had reached that stage beyond a doubt. Meanwhile, market phenomena compatible wit h a major bottom continued to emerge. Last month's short interest was 1. 96 times average daily volume, a level that has been associated with major lows ever since the 1930's. Cash in the hands of institutions continues to rise, and heavy mutual fund selling in June was, again, consistent with the thesis that an important low had been reached. Odd lot behavior was also consistent with normal action at market lows. And ASE volume for July declined to 21 of NYS E volume, the lowest level in 20 years and a normal concomitant of the final wringout of speculation. The pieces, in other words, fall slowly into place. Having said this, it is again worthwhile cautioning the reader against undue expectations. A close inspection of 2,000 indiVidual chart patterns shows that only the smallest minority of stocks possess what can be called significant upside potential. Furthermore, the technical patterns of the great.bulk.of ,pres.ent, it ,mus.t.be.noted.,absolutelyno redeeming qualities ;hatsoever'- Yet those of uS-who have watched market for some time k-now that such a phenomena is perfectly normal at this stage. A minority of stocks are probably now in significant uptrends, but a much larger number have probably just entered a period of base building, and a significant portion will most likely continue on to new lows before the basing phase is completed. Selectivity is a word that we have been accused, in the past, of abusing but we warn that, in the market environment we foresee,we expect to be.abusing it further. Dow-Jones Ind. (1l00 a.m.) 709.68 S&P 500 (1l00 a.m.) 75.00 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL AWTmn No slatement or eo;preulon of opinion or any otner matter herein contained Is, or is to be deemed to be, directly or Indirectly, an offer or the soliCItation of on offer to buy or sell any security referred to or mentioned The matter Is presented merely for the convenience of the lubacrlbet WhIte we believe the sources of our mformotlon to be reliable, we in no WflY represent or guarantee the atturacy thereof nor of the Ifafements mode herein. Any action f1) be taken by the sub- sCflber should be based on his own investigation and Information Montgomery. Scott & Co. as a limited partnership, and Ih partner. O! employees, may now hove or may later ,ake position. or trades In respect to any secunties mentioned In this or ony future I.,ue, and such position may be different from ony views now'or hereofter in thl. or any other Issue. Montgomery. Scott & Co, which IS regblered wllh the SEC as an Investment advisor, may give advice to its Investment adviSOry and other customers of any Ifatemenh made In this or in any other Iswe. ——..—..I

…. . …. .-, ,.. '.of' , 1 90!) ROAD PRINe-ETON nIV'SION or- JERSIV 00'40 MlLMorR NEW STOCK MEtlER AMeRICAN STOCK CXCHANGC August 21, 1970 One major recent change in the technical action of the ,stock market is that it seems to have become a bit more reliable. Short-term downside projections which, during 1969-1970, 5mer.o.,way, t.atipn s.. t9 downside objective of the Ju y top in the the Dow reached an intra-day low of 702.83, moved sideways for a couple of days, and promptly produced a four-day advance which took the index to a new recovery high. As we noted last week, the market is now approaching a very interesting and crucial test, and we have some confidence in that test's being successf1JI. Our upside objectives for the Dow center on the 775-825 area, and recent technical action has given us no reason to think that this target might not be attained. Vve are assuming, therefore, that, within the next six weeks, concrete evidence of the bear market end may be at hand. Assuming th1S evidence does emerge, the problem becomes to guess what shape the new stock market of the early 1970's will take. If one were to rely on the predominant experience of this century, the end of the bear market should signal, quite simply, a bull market — in other word s, a move by the popular indices to and through the old highs. It is interesting to contemplate thi s prospect, sin c e it is, at the moment, the one possibihty almost nobody ilppeilrs to be hedged against. The number of investment milllilgers who accumulated cash at the bottom and who would be further embarrassed holding that cash through a protracted up- swing must be legiol1, However, while the thought is emotwnally satisfying, it must be admitted that ',here is nothing in the present tecpnJcal pattern which would suggest that a major advance is in the offing. OUf reading of this pattern leads us to go along with the populilr view that a protracted period of base building is required, -a'pp-e-iiI'st5'be-wnat ,-fflCluCli'figours-elves'; ore, fact, forecasting, it is worthwhile trying to get some idea of just what such a period might look like. There are, over the past 50 years, only two instances of a protracted reaccumula- tion formation following a severe decline. These are 1938-1942 and 1946-1949. We have, therefore, constructed '. in the tables below, two forecast models which show where the Dow would be at various dates in the future, if the percentage retracement swings of these two eras were precisely duplicated. 1938-1942 MODEL 1946-1949 MODEL Rate DJIA Date DJIA June 1970 713 September 1970 784 July 1970 664 November 1970 630 December 1970 852 februalY 1971 801 May 1971 715 September 1971 647 October 1971 842 December 1971 847 July 1972 679 November 1972 620 December 1972 776 June 1973 692 September 1973 747 June 1974 609 A few interesting facts may-be noted. first-is the accuracy oLbathmodels todate. ,The 1938-1942 model forecilst a rise to 713 in June, and the actual high was 720. It then called for a July decline to 664 and the actual July low was 669. It is also interesting to note that both models suggest a continuation of the present advance over both the near and intermediate terms. The 1946-1949 model would have us at 784 next month, and the 1938 model would call lor 850 by the end of the yeilr. The 1946 model would take! u8 above 800 by carly 1971. Both models would indicate that, while prices below current 1evel s arc probabl e, they are unlikely to be seen for some time. Certainly we are not forecasting either model will be duplicated precisely. Markets SImply do not behave that way. But, in view of the larClC numbC'l of analysts claiming thilt il protructed basing. penod is needed, the models glve us an Ideo of precisely what we orc talking about when we speak of such a period. Dow-Jones Ind. ( 100 a.m.) 735.90 8&1' (J100 I.m.l 78.29 AWTmn ANTHONY W. Tl\BILL D ILAFl CLD, BflRny, 'fflIlCn' Il.t n, P'f'fil 01 01011 01 (I',,! Qt; , 1'1'111'-' 1''''Clfl rr)II'nI,' I. D, ,\ to I,, t dl'c!,. Of ,d,r.rlly. 'Ill r,If, fir 11,,, 'OI,roIol',,1' .,1 nil (,tt(' 10 It' or Ullf i'(,llty r;f ..pd 10' or U'lcr.\!olwd lhf' m'l Itoupo!,,,n 1,1 rl' 1'.I,r,hl!', W'J …. 110 \'.t1 0' oun,on\N' In,.,,,(y 1'11,, lil,.,,! (or 11 Ifr lhc Gf ffln ,hrroi,,r 1,,,I,,,v,' file ,,( ,,..,d, I,eln '.n'! (IeIIO'1 to lit' I. f Ih,' 'h , .-,, r''''(1 'nV',rll,jj,of1 lnd ,I .,,,)II')I /,\clq'''''''Y', rICO'. . '-0. In lilli'''!'' fl(l,,,,,,,dl1f'. nile! !,oIm'I' r ,,,, y ',,,' il' m,,), hhr jrJ\r, C. f,,'If'nllt.!r e, 'n 10 eml i,' 111 m lny vll,Pf 1,'11 Mffljf'Clm('ry. n.''''.'I'''.! ,., ' f. (, .. \'10 1 secm onrl Sl.rh wllh Ihe un muy bf' d,\I('I'''( f,,')n onl .''' …. wlQ 1'1(11 gl'/e wI … 10 ,j. ,,,I… ,I II r md'lp.-d,, Iy of ully s' 'no, Ie 1 e, 1 th,', .. …

.. – ' . ! iJ.. f-… .. .,..,… ………,. …… .. … .Oil &TATE ROAD. rnINCc;TON, N.VI .UruU.y oe,.o CIIVI.,Off 9,',,1, 0.. p, .. e., .. Nrw ,0.1l, 'TQCOI l;.eUAHOIE 1U111. '''''.'C'''' II.H…,.11 ., .' t, – .Tn Memoriam August 28, 1970. ' Born Dcccrr.bcr 3, 1968 THE 1968-1970 BEAil. MARKET Dic.d MJY 26, 1970 Flnnl Rites August, 1970 R. I. P. The epitaph, we think, c..n finally be pronounced. The broad and convincing rally on of la!t wee;' a-.d ),.ondJ.Y of this, with g.l!ns holdwg In the I,tter part of this trc'!!i.,),h.-. f'xtor!.!cd -CC'()'C!'l 1n thr, Dc.\',' to 13S pomts rl,lil.t-.C MrlY 2(,th cr eln advollce of To an advance of thls Mngr.ltudc as an crdl1aT'l fully within a hC'.tr marJet is, In our OP1'llOn, totJ1!y to ignore all historical cxpcncnCE. Let 1..5 r.L.lmmNize the evicence. The lOTI';; meorket d'.cline could be described by L1 100- polnt-\.. lac trend wiilct, for IS months, hJ.d Lcen dc!'ccl1dlng the rate o( .G7 r-omts per doy on the Dow. Just lbout every Dow-Jones fIgure SInce December, 19GB hQd !olJcn ….merc within that channel. ThIs week, the upper 11mit of the dwnncJ, r,owat eround 738, '.'J3S decisl\,(..'ly penet!lltC'd. AL the same tii.1C, a nurr.ber of typlcn of boaoln;, cm!rgIng. The rat'lo of short interest to nYc! age dolly trQd- 10g volumC ;)s of August 14th clhr,bca to a fIgure of 2.08—a level thut has been with culminltlons E'VE'r Since the edrly 1930';.. Cash in the hcmds of muttlll fLHld; rof,C' in JL1ly to In astronomical 11. of assets with the funds having dizposcu of ovm 500 mUlion worth of stock in the June-July period. The reinvestment demand thu. crcatcc. cannot he ignored. The udvoTlcc, as we noted a of weeks ago, has lasted longer than any bear-mark.ct rally nincc the Spring of 1930. The p'.!rccntagc risc far vutstdppec. that of any such r(llly -in the entIre postwar PCI.iOJ.. In .ther words I 1n the- (ontext of forty years of fin.lnc1el expcrJcncc, we have ;.C'en no bear mmkct rally with the stlcngth and Igor dIsplayed over the P.lst thrce months. There lie, to be sure, caveats, il1d th'y will he otlly noted here. No market trend revcrsal thut VIC arc c……;!rc of hos ever tuken place with al1 technical indicators pointing with crytal c.1any in the airectlon. In the p'cscnt car-e a number of lu'';llllC Indlcutors wluch,in the past, heve major have not yet turned positIve, although it Viould not tbke much for then to do 0. 1hc Stand.a.d & Poor's SaO-Stock Index un!. other hroader inl1ces not yet ollo;-cd the Do\ in brcckmg out of thcJr d)\'nttcnd channel.; — v' Cl1though the Cl1rre;!t upG1dc ohJC'ctivc for the S& would indicatc that It could do so !.hortly. rclttlvely better -r\arkct pcrformuncc on the purt of the stable blue cl)lps rcprc- cntt'd hi' the DJIA Is u nortf'ul cnartctcllst!C of markets dt H.lS stage. Vic therefore, fer the lmg-tcrm. Lut we thin\';' it would be the hclCJht of folly ilt lIds polnt to succumb to overoptimism. It is one thillCJ to prOllounct! thc pJllcnt on the road to rccov('ry and quile unothcr to sUljgest he Is completely cured. It WtlS notcri h,;ore ju;.t t ….o .'C'cks ago that t1,c tccnillCill p1ttcrns of the great bulk of listed pr.!!;cnt no r('deem1n,) fCNurcs wnC'ltsC'evcr. hclS not oecuned In tl-.c (o,tnlght. VIC' continue to (cel, 1n other ….ord!., tli(lt the procv;s o( b.Jsc bu!ldlllf) 110 (JoIn') to r''-f'ulre a Cc.J of tfrllC, 'lI1d it to remind the fCr'def th.lt such il requiP'!' vn-ll Uf)\\'i-'Js. Only 1 nworiry of J;uJI','Jdllul (;'lll, .11 thc mOIJ'cnt, bc to h.J./,,) citced Lito k,n!) tpfra Ui'liC';,CIS. 1ht. ;.('n;lhc C(lllff.-, ….. c think, Is not to g('t cel,Jed tl.-ny bi' tIle CUi'hLlr!'1 of tIll' CH1','ni. . but to the '-,lr'-IlQtli d cl1rn!1.Jtc t1l0'–c 1.!.uc!. .. – .)11 too prcc,cnt, \C' 11 c'/cry — \'/nCH' the- IflInwdlltc cipJtcJl orC! IIIcdloCIC. If cur the;I!. J; (.(lITCct, tlll' rhort-term clccltnc cliJo\'dflCJ for clccufOlul.;lt1on o( mOle Cv('Irduly .1tuLllcd 1!;5l1c''; wJII, tncvltduly, …. ('Iccur i)(w-)onco Ind. (1100.10.) 7GI.S7 se.!' (1100 a.m.) 61.2G , /I.\VTmn … ANTIIONY \'I. l,',ml.L PI.I.AfIf.LD, flflRVI\', Ti,OEI.L , 1 I j. ! I …..

———– ———— '——-.—–, ,.— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE September 4, 1970 When Philip had news brought him o'f divers and eminent successes in one day, '0 Fortune!' said he, 'for all these so great kindnesses do me some small mischief. ' For the past-month' iii tnfs letter;-wenave- Plutarch -deal of t-ime' the news of divers and eminent successes in the financial markets, even going so far last week as to announce our belief that the 1968-1970 bear market had passed from the scene and that we had entered a new investment phase. We confess that, along with Plutarch's Philip, we would feel more comfortable about the stock market were it, at some point in the next few weeks, to do us some small mischief. Let us back up a bit and review what has taken place since May 26, 1970. On that nowmemorable day, the Dow-fones Industrial Average reached a closing low of 631.16 and has since moved ahead to around 768. The S&P 500-Stock Index at the same time advanced from a May low of 69.29 to a peak of 82. Quick calculation shows the percentage advance in the Dow to have been greater, about 21, than the comparable 18 rise in the more broadly-based index. Despite the fact that the blue-chip-dominated Dow has apparently led the market out of its slough of des pond, this leadership appears slowly to be shifting. Following the initial market rise in late May and early June, both the Dow and S &P retreated to secondary lows during the first week in July, the Dow at 669.36 and the S&P at 71.23. Since that time the percentage advance in the two indices has been approximately equal at about 15. On a very short term basis, there is some evidence that, in the past week or so, the broader indicators have actually begun to outperform the Dow. Based on our technical work, we wouldexp,ecCthistendency-1ocontinueoverthe near-term-.– -Aswe hav; the tipside for- the DJIA appears to be 768-775, a level which was touched by intra-day peaks in last week's trading. Both the S&P 500 and 425Industrial Stock indices appear to have a bit more room on the upside with objectives of 85-1/2- 87 and 93-94 respectively versus levels of 82 and 90 at the end of this week. We suspect that this apparent shift in investment emphasis comes from the recent short-term resurgence of the glamour segment of the list, the large senior growth companies which are unrepresented in the Dow and which carry a reasonably heavy-weight in the various other indicators. We reiterate our belief that this is only a temporary phenomenon. If the motto of today's youth is Never trust anyone over 30, our own inclination at this stage is not to trust pie ratios over 30. It is not, in other words, our belief that, out of last year's leadership, next year's leadership will come. In summary then, most major averages are at or close to their most plausible upside objectives. Higher readings are admittedly discernable — one interpretation of the DJIA pattern, indeed, would call for as high as 885. However, it would be impossible to read any objective of this magnitude in the more broadly based indicators without some further consolidation and this, we think, is likely to require time. We have reiterated the thesis that, as a preliminary to any sort of major upswing, a protracted base-building period is required. Such a formation, it seems to us, is going to require at least some retracement of the ground already covered between the -low 600's this'ground may-have tO'be retraced, we do not know. No top of any importance has yet formed, and it is impossible to set downSide targets until one does. But our overwhelming impreSSion is that individual base patterns need broadening before any important advance can be mounted. What we are trying to do here is set the stage. Stock market psychology is a fragile thing, and an intermediate period of lower prices would be a difficult time for many investors. Any temporary cessation of the three-month-old advance would undoubtedly bring the Cassandras out of the woodwork, howling about further legs in the bear market. In such a period, the courageous and intelligent investor will have to recognize the second half of 1970 for what it really is — part of a long-term accumulation area — and take action to build his portfolio accordingly. Dow-Jones Ind. (1100 a.m.) 768.55 S&P (1100 a.m.) 82.51 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expression of opinion or any other maHer herein contolned IS, or 1 to be deemed to be, directly or indirectly, on offer or the soliCitation of on offer to buy or sell ony seomly referred to or mentioned The matter Is presented merely for the convenience of the uhs.crIOOr wrnre we believe the sources of our Informollon 10 be relloble, we In no WJY represent or guoran!ee the accuracy thereof nor of the statements mode herein Any action to be token by the subKflber should be based an his own mvesllgahon ond Informotion Montgomery, Scott & Co, as 0 limited partnership, ond Its portners or employees, moy now have, or may loter toke, positions or trades In respect to any securities menlloned In thiS or any future issue, and such POSition may be different from any views now or hereafter exprened In thiS or ony other lSue Montgomery, Scott & Co. which IS registered with the SEC as on investment advisor, may give adVice to Its Investment odvisory and other customers mdependently of any statements mode In this or In ony other Issue

p ,.. ' ,p P(…… – . ….I \ . ., , … ……., ' , , ri L. -. '0 .- f.) . 909 STI' E ROI\D PRINceTON New JEHSEY D1Vl310U Of p..CMOLR NEW YOfH' S'OCI C,(CHANGE MLMBER STOCK r.XCHANGC September 11, 1970 As market technicians, we are, along with the majOlity of our fraternity, firmly committed to the principle of relative strength. This principle slates, in its simplest form, that above-average indIvidual s to,;- ilion .te09 s)o , relative action, it is necEssary to consider a fairly extended time p2riod. All too often, we find, in- vestors'confuse short-term flurries with real relative strength lmprovemenL As an illustration of this, let us compare the mar!et action over n.e past couple of years of three stocks along with the S&P SOO-Stock I;'ldex. We think the three issues chosen are each representative of a broad class of issues whose market action has been Similar. The f,rst table below shows the pnGe' of the three issues at vanous points over the past two years, and the s8cond gives the percentage change over various time periods. Price At 1.1I1g Temco 12/68 Hiqh 11 0 1/70 Hiqh 24 5/70 Low 7 8/10 Low 11-/2 Recent High 15-7/8 Phillips Xerox S&P 500 39 95 108.37 25 116 . 93.46 20 70 69.29 26 65 74.13 28-3/8 81-7/8 83.78 ' Chanoe from 12/68-1/70 lL70-5/70 5L70-8L70 8L70 -Date 5/70 -Date IDO -Date 10i 8-Q.ate LIng Temeo -78 – 71 64 38 127 -34 -86 Philllps -36 -20 30 -19 42 4 -27 Xerox -22 -40 -7 26 17 -29 -14 8&1' 500 -14 -26 7 13 21 -10 -23 In the first phase of the bear mdrket, from December, 1968 through the recovery high in January, I 1970, Xerox was by far the best-performing issue, actually moving ahead m the face of a severe down- 'rcmco-swIng7..0wnereus -dr-op-ped '-alm6-st three tilnes ak' lrluch -as-1he ald Lirig- — 1' disaster, losing three-quarters of its value. In the bear market's second phase, the S&'P dropped 25 from its early 1970 high. Ling Temco continued on its downward spiral with ,mother 70 loss. However, Xerox's relative action deteriorated as the stock showed a 40 loss, and that of Phillips improved WIth the decline beIng less than that of the general market. From the May 10VJ, prices recovered sharply in June and July dnd then sank to a s(condary bottom in August. Between these two dates Ling Temco suddenly became the star performer, rebounding 65. Phillips, the best performer on the previous decline, scored a 30 advance while Xerox contInued to move lower. Phillips' action, of course, was a tYPlCal example of releUve strength during a bear market carrying over into the initial stages of the next upswing while the Xerox weakness is an instance of the opposite case. Ling Temco, on the other hand,demonstrdtes another phenomenon, the sharp re- bound from a deep-oversold condition. Th difficult problem in identifying moves such as this one is timing. The bounce from the May low in Ling Temco was highly dY;'lamic, but, if the buyer had been a bit early, say by a week, nis purchase would have shown a Joss rather than 11 profit. For the most recent period, from the August lows to the highs of last week, Ling Tenlco has continued to show above- average action, Xerox has come to hfe with a 26 advance, while Phillips has moved essentially side- ways. Now, however, let us compare the action of the three stocks over longer time periods ending with recent prices. Going back to the May Jow, Ling Temco, for what it's worth, is the star performer. this semi-spurious comparison, however, the reJative strength of Philllps, with an advance better than twice that of the Index, becomes clearly apparent; ..c – ,, ' Phillips' strength is equally apparent if one goes back to January. Since then, the stock has scored a 14 advance vs. a 0 decline in the market and drops three times as great In the oiher tv.'o issues. However, over the whole cycle, Xerox has shown the superior action with the smallest bearmarket loss of the three issues. In summary I Xerox, the best peliormjng issue over the very long tefftl, began to show detcriordting etlan as early as January and has reversed this trend only over the past three weeks. Phillips'reliltive (1CilOn, on the other hand, has been improving since early this year and anI'! minor evidence of deterior- ation in recent weeks is evident. And Ling Temco, despite its recent great 5t1'011gth, still shows extrelllD– ly poor actlOn on a long ..term basis. lIntll further relative. improvement in issues such as these last two takes place, our inclinution is to view those stocks with patterns such as Phillips as being the most 'Jttractive investment vehicles. DOW-Jones Tnd. (1100 a.m.) 762.12 8&P (jl00 a.m.) 02.49 ANTHONY \IV. TIIBELL DrLIIfICLD, HARVey, TIIBILL AW1'.mn . – – , M !. ItI' 'II 1 'f'''' ,I ,'t ,,,.,, or ,'1 ,,'I'r ttl'! I\,.'-,n (on' lit,' Ii I ,), 'J L.. ,I, I- – ; , ,I.,II) 1,0' IIv cr IU',P ,1)'. (1\ P, , '. f Ir I, ,,1.11011 0 til f,' I,,,,.II' II) I 0' 'il 01'1 'r H' I,' rl 0 P' n Il m,j lIr' ,('lll)r IS plf'''lll …1 mCld, j'Jt rh,' , Jlwr 110( of rh. \','h,I'l It (' bI,v' Ill' If , ,d!I')U t) I, ,,,'!1 1- \ ' ,., I,D Jo' I 'r '111111 ..,, Ih, t,((''''''V 11.,1 f II,,, orn,J htli'm AllY '1 10 1)1' ll, II I Y fhe .,,1,1 j, 1,C!..- J 'II I,,; , 'n, 'I' 1,'wL ,)' ,t, 1 tl' (', ' ,\,1, r., vr I, ….IIl '1'.01 ,r,krrtnlllfl U,(lI 'Y, ,v, Co, I'll I'td P. (,wi 0' ,ny .11 f .J! rt In 1'1 ,., 'mnrd m IIs or lilY I', l (!Illi ,,,I'Oll tl\ 'Y Il' d,f/f''' nl It …, lnl \1,,, .It titf't 1' ,' IU 11,,\, 't'l .-11t,., .. 'I. , …. , …. 10,,1, '\ \IIHI II,,' ',It; ,-. I(lVtJ'!olllllt U,I'II(lr. 'H(11 n,f! nd\',rf' In , 101 ,I 1',,' 'II, \ n, lInn-'- I 'oily cd '111'0' ,,1'''''111, ,d.' !I' 11,. ,f rl!1l '''h'.f ….. .

..– – – – – – – – – – – – – – – – , 'U'lUIUED..D..' S D..1E'U'VrElR2 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE September 25, 1970 The baby calf spawned last May 26 is beginning to grow horns and display some highly I1,!asc,-!lipe characterisUc;s. In,a dramatic burst of strength last- week stock market,. which -had– been consolidating in a narrow trading range since the end of August, burst ahead on a broad front. The advance, this time, was more apparent in the S &P 500 Stock Index than in the Dow as the S &P reached a new recovery high at 84.31 on Friday whereas the blue-chip index still remained below its September 8 peak of 773.14. In the course of the advance, the market showed the typical bull-market characteristic of ignoring bad news and concentrating on good. The flames of war fanned the Middle East, yet the market's only response to the conflict was to beat an orderly retreat within the confines of the aforementioned trading range. Then, in response to favorable business news and a less-thanexpected rise in the cost-of-living index for August, prices took off on a broad front. The character of the rally since last May has been good. The present upswing is the fifth minor advance within the context of the intermediate-term uptrend, a factor in itself an indication of s,trength. (Weak rallies have only one or two legs.) The corrections following these advances have generally been minuscule. The Dow declined 4 from June 3 – 12 and 7 between June 19 and July 7. A 3.8 drop took place in early August, and the recent decline was only 3.3. None of these drops have lasted longer than two weeks. The vitality, indeed, has been impressive. Meanwhile, the market's underpinnings have been strengthened. Our unwillingness over the past month to forecast substantially higher prices (1. e., above the low-to-middle 800' s) was based on the fact that only a small minority of stocks pos-sessed worthwhile long-term base patterns. That the.llC!.st.tew Jponth s.., A great manysto.cksst1ll haye . -patterns inco'nsistent with much higher prices, but'the extent of accumlllation that has taken place in recent weeks is impressive, and probably, at the moment, somewhere from one-third to one- half of the list shows base formations indicating, at least, worthwhile intermediate moves. We are still, however, inclined to view the intermediate term with some caution. This is based, not only on technical factors, but on the business-and-earnings picture as well. Part of the rally, as we indicated above, was in response to improving business news. But, in this connection, it is well to remember the adage about the stock market's never discounting the same thing twice. At the end of June, the Dow-Jones Industrial Average had earned 53.43 for the prior 12 months and was selling for '12.8 times those earnings. As September ends, it has moved up some 80 points in the face of the fact that 12-month earnings for the third quarter are likely to be down, perhaps in the area of 52.50. Thus, the Dow pie has increased from 12.8 to around 14.8. This sort of action is totally consistent with historical experience. In 46 quarters since 1953 when earnings have declined, the earnings-multiple has moved ahead in 35 of them. The average advance in the pie in those quarters was almost 12. The market, historically, recognizes earnings declines as tempcrary phenomena and is willing to place a premium multiple on lower levels of earnings. As earnings advance, however, the response tends, to be the oppOSite. Dow earnings have moved ahead in 96 calendar quarters since 1935, and in 65 cases, the multiple declined, the average drop being 7.3. Even inthe minority.ofcases where.the.multiple has . with-earnings, the average advance, 4, has-been small— . – –.- -' -.- – This has some applicability in the present case, since, barring a protracted automobile strike, earnings are likely to bottom out in the fourth quarter and should certainly advance somewhat in the first quarter of 1971. In view of the past record, it is difficult to foresee a Dow multiple at the end of the year of much more than, say, 16 which, assuming earnings of 53, would result in a price of around 850, not too far away from the objectives indicated by our technical work. Further improvement will, it seems to us, require an accelerating rate of business improvement during 1971, and, with the recovery still in its early stages, it is difficult to forecast how fast such improvement may take place. Dow-Jones Ind. (1100 a.m.) 761.02 S&P (1100 a.m.) 84.31 AWTmk ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or exprenlon of OPInion or onv other motter herein contolned Is, or IS to be deemed to be, directly or indirectly, on offer or the soliCitation of on offer to buy or sell any security referred fa or mentioned. The motter Is presented merely for the convenience of the subscriber While we believe the sources of our mformatlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any action to be taken by the sub scriber should be based on hiS own Investlgahon and Information Montgomery, Scott & Co, as a Irmited partnership, and Its partners or employees, may now have, or may laler toke, positions or trades in respect to any securitIes mentioned In thiS or any future Issue, and such position may be different from any ,views now or hereafter expressed In this or any other Issue Montgomery, Scott & Co. whleh Is registered with the SEC as an Investment advIsor, may gIVe adVice 10 Its Investment adVISOry and other customers 'Independently of any statements mode In t''IIS or in any other Issue

. ———————–, TABELL'S MARKET LETTER ., 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE r– October 9, 1970 As readers of this letter are by now aware, we have attempted, over the past two months, to adopt a constructive posture toward the stock market without succumbing to wild optimism as to the im- mipenQl o- La. — – – , …… — – –W—-e.-.-cQ-!llinue t9ma..i…l…–t-a–in- th-is—general attitud-.e-,.b..u..t.,..a-s- -,. –.—-,. market firmness continues, it would be imprudent not to, at least, examine the possibility that a new major upswing may have started from the May lows. The following is an attempt to consider this eventuality. To begin with, the market's behavior since May is rather neatly describable in mathematical terms. The advance has been contained in a trading channel some 60 points wide which has been rising at the rate of one point per day in the Dow-Jones Industrial Average. This rising trend has been consistent, without any indication of acceleration or deceleration. In other words, the up- ward slope of one point per day is just about the same whether one measures from the May low, the low of mid-July, or the low of mid-August. Since the trend has been perfectly consistent, it is easy to make projections into the future. If continued, the current trend would call for a Dow-Jones level between 854 and 918 six months from now and between 972 and 1035 a year from now. Conversely, the regularity of the trend channel means that its downside penetration would have a great deal of technical significance, and would lay to rest any thought of an immediate bull move. Since the downside limit of the channel, at the moment, is around 740, the risk in assuming its continuance does not appear great. Suppose, then, the market does remain in this upward channel. Is such action consistent with a, normal bull market Listed in the table below are some characteristics of all of the periods generally recognized as bull markets since 1932, with the present upswing, to date, listed for comparative purposes. As can be seen from the table, upswings are, in many respects, similar , – Their length, forexamp1e to ope trldjpg d,ws, tb.. . notable exceptions being the baby bull market of 1938, and the recent 1966-1968 advance. The percentage rise in each advance also shows remarkable conSistency with 1932-1937 (no doubt due to the severity of the previous decline) and 1966-1968 again being exceptions. (It is worth noting that the 1966-1968 advance was 48 in terms of the S&P 500 thus making it nearer the norm.) The average daily percentage rise has varied little in the post-war upswings running between 5/100 and 9/100 of 1 per day. It will be noted, of course, that the present advance is conSiderably steeper at 15/100 of 1, but bull markets tend to decelerate as they mature. Actually, the four previous bull advances were just as steep as the present one in their initial stages. of Previous No. of Aver. Daily Start DnA End DnA Adv. Loss Recovered Trading Days Rise 7-8-32 41.22 3-10-37 194.40 372 39 1390 .17 3-31-38 98.95 11-12-38 158.41 60 66 187 .24 4-28-42 92.92 5-29-46 212.50 129 181 1211 .07 6-13-49161.60 1-5-53 293.79 82 259 987 .05 9-18-53255.49 7-12-57 520.77 77 697 962 .09 1()-;2-57 419.79 12-13-61 734.91 75 312 1043 .05 6-26-62 535.76 2-9-66 995.15 85 150 912 .06 10-7-66 744.32 12-3-68 985.21 32 96 518 .03 5-26-70 631.16 10-6-70 ToDate,— 783.68 24 — 43 94 .15 – – If the present instance is, in fact, a bull market, we are thus able to make some estimates as to the sort of market action which would be consistent with past behavior. An expected length of 900 trading days would carry the upswing to the Winter of 1974. The normal daily percentage advance would call for a daily Dow rise of .32 to .54 points, a rate about one-third to one-half as steep as that of the past five months. Thus, the ultimate price objective would be somewhere in the 1000- 1200 range on the Dow. This would recover a bit more than 100 of the total ground lost — again consistent with past behavior. None of the above is meant to constitute a forecast. The evidence, while it accumulates, is not decisive. Nonetheless, it is in the nature of investing that one makes decisions in the 11ght of uncertainty. The point is that the holder of substantial amounts of cash is, at the moment, assuming the risk of not participating in a move of the magnitude described above. Dow-Jones Ind. (1200 p.m.) 774.23 ANTHONYW. TABELL S&P (1200 p.m.) 85.53 DELAFIELD, HARVEY, TABELL AWTmn No slatement or expreulon of opinion or any other matler herem contolned IS, or IS to be deemed 10 be, directly or ,ndirectly, an offer or the sollcllol1on of an offer to buy or ell ony SeCUrity referred to or menlloned The matter IS presented merely for the convenience of the subscriber While we believe the sources of our information to be relloble, we In no WJy represent or guorontee the accuracy thereof nor of the statements mode herein Any action to be taken by the sub 5crlber should be based on hiS own investigation and Informahon Montgomery, coff & Co, as a limited partnership, and In partners or employees. may noW have, or may later take, positions or trades In respect to any securltle5 mentioned In thiS or any future Issue, ond such pOSition may be different from any.vlews now or hereafter eKpressed In this or ony other Issue, Montgomery, Scott & Co, which IS registered with the SEC as an Investment advIsor, may gIve adVice to 11 investment adVISOry and ather customers Independently of any statements made In thls or In any other Issue