Tabell’s Market Letter – July 28, 1961

—— —- 'fILECOP'f Walston &CO. Inc Membel's New York Stock Exchange , NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CK/CAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER July 28, 1961 In the short space of four trading days, the Dow-Jones Industrial average moved across almost the entire 714-671 area in which the market has held since early May. From Monday's intra-day low of 678.27, the market advanced to an intra-day high of 709.15 on Friday. The average has now held at above the 670 level on three downswings. The Apr 1 low was 671.64, the June low was 673.49, and last week's low was 674.80. From a cal viewpoint, the pattern suggests a strong triple bottom formation and the odds favor an upside penetration of the four-month trading area with a minimum objective of 725-750. Other technical indicators also showed favorable-technica-l action. Volume increased shaq 1; on the advance and the breadth of the market index improved. The breadth index faces an i portant test in the next several weeks. Ability of the index to reach new high territory alor g with the averages would be a very constructive signal. Failure to do so would be a warnin signal of contrary action. This signal is usually given some 6 months or more before the averages actually reach their highs and is an indication of a mature market and increasing selectivity. This week's advance was sparked by President Kennedy's firm stand on Berlin and his request for increased defense spending. He asked for no immediate increase in taxes, but in the background lurked the distinct possibility of excess profits taxes, price controls rationing, etc. , if the situation worsens. No two periods are exactly comparable, but the nearest approach to what might happen in the near future is the Korean War period of June, 1950 through 1952 when all the above taxes and controls were ultimately imposed. Ad- mittedly, conditions are quite different – not only in the general price level, but also in thl fundamental position of individual groups, but it might to compare the grou actionin the above period. The Dow-Jones Industrial avera ad eGlapproximately 500/0 from the June 1950 low of 197 to the 1952 high of 2W n t vU!i&l a 500/0 advance ill the averages on this advance – 20 would be more' L are the percentage advances of-75 Standard &-Poor's group It will be noted that the groups that showed the best relate issues and heavy machinery. – – . '- – e stocks, transportation – Crude 50 Textile Weavers 25 Llfe Insurance 50 Drugs 24 Material Handling -v-JONES IND. 50 Baking 24 Rubber Shipbuilding 49. Dept. Stores 22 Oils – International 96 Automobiles 49 Utility-Electric 22 Fertilizers 96 Machine Tool 48 Banks 21 Aluminum 96 Invest. Cos. (Closed) 48 Publi!hing 21 Oils-Domestic 86 Broadcasting 47 Motion Pictures 20 Rails 84 Machinery-Steam 46 Printing Equipment 18 Mining & Smelting 82 Machinery-Ind. 44 Natural Gas-Dist. 17 Oil Well Equipment 78 Farm Machinery 43 Building Materials 16 Paper – Containers 71 Chemicals 39 Retail-Apparel 14 Air Transport 69 Shipping 38 Sugar Refining 14 Coal 69 Fire Insurance 37 Beet – Sugar 12 Sulphur Copper Metal Fabricating 67 Companies 36 66 c Distillers 36 66 Insurance-Casualty 34 SSohaopess Textile -Apparel 89 8 Steel Alloys 66 Cement 33 Food Packers 7 Paper 65 Railroad Equipment 32 Telephone 7 Gas Pipe Lines 64 Gold Mining 32 Biscuit 6 Lead & Zinc 57 Machinery-Construction 54 Electrical Equipment 54 Foods-Canned Dal'ry Mail Order 32 Tobacco 3 31 Containers-Metal-Glass 2 30 Meat Packing 2 Radio & Television Sugar – Cane 53 Steel 30 Variety Chains 52 FOoffoidceCEhqauinips ment 28 26 Soft Drinks 1 – 20 Dow-Jones Ind. 705.13 DOllr-ToneS Bails 139 06 EDMUND W. TABELL T\iVALS'T'Off & CO. RfC. ThiS mnrket letter is not, and under no circumstances IS to be us, an offer to sell or n sohcltniJon to buy Ilny se-curitIes reierred to herem The mformatlon contnmed hcrcln IS not guaranteed as to accuracy or completeness nnd the furnishIng thereof IS not. nnd under no cIrcumstances IS to be construed as, n repr-cscmtn. lion hy Walston & Co, Inc All expressIOns of OPInIon ate subJect to chnnge WIthout notice. Wnlston & Co, Inc, !lnQ Officers, Directors, Stockholders nnd fmployccA thereof, purchase, Bell nnd mny have an Interest In the sccuntles mentioned herein ThiS mnrket letter IS itJtended and presented merely as n Itenernl, mformnl commentury on day to day market news an9 not as a complete analysis Additional information With respect to any securitIes referred to herein will be .. . . . .Jl