Tabell’s Market Letter – March 23, 1962

-..' W—-a–l-s-tIonnc–&–C–o. Members New Yo,. Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH,lCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER March 23, 1962 ,..- The recent action of the stock market has been disappointing and confusing to a great many investors. In mid- February, the Dow-Jones Industrial Average reached the bottom part of the 720-740 supply area and failed its first attempt at penetration, reacting sharply to a low of 702.91 at the end of February. From this point, the averages again moved ahead and established a new high for the move, 727. 14 last Friday,well above the February peak. ,Then, ina-week of-desultorytradingthe average'a-gain'backed off and reached a low of 713.02 on Friday. Theorists who had been expecting major buying interest to develop and spark a general upsurge were again disappoint;'Jd. In order to get a clear view of the near-term market probabilities it is necessary to go back almost a year, for it was in May, 1961 when the technical conditions that characterized the present stock market first emerged. At that time, the Dow had reached a high of 714. 69, within a few points of today's close. After a short cor- rection the Average advanced again and made a new high in August, but this new high was accompanied by (1) a failure to achieve a new high in breadth, and (2) a very sharp deterioration of upside volume. It was that action that led this letter to abandon a constructive attitude and assume a more conservative stance. , As regular followers of this letter know, action since that time has neither deteriorated further nor has it improved much. The new high in the averages in Novem- ber was accompanied by a breadth peak above the the decline in upside momentum halted. Subsequent to this, on a longer-term breadth has acted about the same as the market and there hasEt!ena1y s'lcantincrease in selling pressure. Thus, in summary, the markif' r almo year has been one which,there .ha-s-een no-gr-eat .. has been characterlzed by lack of a broad advance. w W yo would be needed to generate Contrary to any t' is no technical evidence that such an increase in buyin e 'orth noting is the fact that our shorter-term breadth index fa nigh a st week despite the fact that the averages a y pe ya considerable margin. This, at the moment, has no longer-term sigm i e, but it also indicates the inadvisability of basing invest- ment policy on an i ment broad advance. Such an advance, until such time as tech- nical conditions change, must be regarded as highly improbable. Until the technical picture changes, then, it appears we are in for more of the same. In other words, the mar ket will probably continue to exhibit the same characteristics shown since last May. These characteristics are, among others (1) A relatively narrow trading range in the averages. For example, since May, the Dow Industrials held between a high of 741. 30 and a low'of 673.49, a range of barely 100/0. (2) Shifting leadership. The glamour issues topped out in April-May 1961 and was assumed by the defensive-growth iSsues sucn. as foods and utilities. Now these appear to have lost upside momentum and a new group of cyclical stocks has taken ower the market leadership. (3) Wide swings in individual stocks. Another way of characterizing market action over the past year is to note that Texas Instruments, which this week reached a low of 86 lis, sold as high as 206 3/4 last May. Cluett Peabody, on the other hand, could have been bought in May for 61 1/2 and reached a high of 107 a few days ago. It is this wide diversity for which the investor should continue to be prepared. Dow-Jones 716.46 Dow-Jones Rails 144.40 ANTHCNY W. TABELL WALSTOI\T & CD. INC. Thl'! market letter IS not, and under no Circumstances IS to be construed as, an offer to sell or a soitcltation to buy any secuntles referred to herem The informatIOn contained herein IS not guaranteed as to accurftcy Or completeness and the theleof is not, and under no circumstances is to be construed as, a representa- tIon by Walston & Co, Inc All expreSSIOns of oplllion are subJect to change Without notIce Walston & Co., Inc, and Officers, Directors. Stockholders and thereof, purcha;e, sell and may have an lllterest in the- securities mentlOned herem. ThIS market letter IS mtended and presented merely as a general, mformal commentary on day to day market news and not as a complete anaiysII' AdditIonal mformatIon WIth respect to any !SecurIhes referred to herelTI WIll be furnIshed upon r e q- u e . s t ' – – \\ K 301 – …. – – –