Tabell’s Market Letter – July 26, 1968

, / Walston &CO. —-Inc —– Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO! COAST AND OVERSEAS TABELL'S MARKET LETTER, July 26, 1968 July 1968 has, so far, proved itself to be a frustrating month. A five-day rally which began the month was aborted, and the next two weeks saw a neutral to downward trend. Last week acceleration on the downside took place, the Dow penetrating its June low on Thursday Thus, the month ends as it started with short-term indicators again in an oversold position. The central fact is that risk appears limited with one set of downside targets in the 870-860 range, and the most pessimistic readings at the moment centering around 850-840. -One factor, of which the press will shortly be reminding us, is that 1968 is a Presi- dential election year. Numerous studies have been made of market action in such years, and it is an indubitable-fact that normal market -In-an- effort to tabulate year action succinctly, we have prepared the following table. It shows, for each year, the President elected and his party; followed by the average price for each month expressed as a percentage of the previous December's close (i. e., 110 means the market was up 10, and 90 means it was down 10). Year President Jan. Feb. Mar. -Apr. May Jupe July Aug. Sept. Oct. Nov. Dec. 1900 McKinley R 101 1(i3' 104 105 100 98 –gs 99 97 100 108 i14 1904 Roosevelt R 102 99 99 101 99 99 103 107 112 118 125 126 1908 Taft 1912 Wilson 1916 Wilson 1920 Harding R 105 100 105 111 117 117 123 126 125 126 134 138 D 100 99 102 106 105 105 106 109 109 109 108 103 D 99 98 97 96 98' 99 98 99 102 105 107 103 R 99 91 97 96 91 89 89 86 89 89 85 77 1924 Coolidge R 103 104 102 100 99 101 1928 Hoover R 99 98 103 11Q 113 1m 1 8 1932 Roosevelt D 103 101 102 76 66 1936 Roosevelt D 102 108 112 112 104 V;\116 110 115 l'W 1 123 131 9 2 88 87 120 126 130 119 132 82 128 1940 Roosevelt D 99 98 97 1944 Roosevelt D 102 Hl1 105 1948 Truman D 97 92 94 98 82 86 87 88 85 ,09, 12 108 111.- 110-115 11 108 104 103 106 100 99 1952 1956 1960 1964 1968 EisenhowerR Kennedy Johnson D 102 97 8 105 106 104 104 105 109 98 1 102 107 106 103 102 100 102 92 96 93 94 92 91 93 97 107 109 108 111 110 111 113 115 112 92 99 101 104 104 The seventeen ye 0 date show an approximate normal distribution. Nine could be considered bull mark ,whereas three (1920, 1932 and 1940) are distinct bear-market years. In five years, the trend was flat, as evidenced by the fact that the December average price was within 5 either way of the previous December'S close. Of even more interest is the general tendency towards a flat trend or moderate weak- ness during the first half of the year. Nine of the 17 years showed little market change through June. It is interesting that 1968, to date, also appears to be taking this kind of shap Indeed, only in the three years which later turned out to be full fledged bear markets was the action in the first half predominantly on the downside. What is interesting at the moment, though, is the definite tendency toward a strong second half. Indeed, as the table shows, in 14 of the 17 years the average price for December was higherthan the ayer,tgeRrice for- June. Even in two of the three bear markets, 1932 and 1940, the market rallied in the second half from the June lows. Furthermore, in one of the three exceptions (1912) the June-Decem bel' difference was minuscule, and the market spent most of the second half in higher territory. Only in 1920 and 1948 were June prices significantly lower than December's. There are, of course, numerous possible rationalizations for the election year tendenc for a weakish first half and a strong second half of the year. One would be the gradual re- moval of uncertainty, as the election becomes closer and the outlook for the next four years becomes clearer. Whatever the reasons, however, the record has some interest as we look forward to the last five months of 1968. Dow-Jones Ind. 888.47 Dow-Jones Rails 250.86 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb This market letter Is publlshed tor your convenience and in(onnatton Rnd Is not an offer to sell or a soliCitation to buy Rny seeurltles diSCUSSed, The Intonnation was obtained from sources we behtle to be rehable. but we do not guarantee its accuracy, Walston & Co.. Inc. and ita officers, directors or emDloyees may have an mtereet in or purcbase and sell the securities referred to helem WN801