Viewing Month: August 1949

Tabell’s Market Letter – August 05, 1949

Tabell’s Market Letter – August 05, 1949

Tabell's Market Letter - August 05, 1949
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TABELL'S MARKET LEnER 35 WALL STREET. NEW YORK 5. N. Y. Digby 4-4141 From May 5th to August 1st, a matter of sixty-six trading dars, the Dow-Jones industrial average moved in a Wide trading range of 16 pOints. From the May 5th high of 177.18, the market declined to a low of 160.62 on June 14th. This was a decline of 16.56 pOints in thirty-three days. From the low of 160.62 on June 14th the market advanced to a high of 177.17 on August 1st. This was an advance of 16.55 points in thirty-three trading days. Thus, the entire thirty-three day decline of 16t pOints was recovered in the same number of trading days. This is unusual as'the rate of decline is usually more rapid than the rate of advance. As we look at the long term picture, rather than the day to day, or even month to month fluctuations, this quick rebound from the 160 support level has considerable significance. The 160-164 support level has now been tested on four widely separated occasions, namely, in October 1946, May 1947, February 1948, and June 1949. The 160-170 areawhich I have consistently considered a long term buying area, has been' entered in eleven of the last thirty-six months. ' From September 1946 to November 1948 business and indusry were booming with the F.R.B. index of production moving in a range between roughly 180 and 195. (100 1935-1939 average). The stock market declines into the 160-170 range of the Dow-Jones industrials during this period were the result of fears that a decline in business was imminent. This de- cline in business has now occurred with the F.R.B. index dropping in seven months from a November 1948 high of 195 to an estimated level of 165 for July, 1949. In spite of this decline in business, the market has again met support at the 160 level of the Dow-Jones industrials, the low of a narrow trading range (15) of three years. This action takes on an added significance when we read the busi- ness forecast of Dr.C.F.Roos of the Econometric Institute in the August 1st issue of Newsweek. The record of Dr. Roos and his staff in forecasting the business trend over the past few years has been considerably above that of the average economist. He believes that the F.R.B. index will reach its low for the next ten years in either July or August of this year. After a rise into the later part of 1949, he expects another dip in the first six months of 1950. His opinion is that this decline will hold slightly above the August lows. He then antiCipates a rising trend until 1953-1954, hen ano- ther dip in business is expected. The decline at that time,he believes, will hold above both the lows of 1949 and 1950. From there on; his proJect- ion indicates a riSing trend to 1960. All of this is subJct to an'allow- ance of 5 to 10 for error. The opinions of Dr. Roos coincide with my long term technical pat- tern of the stock market. I believe that the narrow trading range of the past three years is a long accumulation period with stocks passing from weaker into stronger hands. The accumulation may not yet be completed and the averages may remain within the area of the last three years for a longer time. However, I made the prediction almost a year ago that the pat- tern now being built up will eventually result in a price level ,in the stock market above the 1929 high of 386 during the period betweeh 1955 and 1960. I confidently repeat this prediction again. .' . For the near term,the market has advanced approximately eighteen pOints in thirty-seven trading days to a high of 179.38 on August 5th. It would appear quite obvious thatin the near future, some technical correct- ion should occur. However, the advances in the market, since'the narrow trading started almost three years ago, have been of the more or.iless straight line variety with sharp upswings in a short periOd of' time and with comparatively no teohnical oorrections. Witness the twentyfour point upswing from November 1946 to February 1947, the twenty two point riSe from May 1947 to July 1947 and the thirty point advance from Fecruary 1948 to June 1948. . It is possible that the current intermediate uptrend will top out in the 178185 area and will be followed by a correction to the ,lower 170s. Following that, a trading range might be built up in an area bounded rough- ly by 170 and 185. Such aotion would result in a long head and shoulders bottom pattern with the November-May range of 170182 being the'I'eft shoul- der,the sharp deoline to 160 in June being the head,and the oontemplated 170-185 range the right shoulder. Suoh a pattern would be the preliminary for a strong market in 1950. August 5, 1949 . Edmund W. Tabell Thl, memorandum I, not have an Inte'lt In 10m. to or b. all conltrued a. an of the IKllfUlu off.r or lollcltatlon of mentioned herein. The oHe,. to buy or 11 any lecurltleL From ,o…;oln; mahlrllli hal been prepered by time to 111 al a timmaetteWr aolsftoInnoHrmoaftfmloann a Goodwin may only. It It bliled upon Information bellev.d reliable but not neeesullrily complet., II not filuarllnt.ed e. accurate or fInal, and Is not Intended to foreclose Independent nqulry, – ——–..– — –

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Tabell’s Market Letter – August 12, 1949

Tabell’s Market Letter – August 12, 1949

Tabell's Market Letter - August 12, 1949
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TABELL'S MARKET LETTER 35 WAll STREET, NEW YORK 5. N, y, Digby ' The market appears to have,reached an area of'temporary-resistin the 180''181- range. — O'lti prlce–6bjective for the first phase of the advance has been the 180-183 area. However, the market shows no signs of a eakened technical condition and any correction should be moderate with individual stocks continuing to show above average action. Regardless of the action of the averages, selection of the right indiVidual issues will continue to be the difference between stocle market gains and losses. A perusal of action of individual groups and issues over the past three years plainly shovls that this period has been one of extreme selectivity. This action will most likely continue until the piece-meal adjustment in our economy has been completed in industry after industry. In the meantime technical market action indicates that regardless of the near term fluctuations of the averages, there will become available ,outstanding purchases from both a value and yield basis. We will endeavor to draw your attention to these individual issues in subsequent letters. In the meantime, it would seem advisable to take advantage of the current etrength in the general market to switch out of some of the issues in our recommended list. These issues fall into three categories (1) Issues that show fair profits and temp,orarily appear to have reached their upside objectives; (2) issues that have shown uncertain action and do not have, at the present, a clear technical pattern; (3) issues that have shown relatively unfavorable market action and give no indication of important nearby turn. – In the first' category I would include Cooper Bessemer, Flintkote, S.S.Kress, Sears Roebuck, Sunshine Biscuit and White Sewing Machine. In the second category I would include Bendix AViation, Eastman Kodak, Firestone Tire, Fruehauf TraUer, Joy Manufacturing, Paraffine, Sylvania Electric and Youngstown Sheet & Tube. In the third category, I would include Bigelow Sanford, Firth Carpet, Holland Furnace, Sharon Steel and Wheeling Steel. I-would continue to hold the remaining issues in my recommended list. They all continue to show favorable action, or at least average action. The better grade issues include Addressograph Multigraph, Allis Chalmers, American Cyanamid, American Home Products, American Seating, Borg Warner, C.LT. Financial. Commercial Credit, Endicott-Johnson, Federated Department Stores, General Time, Hewitt-Robins, Intertype, Johns ManVille, Kresge, Phelps Dodge, Shell Union Oil, Sperry Corp, and Standard Steel Spring. The more speculative issues include American Airlines, American Power & Light, Avco, Brooklyn Union Gas, Budd Company, Carrier Corp., Cities SerVice, Combustion Engineering, Continental Baking, Denver & Rio Grande, Distillers-Seagram, Eastern Airlines, International Minerals & Chemical, Lowenstein, McKesson & Robbins, Niagara Hudson, Penn-Dixie- Cement, Pressed Steel Car, Radio Corporation, Reynolds Metals, St,Regis Paper, Schenley, Shamrock Oil & Gas, Standard Gas 4 preferred, Stude- baker, Sunshine Mining, United Merchants and Western Pacific, August 12, 1949 EDMUND W. TABELL WALSTON. HOFFMAN & GOODWIN ,, , , .,-'' Thll memorandum Is not to b. Mtra.d 1111 an offe, or lolldt.tlon of offerl to buy or HII any curlt'.'. From tim. to tim. WalnoR, Hom, & Goodwin ma., ha.,. an nter1llf In some or all of the ,ecurltles merttloned herein. apon Information believed ,.lIable but not neceuarlly complete, The foreGoinG mate,lal h.,. been pU1p.,.d bl' III ., Is not queranteed al accllrate or flnal, and Is not mottt… Intended of to f'On'lo'ercmioaltelOIllt'IodnelpyedeIntt t,Inbqausld. -.— .s,,

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Tabell’s Market Letter – August 26, 1949

Tabell’s Market Letter – August 26, 1949

Tabell's Market Letter - August 26, 1949
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TABELL'S MARKET LEnER lS WALL STREET. NEW YORK 5, N. Y. Digby 4.04141 The signs of at least a temporary top, which we have been mentioning in our letters of the last two weeks, have increased. Last week the market broke several uptrend lines. This was true not only on the price trend graphs but also on the buying power gauges. Selling pressure also decreas to break a downtrend line. However, the decline was caused mainly by a drup in the buying urge rather than a heavy increase of selling pressure. It woulu appear that the irst phase of the advance, a rise of app mately 22 pOints from 160.62 to 182.67 in two months, has been completed. ,Just how far a, declining phase will carry is problematical. A normal te'lIHJ.,- cal correction of one-third to one-half of the 22 point advance would bris the industrial average 'back to the 175-171,area. However, the averages or individual issues have not yst built up a sufficiently broad distribution area to indicate such a decline at this stage. Furthermore, there is a fair resistance area at 178-176. It would be necessary for a broader top to be built up before a decline of such degree is indicated. ' The declining phase may carry down through middle or late September, interrupted by sporadic rally attempts to the lower 180 level. Such a re- action, or rather broad consolidation, would improve the technical pattern considerably. As I have mentioned before, while many issues have already built strong base patterns, there are a great many other issues that have not yet built up a broad enough potential to sustain a strong upward move. Most issues of this type are in the groups that have shown most unfavorable action over the past few months, such as the steels and the rails. While these issues most likely reached their lows in June., their potential accu- mulation patterns appear incomplete. A month or so of reaction or conso- lidation may complete the formation. If this happens, these issues should be watched closely as they may be the leaders of the next and more dynamic phase of the advance and take the place of the more or less defensive type of issues that have been the leaders of the first phase. All of the foregoing refers to the relatively minor or near inter- mediate trend of the next month or so. The longer term pattern shows no signs of jeakening and in fact is strengthening itself during the present consolidation or reactionary period. If the advice of the past three weeks has been followed, ';roups issues marked as shoViing relatively unfavorable action have been sold on strength into the 180-183 area. Retention of issues showing favorable action has been advised as I doubt if these issues will have re than a nominal correction'even in the event of a decline into the lower 170's in the next few weeks. Would not advise repurchases until the industrial average declines to the 175-174 level or until a clearer indication of the extent of the decline is given. While many individual issues continue to show favorable action, I am omitting the list until such a time as the action of the list ca,) be observed in relation to the current decline in the averages. August 26, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thl. memorandum Is no' to b. coMtnled a. fin oHer or solicitation of offers to bur or 11 any I.curltles. From tim. to time Walston, Hoffman & Goodwin rnay haye an Int.rest In some or all of the securities mentioned h.,.ln, The foreqolnQ meterlal has been prepared by us 8S ill matter of Informetlon only. It I. bated upon Informetlon bellev.d rellebl. but not n.ceslarlly compl…. Is not quaranteed lIS accurete or final, and I. not Intended to foreclo Independent Inquiry.

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