Tabell’s Market Letter – June 23, 1950

—-r – Walston.Hoffman&. Goodwin SAN FRANCISCO, CALIF. NEW YORK, N. Y. PHILADELPHIA, PA. LOS ANGELES, CALIF. BAKERSFIELD BEVERLY HILLS EAST ORANGE, N. J. LONG BEACH MODESTO OAKLAND PASADENA SAN DIEGO SAN JOSE'''- SANlA ANA EUREKA FRESNO HAGERSTOWN. MD. HARRISBURG, PA. PITTSBURGH, PA RIVERSIDE SACRAMENTO – …. ……;lATIlE.wASH.- ..-; STOCKTON VAlEJO – – '''; TABEll'S MARKET lETTER 35 WALL STREET, NEW YORK 5, N. Y. DIgby 4-4141 HOTEL WALDORFASTORIA PlO1B 9MlbO The industrial average continues to move in a wide range. Since the first of the month the market has advanced from a low of 218.66 to a high of 229.20 and then tested the low again this Tuesday at 218.99. At , , this week's lows the market reached an overhL,-apght condition on our short term indicator and gave two distinct buying signals one on Monday which 1 proved to be somewhat premature, and another on Tuesday at 219.92 in the I. averages. From this pOint a very sharp rally ensued and at Friday's high of 225.55 the market had rallied 6.56 points (from the week's low. While this average has not yet reached overbought territory on our short term indicator, it will ,do so on Monday unless a sharp technical correction should occur. This may result in a short term sell signal early next week. However, neither the intermediate term indicator or the long term indicator are in danger of registering a comparable overbought signal as they have i strengthened their position due to last week's decline. Therefore, even I .' if a short term sell signal is given early next week, it would appear that it would result in no more than a consolidating phase and a minor decline. It is entirely possible that we are entering a more dynamic – phase of the advance – a phase that will be the prelude to an eventual distribution area. It takes time for such a distributional area to form and during the formation of such a pattern the market in general, and specific issues in particular, could have sharp price advances. This would be accompanied by much larger volume than hitherto witnessed. From a time element such a period could last from three to six months. I continue of the belief that the highs in the industrial average will be somewhere in the 240-260 area. This opinion is purely conjectural because as yet there are no actual building up of distribution patterns. Before that occurs , it would appear that there must be increased public participation and ad- vances in the secondary and speculative issues. ,i Leadership' this week has shifted somewhat. The soft goods iSsues! i notably department stores and textiles, showed considerable strength. These' . . groups, which have been laggards for the past f.our years, were drawn to ; your attention in our letter of May 5th when we advised the purchase of eight retail store issues. Since then we re-recommended several of these issues and a number of textile stocks. While these issues have advanced , from recommended levels, I still believe that they will move higher and , ; advantage should be taken of all price dips to add to holdings. A group of representative issues is listed below, together with their accumulation areas, upside breakout points and possible price objectives. Approx. Price Allied Stores 38 ; Assoc .Dry Goods 19 ; Best & Company 29 , Burlington Mills 22 City Stores 20 Goodall Sanford .,17 Interstate Dept. 27 Lerner Stores 23 , Lowenstein M. 27 May Dept .Stores 50 r'jercantile Stores 17 Montgomery Ward 57 National Dept. Stores 18 Pac ific Mills 34 Reeves 14 Robbins Mills 24 Wyandotte Worsted 12 1949 1946 Approximate Div. igh Trading Range 3.00 3 3/8 25 37 1.60 36 1/4 12 – 19 2.00 52 1/2 24 30 1.50 29 7/8 14 24 1.20 38 1/4 13 – 21 1.37t 47 3/4 14 19 2.00 50 18 26 1.50 44 1/2 17 26 2.00 43 3/4 21 – 27 3.00 70 36 48 1..00 35 13 – 18 3.00 104 1/4 48 59 1.50 39 14 – 22 3.50 48 28 – 34 1.50 18 11 18 1.00 26 3/4 15 26 1.50 25 3/8 8 13 – New indicated rate. – 1948 high. Possible Indication 50 – 55 29 33 48 28 40 35 – 40 29 36 32 35 34 70 25 75 80 32 42 – 51 '26 34 17 24 ,, I ;' I ,1i .'' , June 23, 1950 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not have an Interest in some to or be all construed as an offer or 50ltdtation of of the securities mentioned herein. The offen to bll)' or sell o/Iny securities, From time to time Waldo,n, Hoffman foregOing material lias been prepared by, us as.a matter of Information o&nlyG. oIotdwISi.nbameady upon Information believed reliable but not necessarily complete, Is not guaranteed s accurate or final, lind IS not Intended to foreclose Independent Inquiry,