Tabell’s Market Letter – November 10, 1950

Walston.Hoffman (\ Goodwin NEW YORK S, N, Y 35 WClII Street DIGBY 44141 PHILADELPHIA 2, PA 1420 Walnut Street PENNYPACKER 55977 TABEll'S MARKET lETTER LOS'ANGELES 13, CAliF 550 Soutn Spring Street MADISON 9-3232 SAN FRANCISCO 4, ClIF 165 Montgomery Stret SUTTER 1-1700 The very favorable Election results and a temporary cessation of the Chinese Red threat resulted in a much stronger post-Election market, After reaching new lows on Monday at 220.59 and 64.00 after a sharp three-day drop brought on by the new developments in Korea, the market recovered to 229.20 and 67.4l. The ELection trend toward conservatism has very favorable long term ,implications and strengthens the conviction often expressed ,by this letter that go.od dividend paying common stocks are sound long term holdings under present conditions and that equities should constitute the much greater part of investment portfolios. However, from an intermediate term point of view, it may take some further time before the long term favorable factors offset the temporarily unfavorable short term possibilities. Despite the rally of this week, the technical picture continues to suggest considerable caution. While both averages at Monday's lows had retraced one-third of the advance from the July lows and thus fulfilled the minimum requirement of an intermediate correction, the volume indications continue unfavorable. Friday's volume was 1,640,000 shares which is considerably below the transactions of 2,575,000 shares on Monday's decline. Also, the number of advances has lessened each successive day despite the fact that the general market advanced. There were 857 advances on Wednesday, 813 on Thursday and 635 on Friday. Conversely, 'the number of declines have increased with 137 on Wednesday followed by 261 on Friday. This indicates a few issues are carry- ing the burden of the advance while the balance are under pressure. Also, the sharp swings at the top of the 37 point rise since July leads to caution. These sharp price swings usually occur at the top of an intermediate rise. Since October 25th, a period of thirteen trading days, the industrial average has traveled over an area of 33 pOints in up and down swings, or an average of 2t pOints a day. The rails have had a thirteen point swing or approximately a point a day. The important points to watch are the October highs of 232.75 and 71. 31 and Monday's lows of 220.59 and 64.00. However, most of t,he work in the recent trading range has been on the upper part of the area so a downside penetration would have more significance than upside. The tops have broadened enough to indicate 210-205 and 61-59 in the event of new lows. An upside penetration would carry to 235-237. The present pattern indicates caution on buying on strength. It appears advisable to wait until the pattern clarifies. An upside penetra- tion of the recent range would be followed by a consolidation and an opportunity to buy at approximately present levels. A downside penetra'tion would result in some very excellent buying opportunities in a great many issues with very favorable long term patterns. November 10, 1950 Closing Averages Dow-Jones Industrials Dow-Jones Rails 229.29 67.30 EDMUND W TABELL WALSTON, HOFFMAN & GOODWIN This m9morandum is not to bl! CDMtrullld III lin offer or solkita!ion of offefl to buy or sell 1'1' securiliu from time to time Wl'Ilston, Hoffman & Goodwin may havil an intered In somo or all of the securities montioned herein. The lorlllgo;og r'lalcHlIlI has been prepared by 1,1 fIS /I matter of Information only. It il balId upon Informatton belulved relible but not neceurlly compl.'e, h not quarl!lntClcd ' accurate or fhull, nd is not intended to foreclose independent inql)iry. ,, n ./