Tabell’s Market Letter – August 10, 1951

Tabell’s Market Letter – August 10, 1951

Tabell's Market Letter - August 10, 1951
View Text Version (OCR)

————————————————— f,'i.; . . .s, ;-;;'f;';,'1,C WoIston.Hoffl1101l &- Goodwin ;;,f'l'jc;;-;c'';.'c-; –r; 1- t!ji- ,p6;t.e-nc (/j'/ec ,– ft'1 .',-' f; ; .i', NEW YORK 5, N. Y. PHILADELPHIA 2. PA f,b,/\,'1 3S Wall Street DIGBY 44141 ,'; 1420 Walnut Street PENNYPACKER 5 5917 ,,-'7,Cr TABEll'S MARKET lETTER 1 Ij LOS ANGELES 13, CALIF. SAN FRANCISCO 4, CALIF 550 South Spring Street 265 Montgomery Street MADISON ,)232 SUTTER 12700 ; 1,'' t',.!, ,,-,lcY; I' I P;', ; i t;; I am reprinting below the letter I wrote on May 11th because the r;, 1,',i',(;' I,odpuinstiroinasl expressed then a average declined ptpoly24e1q.u8a9llyinwlealtle t oday. May, Since rallied that to time 255.23 the in eianrl-y;iii1… k,June, dec lined to the June low of 240.72 and rallied to a new high last ,.nweek at 266.52 while the rails reac hed a high of 83.38. -. I!hil. It t,,, '-'f- ;,1 For the longer term my thoughts have changed but little from my ,'- ;.,;forecast of 1948. At that time, I stated that the stock market appeared to kibe in a long uptrend similar to the war and post-war period of 1914 to 1929,.\ r/;'The present uptrend started in 1942 and, if the same time span were used, Ui eWOUld continue to 1957. Such long term moves obviously have their interruPt11 lcions. Usually they consist of five phases – three of advance and two of de- !,;; f,icline. The first phase f;in June 1942 to 213 in was May the advance from 95 in the Dow-Jones 1946. The next phase was the decline industrials from 213 to ,;; t;; b160. This low point was tested each year from 1946 to 1949. In my 1948 fore,,' rlicast I expressed the opinion that the next advancing phase would carry from ;.;;1 (I;a low of 160 to about the 250 level with 5 leeway either side. The advance ;1. ',would be followed by a decline to about the 200 level. After that, there ;, i' ;would be the final dynamic advance phase that would carry the average well '1, ;above the 1929 high of 386 to probably 450 or higher. I see no reason to i); r'change Fi; the broad outline of this pattern. The present advance is, in my opinion, nearing its end. Whether , ;the industrials will rally somewhat above last week I s top of 264.44, or (iy, p)whether the rails will rally somewhat above the February high of 90.82 is l, , (Vt1 iiu,cnopnrceedrincdet.a bIl e n and of minor significance my opinion, the market is as far as the long term only in the early stages trend is of forming ,C)'.;'t tt;(Ia distributional top. It may require considerable time and wide fluctua- ptions in a broad twenty-five point range in the industrial average before ;hhe top is completed. The downSide implications of such a pattern are not fi'e-l) fpredictable until the formation is more complete but, in my opinion, the de' ilUcline will be relatively mild as compared with the 1946 or 1937 deCline, Nt' i!;both as to price and as to time. The 1942-1946 advance lasted four years 1 ;',and was 123. The 1949-1951 market has advanced 67 in a two-year period. 1- i, The next decline will most likely be about in the same ratio when compared V nto the 1946 decline of 25. That would mean a decline of about 15 or 20, f1 l.l0r about forty or fifty pOints to approximately 225-215. Of course, a broad; ,,;lening of the top may occur later but that appears to be all that is indica- r ;;-1;ted at the moment. The duration of such a move is guesswork but, as a !-;; ;'guess, I would say it would occupy a time period of six months to a year. I; 1 'r.',I'i'i;stocks This have had does not mean that all securities Will decline little price advance during the past two years 15. Many and are not !,'; ;,,'-, (J;overbought'- Their decline would be comparatively moderate. There are other V );issues that could even advance moderately ;;'ment. The most vulnerable issues would be during such a period of those that have advanced res-haadrjpuslyt-\,';;i;,; r(from the 1949 lows and are in need of consolidation and re-accumulation at to;, ';;lower levels. 1 111!1,'/1 (I To the longer term investor such a decline as envisaged should '- j,\.be of no great signif'icance and hardly warrants disturbing sound holdings. ,/New funds, however, should be invested only in defensive-type issues. For i' '' i those interested in intermediate term capital gains of six months or so, f. rithe pattern has much greater significance. While some issues may work tem- ;; ;-';porarily higher, it would appear that most will be lower six months from no; L;,.(,and, therefore, the greater part of funds should be liquid awaiting buying l!opportunities. For the short term trader, it would appear that the market ;''. il,iS no longer a one-way street and a great deal more caution is necessary. V.,j f,,l H rl A!t!s 261.92 EDMUND W0 TABELL WALSTON, HOFFMAN & GOODWIN tr;;; ii Dow-Jones Rails – 81.00 fl''\ Pfr) ' /' ny 'fThh memorandum it not to b. confruld .11 an offltr or ,olicltation of Off'fS to bur or 'ell SltUfltlt15 From t1ml to tim. Wablon, Hoffman& Goodwin may l1 have ,an Int.,.11 In some or 01111 of the 'Ieurlt! mentioned h,r,in. Th, f01.qoin1;1 maler,11 has been prepared by UI as II mattn of InformatIon only It is based 1\0' 1 upon Informflhon b,II .,.d r.nable but not nlclnarily omple'., Is ;ua,ant..d oIlS accurate or final, and b not intended 10 foreclose Independent inquiry 1;,' 'IJ /''-' ..k;. ';;,…2.7;.'!t.;D!j.-!ii.',tl,-T!!,;.j.,,;.–' -7'-'.,. –. .-;'!..!….,J'Z–.,….l'i-'EJ..'.(.IJi(;'j;,;\;.-,;J!,iv L..,

Download PDF