Tabell’s Market Letter – August 31, 1951

&Wolston.Hoffn10n.y, ''.;I t,,t;t;,-;. , .. ,.,.. , ' Goodwin,,',' '–, ,'.. ' ,) ct J 1', NEW YORK 5, N. Y. 6.-4M;e;zC (!curUfed PHILADELPHIA 2, PA. LOS ANGELES 13, CALIF. SAN FRANCISCO 4, CALIF. ' t' H t.. 35 Wall Street '., DIGBY 4.4141 , .. …1 1420 Walnut Street PENNYPACKER ss'm ,' TABELL'S MARKET LEnER !'I' li The Dow-Jones industrial 550 South Spring Street MADISON 9322 2b5 Montgomery Street SUITER 12700 e during the past week reached the rI' r.,.. ,—,,' Lt. . . /.', ;j ,I highest price level since June, lS'30 at 271.64 The Dow-Jones rail aver;', ;If' age, on the ot her hand, was still ten pOints below the February high. The 1,''1., r;, New York Times 50-Combined stocks average did not quite reach the May highF;, Recently, severalbalance sheets of the business and financial out ; look have been issued citing both fworable and unfavorable factors in an ;;'' I attempt to arrlve at a decision as to the course of business and the stock; 3 market for the, next, six to twelve Lonths. Perhaps a balance sheet ;of– th i(;/; technical ,condition of the market might be appropriate at this time . . ';.. o!, ; FAVORABLE FAC'l'ORS would inC'lude the following ' ,,' … , !i;, E1. – 'fher'e has been no speculative excesses in the low-priced ,;stockscthat-usually mark the'top of the market. Low-priced stocks-avei7')/.;i ,';. done little market\lise'. The leaders of the market have been the better ;/;, 'd' grade stocks. ii ,,, 2. – A. great many secondary issues have very strong long term, I,, ; technical 'patterns. In some cases, they have been under accumulation for i,'; two years or more and indicate substantial price appreciation eventually. ';,', i' They have done i,, yielding 7 to little 11arketv.J'ise J are 10. They also appear showing excellent earnings J and are to be in an excellent defensive ;' position. 1- . V are low 3. ,There is no selling pressure at the and, in the'main, stocks are firmly held by moment. Brokers institutions and loans lon g 'c. ; term investors. It would apparently tae a decided change in business. ,pros- , ,,. pects to dislodg, e , ' large' amounts of these holdings. . .. 1-. ' . /,'. ,;; on t,f,,; been , 4., formed )WY ith a potnt few and exceptions, no figure graphs heavy distributional tops have '&, of individual issues. Of course ,', these distributiqnal patterns can form rapidly and usually form at a level''c, i/; below thehigh'However, the patterns do not look too dangerous at the ,.,i moment . .Rec('nfL., 'it appeared that some tops were forming but it eventuall!!., ,,' turned out thatthe offerings were absorbed and the trading areas Ilere. pene; j; trated on'the'upside.. . ' . – , ,' ' cl . …. JJI…. , , . ;,7.' Ic'J UNFAVORABLE FACTORS would include the following ., ;/ fj; . ,-.i'. ,;'pespie the advance to new highs in the industrial averageit i the inter,nal action of the market is poor. This unfavorableaction could b ,',' reversed, but until it' is, it suggests caution. While it appears that ,the , 'j ! market is Thursday, strong- 'as ,measured only249 stocks of by the averages, actually up to the close 1422 listed issues reached their high for on' the ; rt, U year in August. ,This is only 17 of the market. In contrast, 376 highs were,/ ,', reached in Jal'vary and 409 in February. To the av('rage holder of stocks, d ;' , the market reached its high in February. '. ,1,/, i The same pattern is present in advances and declines. Over the past;' ' twenty'five'weeks ending August 24th, there have been a total of 14,447 , ; issues advancing ,as against 15,692 that declined. This is despite the 'fact , that the averages are at a new high. The same is true of volulne. At the i ; February top, t''le twenty-five week total of volume was c lose to 300 mil1iOI;1' i' shares. At the week ending August 24th, the twenty-five week volume had, … t';,; l;' dropped to 186 million. Upside volume; has dropped even more sharply. on ,the' c' ,,' tllenty-five week totals. It was c lose to 200 million in February, arid was F, ',/', around 99 million for the week ending August 24th. 2. – On the point and figure charts, the great majority ' of ,, the r,;',' issues that have led the market have about reached their objectives .. They .,' must re-form accumulation patterns at these or, more likely, 10l)er .levels. /, ', For the market to carry forward, new leadership must bo found. . i, , Some groups appear to have formed tops and seelO to be in long ,term ;,' ! downtrend., Motors and steels are examples. Some of the papers have poten- I '. I, tially dangeous patterns. ;,; —n.. Tmarket in '1 921t. , -i'9G51enaenrda l Mot 1946 o,rGeirieiaichracli-.Moitt6srsl-lr.iegahc long neCl. be its fo n re igh 'tOllfe,54…..n,374r-aol'n-7;',,,I ',; Oct.5, 1950. It closed at 50 on Friday. ' i-' , 4. – The rails have acted as a barometer since 1942. They have',, \i led almost every.advance and decline of ioportance. Present action is un- 'l favorable as witness successively lower highs of February, May and A)lgSt ', ;;—- ; !,t7'/' 11. Ifran n onltrued as an offer or lolicltation of offers to buy or have all Ifered in lome or all of the 'securities mentionld herein th. foregoing mater IJ'\Jt'.'hbi,J.J'.!clI,1iV.fpite.s parF.qqUrlp(. i'Ib' -. efuWar lfJd2WG.t!tlf'W\T'1..wo.lq\l,..1&'IyGooItdwIillbumeady; — /i' upon informtlon bllilVtld rlnable but not neceulIrlly complete, b not ;Juarllnteed a5 accurate or flilal, and j, not intended to forecl05e indtlpendent inqUiry. , V'; ' !!tL\0;,'i,''in;);, ,.;7;;''' ,'.,. J.';,!.;,'),;.;,' ,,; '7 ,;'! , ', …'..!– ,. .I'. '!-'.'i.' ',; ,. /' ,! c , '….., …. ' . , .' /