Viewing Month: September 1951

Tabell’s Market Letter – September 07, 1951

Tabell’s Market Letter – September 07, 1951

Tabell's Market Letter - September 07, 1951
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, .'J'r' . ., , , ' , ,, -II NEW YORK 5, N. Y l-, 15 Wall Street DIGBY 44141 PHILADELPHIA 2, PA 1410 W41nut Street PENNYPACKER S5977 LOS ANGELES 13, CALIF. SAN FRANCISCO 4, CALIF 550 South Spring Street 165 Montgomery Street MADISON ,2)2 SUTIER 12700 ', ), i, TABEll'S MARKET lETTER 1(' , ,I ,' -,, Last week I issued a balance sheet of the technical condition of ';the market citing both favorable and unfavorable technical factors. It would appear that the clue for present policy is contained in the (,;two fac tors re-quoted below. One is favorable and the other unfavorable. ,',I t ',', FAVORABLE ,Y,I, ,',,' A great many secondary issues have very strong long term technical patterns. In some cases, they have been under accumulation for two , years or more and indicate substantial price appreciation eventually. They have done little marketWise, are showing excellent earnings, and are yielding 7 to 10. They also appear to be in an excellent de- fensive position. ',', .f. ;;', , ',,– ,,,'' UNFAVORABLE On the pOint and figure charts, the great majority of the issues that have led the market have about reached their objectives. , , They must re-form accumulation patterns at these or, more likely, ,, lower levels. For the market to carry forward, new leadership ', , mus t be found. ,, The market leaders of 1951 have been the oils, chemicals, ethical '- 'drugs and rubbers. They have been bought, particularly in the earlier e ;,.,stages, by larger investors, both institutional and private. Recently a , more speculative element may have entered the picture. These companies have ,' /been extremely popular because of their excellent growth outlook, but at 'ipresent prices it is possible that they have more than adequately discount- ,, ,ed this favorable potential. In any event, from a technical viewpoint ,most ,,',of these issues have about reached their long term upside objectives and ,'appear in need of at least a consolidating period if not a technical ;' 'correction. Even the most favorable situations become temporarily over; 'bought at times. 'e'.' , On the other hand, there are many secondary issues that have held in ,, ;, narrow trading ranges for several years and appear to be under accumulation i ',In many cases, these issues are just a shade below the quality that would .;,,' ,,make them eligible for inclusion in some institutional portfolios. With the , ; general public in a rather apathetiC buying mood, these issues are neglected, ;,',As a result, they present excellent values. An undervalued issue of medium , '; quality can quite often be a better investment than an overvalued blue chip. The main complaint against issues of this type is usually – They are ' ',,;,so slow. They never move. Market memory, unfortunately, is very short. Som; 1,of the greatest advances in the past two years have been issues against jwhich the same complaint could have been levelled. It takes ti'!le and pa- ,,' ,-, 'tience to build up strong base or accumulation patterns. ''., ', For example, here are a few issues that were formerly in my recom- i'mended list – I,,; PFIZER (on an adjusted basis) held in the 15-20 range for three , years. The recent high was 46 5/8. I AMERICAN CYANAMID was a slow moving issue for almost three years ;,',when it held between 35 and 45, yet two years later it reached 13l. I REYNOLDS METALS not much more than a year ago was still holding in I,;the 18-25 range which it had occupied for three years. The 1951 high is 58.; , WHEELING STEEL back and filled between 13 and 21 for over three ', .- years. It managed to attain a high of 43 1/2 this year. ' SEABOARD AIRLINE R.R. accumulated in the 15-25 area for three years ,,' ',before reaching the February high of 61. Ii UNITED AIRLINES from early 1948 to mid-1950 was available in the ,;approximate 10-17 area. The 1951 high was 310 ', Many other examples could ,be used both in higher grade issues and ,'those of a more speculative category. The secondary issues present, in my opinion, the best holdings in .' t ';todayls uncertain market. My recommended list of issues of this type was ','published in the letter of August 17th. Copies are available on request. ,, 'i,This list will be added to when the occasion warrants. For long term apprei;clation accounts, continue to recommend a 25 invested position in equities i e 'of this type with the balance to be kept as a buying reserve. i,Stember 11 EDMUND W0 TABELL , W m;, This memorendum IS not to be conltrued liS lin offer or olicitlltion of offerl to buy or lell 'f.m a n, mod .. ln may '; /' hllv, an interelt In 10m, or till of the ucurHiel mentioned herein, Th. foregoing material has been preparect br us tiS tI mlltter of inform.s!'n .orly I. bl1ed I upon Information believed ,.lIabl. but not neuuarily complete, is not uaranteed a5 CiCCI/rat. or final, and is not intended to forecl010 In(\iH!n-lMt IrqUlry y .-. ..' ,' . '-'.-. ,-.;…..-.;''-… ;..–;'.r!;–,, ,-..,.,' ,, ',, -,.- ;,', ,,-,-,;,,,'–,.'-;'–;; ''''–;S, !.– ./..;.;- . – ,'.- . ',\', .-X

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Tabell’s Market Letter – September 14, 1951

Tabell’s Market Letter – September 14, 1951

Tabell's Market Letter - September 14, 1951
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&Wolston.HoUllIon Goodwin f '-, .. '/ . ,' , .I,f!'.,I 9-.,/' ;f (' , NEW YORK 5, N. y, PHILADELPHIA 2, PA 35 Wo/III Street 1420 Walnut Street DIGBY 44141 PENNYPACKER 55911 -, tT TABEll'S. MAItKET lETTER LOS ANGELES 13, CALIF 550 South Spring Street MADISON 9-3232 SAN FRANCISCO 4, CALIF, 265 Montgomery Street SUTTER 12100 1.. ' ' .,I J ' . t'''f '2' I 'I ; f j;nflation or deflation The government, most economists, and more rJ1 'cently, the stock markE't,are predictihga continued inflationary trend. Sum..i;;; -imaries of recent articles appearing in The Commercial & Financial Chronicl-Ej'; ,.care illustrative – );,; ;;; In detailed analysis Dr. Wolkiser maintains that rearmament, budget def f-' cits, wage-raising labor policies, rising incomes and reduced production ;f of consumer goods on the one hand, and United. States military and finan- ,-j cial support of our economically weakened allies on the other, provide th ,- background for continued strength of inflationary forces. Concludes the c-', inflationary trend will prevail until a decision is reached in an in- t;' evitable East-West Hot War. t';, . -Or the following – .', I .-, Dean McCarthy cites as potent inflationary factors the fact that consu- mer income is increasing about 20 billion a yeaI' and constant rise in ,'/ wages Wihout compensating gain in productivity. Says price suppor,t pro- ;. gram has ,sapped foundation of our agricultural economy, and attacks need- less govenment spending and low moral standards in political life. Warns- economiC s,ecurity cannot be attained by playing off one class against another. \I \ ,,,' , Howeve'l, other articles in this excel'ent periodical present a minor ity viewpoint \such as – ,, Referr1.n& t6 his previous analysis of inflationary and deflationary for…(-'- ces in current economic Situation, Mr. Sears, after presenting a statistt- !!tl!ecff;eswitrte ;; ;j' ; are deflationary rather than inflationary implications in recent develop -', ments. Sees no likelihood of shortages in any field arising from proposed- ;,' level of defense expenditure, and concludes potential inflationary pres- ;,- '., sures have been over-estimated. ; . f; The last ten pOints of the advance in Dow-Jones industrials from the- ;, June lows. has been based largely on continued inflationary pressure. The ;-. 'market leaders of the past ten days have been the metals, oils and other groups that. would benefit from an inflationary background. The fear of in- , flation has caused the market to forget the threat of higher taxes and lowEiii – earnings. If such fears are groundless, and deflationary factors are to be' -in the ascendency, it would be expected that the market would work lower. ;- From a technical market action viewpoint, I am more inclined to follow r the deflationary opinion at the moment regardless of the fact that I believe', we are in a. long term uptrend cycle !n stock market prices. ', As I.have been stating ever since 1948, I believe we are in a long term uptrend in stock prices that started in 1942 and will CUlminate in , 1957-1960 at a level considerably above the 1929 high in the averages. Long' . term advances usually consist of five phases. Three of advance and two of '–' decline. The first phase of advance was 1942 to 1946. The second or declining phase was 1946 to 1949. We are now in the third phase started in June 1949' , at 160 in the Dow-Jones industrial average. It now has a time span of twenty-seven mbnths and an advance of 117 points or 73. I believe it is near its top and that the next iml2.ortant mov,.e will be the fourth or declining phase 0 f the long term pattern. Before that, '' .- happens the market mayor may not work moderately higher but purchases at ,this level are hazardous in the extreme, except for the short term trader ,who is willing to move rapidly. I do not attempt to forecast these short '. ' term fluctuations because I know of no technical indicators that are more /' ;than very partially reliable. , How far will the market decline in this fourth phase In my opinion, ; ' -c the decline will be relatively mild. It might result in a retracement of , i', one-third to high is made. t wo-thirds In terms of the advance of the present from high, the June low of this would mean 160 to whatever',–' a decline to ,, , , somewhere between 240 and 200. The pattern is not clear enough to suggest i, '; 'which of these two alternatives is the more likely, but I believe it will ;.- be nearer the lower objective. C — EDMUND W TABELL ' Sdr.hbemheQ'ItJ 111 JO 1IS'Y' o/In interesT in some or anb19ln.tl..d 0/11 an offer or solicitation or'ifa uCllrlhe. menhoned Iter,in Tohf .offfoerresliltooingbuymaotrer,iael IhelnWb!elenlpreNpaFrJidomfi;HeVIFFonMaAlm\rTtewr&o'f oiaoOrmOD(W'I 'Mrt;odI'1' b'ased;- ;,,' upon Information b.heved reliabhl but not nlluuanly complete, is not ;II/arantead as accurate or final, and is not intended to foredon Ifldn;..ndent .nqult ,

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Tabell’s Market Letter – September 21, 1951

Tabell’s Market Letter – September 21, 1951

Tabell's Market Letter - September 21, 1951
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h'-,,' , NEW YORK 5. N. Y. t , 35 Wall Street i' I ' DIGBY 44141 PHILADELPHIA 2. PA 1420 Walnut Street PENNYPACKER 55977 I'' ;,'.,,. TABELL'S MARKET LETTER LOS ANGELES 13. CALIF 550 South Spring Street MADISON 9232 SAN FRANCISCO 4. CALIF. 2bS Montgomery Street SUTTER 12700 -, 1 1, . .- l. .. -,' '.',i For the past ten days the industrial average has held in a trading — irange bounded by 277.51 and 271091 with volume averaging above two million sha1'eS daily. This is the heaviest volume since the present phase of the ..advance started on June 29th. The character of the market also has changed. '. (ome of the chemicals and oils and drugs that have been the market. leaders 1, ;-up to this point are showing signs of liqUidation. Despite the fact that ;- the industrial average reached a new high during the week, Standard Oil of ,-,' -'New Jersey reached its lowest price since July. On the other hand, the c ;, rails and some of the secondary issues have been stronger and volume in C..',- ;. 'ome of the very low priced speculative issues has increased sharply. The .– ..,.lowered quality of leadership is not encouraging, particularly after a sharp- . ,advance in prices. The fact that the industrial average on Friday broke be- i.'low the low of the previous ten days to reach 270.21 is also a cautionary signal despite the fact that the rails are in an uptrend and closed un- -'. 'Changed on Friday while the industrials closed 2.16 pOints lower. .-i c If we look at the market from the viewpoint of individual issues rath than the averages, the technical pattern appears to be somewhat clearer. '- Several pOints are outstanding h ' ; (1) The market leaders of the summer rise appear to have reached or i-' ; .about reached their upside obJectives. They have formed only minor tops ,'. 'but are vulnerable to profit taking. .-f (2) There are numerous better quality secondary issues Just a shade ,,'. tbelow institutional quality that still have favorable technical patterns , t and appear undervalued. Whether or not advances in this type of issue will -,,, .) );ake place immediately, or will be delayed until after a general market re- ;!- actIon, is not certain. However, most of these issues are of good defen- 'sive quality and should react only moderately in the event of a decline. ;- , (3) The above paragraph should not be confused with the outlook for tI.ow grade speculative issues. Most issues of this type have mediocre techni- . cal patterns and indicate very little marketwise at the moment 0 They appear – ;to need considerable time before they complete their base patterns. , (4) From the minor tops built up in the leaders, it is possible to 'estimate a decline to about 265 in the industrial average. This level is ; the first support pOint. After that, another rally attempt is to be ex- Z; l;buti pd down fluctuations might result in building up larger ' The above four pOints suggest that the market will hold in a rane bounded by roughly 280 and 265 for the next few weeks. During this 'period, , Iindividual issues will have Wide price movements. After the pattern is com-to !')pleted, the extent of tile next move will be indicated. The direction of (the move is not yet certain but from my technical work, I believe it will be- downward. ; For the short term trader, a period such as this offers excellent ; trading opportunities. But a word of caution. A possible distributional ,/pattern of this sort ends quite abruptly and can result in severe losses. ', i,The trader should be willing to abandon commitments if storm signals appear.' ,- \. For the intermediate term trading account interested in long term ,tpapital gains, the situation is different. The outlook six months from now ls uncertain. Would confine commitments to better quality secondary issues ,with favorable technical patterns and have 75 of funds liquid as a buying , ,,' ;1.',res er ve. For the long term investor depending on income, I continue to advise ! a fully invested position but would concentrate holdings in issues of prime .' .; investment and defenSive ,quality. ,. ,… September 21, 1951 ;', Dow-Jones Ind. 272.11 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN ., Dow-Jones Rails- 85.34 II,.',, '1 , i This memorandum is not to be construld as tIIIn offer or solicitation of offlHS to buy or lell any 'llcuritiel. From time to lime Walston, Hofftrlln & GoodWin may have an Interest in some or all of the curliles mentioned herein The foreqolnCiJ material has been prepared by us 11 a matter of Informdfitn OTly I' IS based .7 upon information believed reliable but not neceuarily complete, Is not ;uIITanteed .III accurate or final, and is not Intended to forec;1os1 inde;)f'ndnnt lIqulry i;i, -,,,.'' '.;.',-'..;—;;;-,.,..'J..,.;!'J/ ',,,- 2..',.–….;., ,-r..;X'Y,-, ',,-;.';..'';',-.',;;- ',.;'',–;,,'–,''',.!';.''7.', ..', '''- '- ,,'i.;; -.-

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Tabell’s Market Letter – September 28, 1951

Tabell’s Market Letter – September 28, 1951

Tabell's Market Letter - September 28, 1951
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I ';'—T' \—-'-;1',,''.''– '!. ' 7 /' I' ,,. .;, NEW YORK 5, N. Y 0- y 35 Wall Street t1, ' 0 IG BY 14I41 PHILADELPHIA 2, PA 1420 Walnut Street PENNYPAeK-E5'S 7.7 LOS ANGELES 13, CALIF 550 South Spring Street MADISON '2)2 SAN FRANCISCO 4, CALIF 265 Montgomery Street SUTIER 1-2700 -';! ;- I i'',; TABELL'S MARKET LETTER ' ; ,! ,; ,. , , i! ,- n;',1 0 There is no clear-cut indication to be derived from the action of the ,) !.;'averages at the moment. The industrial average appears to be in the process, ' 'of correcting the recent sharp advance to 277.31. It has broken out of its ;, I uptrend channel from the June lows and also is selling below the average price of the last twenty-eight trading days. This week's low was 269.08. f l The next support point is around 265. The rails have shown much better ac- ' . f-;tion and, at the week's high of 87.04, had passed the May high of 86.51 but't. tt',were still below the February high of 90.82. This average is showing indi- ;, ;cations of bullding up a potentially strong technical pattern although more ;,ttime may be required. It has reached its near-term upside objective of 85-87,; f'i;and some consolidation is indicated. For the longer term, the most construct. ;;'ive pattern would be a continued trading range in the 87-79 area. Selection, 'is very important in this group as individual issues have quite diverse .' ; patterns. The only rail on my recommended list is Gulf, Mobile & -Ohio. This ;, ,',.issue is showing above average action and reached a new high for the year ,,, ,!;thiS week at 30 3/4. The June low was 21 1/2. Action of the rails will be '; ,,watched closely and additional issues recommended at the proper time. \( The market appears to be slowly building up a top pattern but there 1/;1',is no indication as yet that this process has been completed. A much clearer picture of the general market pattern is given if one ,', ',' ' f ',Lobserves the action of individual groups and issues rather than the market ','- j averages. For example, while the averages have reached successive new highs ';, i in October 1950 and February, May and September of this year, some of the ,;' more important groups have not followeQ. this ac tion. Mos t of the motor ,;, ,'(stocks reached their highs in October 1950 and most of the steels reached ;,,; ,(their tops in February. In both cases these highs coincided with their long, ,; ,iterm technical upside objectives. Since that time, they have backed and (,; ;,I,filled and have built up potentially dangerous top patterns. The leaders ofc; .I I 1,,Lthe July-September upswing were the chemicals, oils and drugs. In most cases ', \,,;these groups have also reached their long-term object ive at recent highs. ;iTheir patterns differ from the motors and rails only in the fact that they'.; ; have not yet built up potentially dangerous top patterns. It may take fur- , i; ther time and more backing and filling in a trading range before the distri';''', butional pattern is completed. . ' , ','1 In contrast to the groups that appear to be topping out, there are ''', ,i;'-;many better quality secondary issues that have very strong long term pat- I, terns and have done little or nothing marketwise. Many of these issues are i,,just a Shade below top quality, have excellent earnings and are selling at ,2'J; r;prices to yield 6 to 9 or more. Issues of this type appear undervalued , J ('and in a position to move ahead. The 64 question is whether they will do ; i, so immediately while the erstwhile leaders are continuing to fluctuate in a , ; 'wide trading range in the process of building up the1.r distribut1.onal top ; ;, ,patterns or whether they will await a genera'l market decline before start- '; i,,ing their advance. In any event, issues of this type appear to be the most favorable buys,- , 'at the moment. In the event of a continued rise in the market, they should ;;! ''show above average advance. In case of a general market drop, they should ,' 'decline less than the averages and be in a position to lead the next advancer' ,',because they already formed strong accumulation bases. For these reasons, I ' ' have advised that capital appreciation accounts, interested in six months . ' ,hOlding, should be concentrated in issues of this type plus a large cash I/, , reserve of buying power. ' Listed below are some better-grade secondary issues. The sto.cks mark- , ted with an asterisk are new additions to my recommended list , merican News 33 Columb1.a Broadcasting 28 Marshall Field Blaw Knox 19 Ell1.ott 27 National Supply hBucyrus Erie 'BurrQughs '-'i.'Carrier 23 Fruehauf Trailer 17 '-Gray Manufacturing 22 all Printing 26 N. Y. Air Brake 15 ……. Smith, A. 0 18 20th Century-Fox Certain-Teed 16 Hewitt-Robins 27 Western Auto 30 27 21 37 21 49 .- 7, ' , ,- ……,. City Stores 19 'Lerner Stores 26 '; September 28, 1951 EDMUND W, TABELL I';,' WALSTON MOFFJI'IAN & GOODlrl-.1.nlll-lThIS m.morendum is not to b, construed as an offer or sol.citetion of offers to buy or sell any securifi!, From time to time Walston, Hoffrloll'l & GoodWin may !',I have an interest In some or all of the securities mentioned herein The foreQolng material has been prepared by us .Si e matter of ,nformall(,!i 'I'ly . I baed upon Information believed reliable but not nIIcenerily complete, is not lJlIrlanteed as accurat. or final, and is not Intended to foreclose mdEptndnl1f Ilqu.,y -,''''',—,';;'-'J-'——-'''I– —- —,',','- — ;,- –.r—- .,,; . .;–'-''-,,;,-. —.;,-.,—- , ,' ',…

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