Tabell’s Market Letter – September 28, 1951

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—- .,,; . .;–'-''-,,;,-. —.;,-.,—- , ,' ',…