Tabell’s Market Letter – September 05, 1952

r\, I o l s ion.lIoffmon &- Goodwin NEW YORK 5, N, Y , , 35 Wall Street , '- DIGBY 4414\ PHILADELPHIA 2, PA 1420 Walnut Street PENNYPACKER 55'm ' TABELL'S MARKET LETTER LOS ANGELES 13, CALIF 550 South Spring Street MADISON 93232 SAN FRANCISCO 4, CALIF 265 Montgomery Street SUTTER 12700 ,- , ' — '-, The action of the market over the next week or two should furnish ,-' '/a pretty definite clue as to what to expect from now untiLElection Day. – ,to,The Dow-Jones industrial average is in an almost perfect technical position-' give a decisive indication as to the direction of the next twenty or , 'thirty point move. The industrials, at the August 26th low of 272.28, had ; retraced almost exactly one-third of the 26.77 advance from the May low of -51t. 70 to the early August high of 281.47. This one-third retracement is ,-, 'the minimum amount required for a normal correction of an intermediate move As to the next step, the average then regained the normal two-thirds of 9.19 ',dec line to reach a high of 278.16 on September 3rd. It has now spent two days in consolidation with a low of 275.18. Ability to move acove the nor -'mal two-third retracement high of 278.16 would indicate a continuation of – the main advance and a topping of the early August high of 281047. The up- . side objective would be somewhere in the 285-295 area. However, if the — August 26th low of 272.28 is broken, the indications would point to at leas a two-thirds retracement of the advance from the May lows. This would bring '-the average back to the 265-263 level. But a decline below 272 would also ,' ,break the uptrend line from the May low and the pattern of individual issueS' -suggest that the decline could carry down to a testing of the May low in th '-255-254 area. In any event, a breakout of the 272-278 range could be of con'– siderable importance marketwise. – ' Volume action continues indecisive. It has been several months since 'volume has reached the 1,500,000 share mark. The direction of the market on ',the day that figure is topped may also furnish a clue as to the next inter– tnediate term move. Moving averages of advancing volume continue below the I Levels reached at the February 1951, September 1951 and January 1952 highs.;– This is also true of advances and new highs. A recent compilation showed ' ''that in the twenty-month period since January 1st, 1951, 40 of the stocks 'listed on the New York Stock Exchange made their highs before March 31st, )951 or seventeen months ago. 70 made their highs in 1951 and only 30 — reach new high territory in 1952. For the same period, 30 of the listed ; , ,stocks reached their lows in 1952. In other words, the most profitable posi— tion marketwise over recent months would have been 50 long of stocks and -' – '50 short, provided the selections were correct. A study of individual issues and groups indicates that this select- ,- ive action will continue, but considerably more issues – are potentiallr -unfavorable than favorable. There are many issues that indicate either a possible ten-point advance or a possible twenty-point decline. That is \ hardly favorable odds. On the other hand, there are a relatively few like American Telephone that indicate a possible 25 or 40 point advance against -,- 8. possible 5 or 10 point drop. Several groups have vulnerable patterns. The oils are an example. 'ost stocks in this group reached their highs in January or February and their lows in April and May. In the August rally they failed to reach new ;high territory despite the fact that the averages reached new highs. If they break the April-May lows, a definite downtrend would be indicated. This has already occurred in some of the smaller issues such as Amerada and Texas & Pacific Land which have declined 20 to 25 from their highs. 'If the larger oils follow this pattern it would be 65-70 on Standard Oil -6f New Jersey, 48-45 on Texas Company and 32-30 on Socony Vacuum. Other groups with vulnerable patterns include the chemicals, metals and rubbers -and, to a lesser extent, the paper issues. On the defensive side, utilities 'and food stockS appear attractive. Other groups such as electronics, office I 'quipment, aviation, building supplies and rails might work temporarily — ,iower, but have excellent long term patterns. — ;September 5, 1952 Dow-Jones Ind. 276.50 EDMUND v. TABELL WALSTON, HOFFMAN & GOODWIN , ' Dow-Jones Rails – 102.48 Z. f ,- Th,s have menmIonrtarnldl!udmin 15 nol some to be construed olU lin offer or lol,citation or all of the ,.curities mentioned herein Tohfeofffoerresgotoingbuymtoerrlse1ll any ,.cunties From time hu been prepared by us atso.timmettWerahotfo!,,n.forHmofafrtl'C!nn & Goodwin may only It 1 bliled ; , upon information believed reliable but ot neclluarlly complete, IS ot gUllranleed as accurate or final, and IS not Intended to foreclose Idependent InquIry -;1'-; ,- ';– , , – ,- ,— , , , ,'-' ,' ,\.1,'-,' – – — '– -..Y -. — — -.– – .!.. ;-,a…..i ;;;i.-,…..iZ-1-.;.-il-i.-,-i.ifi&iO,ii.'-..,ha..w….,.; .-I