Tabell’s Market Letter – October 10, 1952

, l\To l s ton.lIoffnl0n f. Goodwin' ,—-' ,'–,,, —-'c —7 Z/6'd6;UNZ& CJ,kct-'rbe4 ,( NEW YORK 5, N, Y — 35 WII Street PHILADELPHIA 2, PA 1420 Walnut Street r -', DIGBY 44141 PENNYPACKER 5-5977 , 'I TABELL'S MARKET LETTER LOS ANGELES 13, CALif 550 South Spring Street MADISON 9-3232 SAN fRANCISCO 4, CALIF, 2b5 Montgomery Street SUTTER I 1700 .- '7 , , , I The market, as measured by the averages, continues to hold in the ,-', 'trading territory outlined by the September 12 lows of 267.08 in the Dow 'c-'industrials and 96.87 in the rails, and the late September highs of 273.74 ' ',land 102.92. The lows of 268.97 and 99.26 reached earlier this week were , substantially above the support levels and the volume on the decline was ;;,small. This relatively favorable action resulted in a rally that carried , ,to highs of 272.36 and 101.56 on Thursday. The comeback has not been strong ,, '''enough to alter the intermediate downtrend signal i'rom the early August ' ',high of 281.47 and 105.55. The first encouraging signal would be the abil- ,-, ;'ity of the averages to rally above 273.74 and 102.92. This, together with I ;,a pick-up in volume and a reversal of the downtrend signal now in effect Hon the intermediate term indicator, would indicate a reversal of the trend , , ,and a testing c the August highs. None of these three things have happened 'c,' 'as yet.On the bearish side, a decline below 267.08 and 96.87 would confirm , the downtrend already in effect. This would be particularly discouraging c )-1' volume increased sharply on the downside penetration. /, The various averages, more than any time in the past, do not convey', ,'a true picture of what is happening in the market today. Take the Dow-Jones , I 'industrials, for example. At Friday's close of 270.61 they were down only'; ','3.6 from the 281.47 high,- an infinitesimal amount. The same is true of the -, ,various other averages,as noted in the table below ;1 c New York Times Industrials High 1951-192 304.9 Oct.9th Close LOS 294.93 3.2 ,New York Herald-Tribune 100-Stock 152.19 148.10 2.8 ' 'Standard & Poor 90-Stock ,' 202.86 195.10 3.7 ' Of course, the New York Herald-Tribune and Standard & Poor I s aver- , ages are combined averages and include rails also, but the four averages ;,,'all convey the impression that the Market is selling at a price level ',only slightly more than 3 below the highs of 1951-1952. A quite different impression is obtained when the action of indi- i,;vidual issues is observed. Listed below are the twenty-five stocks which head the list of the 50 most popular 1952 mid-year holdings of the invest- ment trusts All of these issues are industrials. Five stocks, two rails ' and three utilities, are left out of the list and the next five indus- ',trials added 1951-52 High 'Amerada 235 ' Std. Oil N. J 85 ,Cont . Oil , \ulf Oil 75 58 Int.Paper ,– Goodrich 56 72 ,Texas Co. 60 ;'Std.Oil Cal. 64 –Gen' 1 Elec. 64 Kennecott , Phillips 92 62 Union Carbide 68 Close 10/10/52 194 75 59 48 49 65 52 53 63 73 55 64 De- crease Hit1951-52 17.4516 Dow Chem.2 11.76 Gen'l Mot. 61 21.33 Std.Ind. 92 17.24 DuPont 102 12.50 Monsanto 109 18.05 West.El. 42 13.33 Mont.Ward 75 17.18 Sears Roe. 60 1.56 Beth Steel 60 20.65 Alum.Ltd. 62 11.02 Skelly 99 16.00 Chrysler 86 Humble 86 Close 10/10/52 41 60 85 87 87 42 57 57 48 49 82 84 68 De- crease , ' 2.38 ;'-', 1.63 ', 18.48 , 14.70 20.18 ,,',' -0- 24.00 5.00 20.00 20.96 17.17 2.32 20.93 –' ,, Remember, this is not just a handpicked list. It is the 25 most popu-' ,lar industrial stocks held by investment trusts on June 30, 1952. Yet, only' ,'six have acted in accordance with the averages. The other 19 have declined 'from 11 to 24. The average decline of the 25 stocks is 13.8 as compared ' ',with slightly more than 3 in the various averages. A 13.8 decline from the, 281.47 high in Dow-Jones industrials would bring the average down to about –', ',243. It appears that 243 would convey a more accurate picture of where the ',';market sta.nds today than 270.67. I have stated in the past that I expected the market to reach 235-220 before the market resunies its broad advance to ,,' much higher levels. In terms of individual stocks, the market is nearer its 0, duwnside objective than would appear from the 270.67 clese in the industrial, a' verage. The 50 most popular stocks is EDMUND W. TABELL ,' I