Tabell’s Market Letter – January 09, 1953

-. \ ; ,' ,, , 'c NEW YORK 5, N. Y PHILADELPHIA 2, PA 35 Wall Street .. ; ; DIGBY 4-4141 ,; f 1420 Walnut Street PENNYPACKER S 5977 0- . TABELL'S MARKET LETTER — -,- ,''.,'./';,,I' ,. LOS ANGELES I J, CALIF. SAN FRANCISCO 4, CALIF 550 South Spring Street 2b5 Montgomery Street MADISON 9 3232 SUTTER 12700 '' The market declined sharp on Friday with the Dow-Jones industrials ,'.' reaching a low of 286.09 and rails falling to 108.47. This is a de' f cline of almost nlne points froml the recent 295.06 high in the industrials; 'and a drop of six points from t;h'e 113.94 high on the rails. At the lows, ;., ! the industrials had lost only a , 25 of the thirty-two pOint rise from ;'' the October lows. The rails retraced about 30 of their seventeen point , ' ,rise. Normal technical correctionSusually retrace a third to a half of the I advance so the decline could carry down to 284-280 and 108-105. However, !', ;', no important tops have been formed as yet. This would require more time. Action of the market should be watched closely on the next rally. \,- LONG TERM INVESTMENT I cohtinue to advise a 100 invested position . ; in accounts concerned mainly withl income and longer term appreciation. Pre-';;, sent holdings of recommended iSsuys should be retained, but would add to , -', holdings only during periods of market weakness. The following issues appea, I 'attractive around present levels , , OTIS ELEVATOR (39) appears to be an attractive issue for longer term, ,,',holding. 'Ehe 1950 low was 30. Sinpe then the stock has been in a slow up- .', r'-'i,utrpesnidde. For almost two penetration to years the stock held in the 41 1/2 indipates a probable 35-39 range. The recent move to the 45-55 area. \ ,There is downside support at 38-31. The' stock yields 6.4 on the 2.50 f,; ';dividend. Earnings for 1952 are estimated at Slightly above 4.00 a share. ') . In risk accounts concerned ainly with CAPITAL APPRECIATIOH over a F' . ,', six months period, I advised in December that invested positons be cut .' ; from 60 to 50. Remember purchass in this account are to be held for a'.;.! tminimum period of six months so that the outlook for that period must be ;;. ). considered rather than the near term trading outlook. On advances to the ; 295-300 area in the Dow-Jones industrials, would be inclined to further i; ; cut invested pOSition to 33 1/3.1 ,., '-i ; The WESTERN MARYLAND(28 1/2) was recommended in the 21-19 buying area. stock has been strong recently and reached a high of 29 1/2 on Friday. ,.-i- –lOn my technical work, the upside penetration of 18-24 base indicates a ,., .;potential of 30 followed by 38. Whether it will be necessary for the stock ', ;. to consolidate before attempting to reach 38 is problematicaL The stock '' 'would meet strong support on the downside at 25. The longer'term objective , of this issue is considerabl;r higher. ( ) ., NORTHWEST AIRLINES (14) has I been a laggard issue for a long time. '/ ,,', Like all the airlines, it declined sharply from the 1945-1946 highs. In '; the case of Northwestern, the decline was from 63 1/2 to 7 in 1949. The ,.; I, ,stock shows signs of forming a base pattern of considerable size. It has ',held in an area bounded roughly by 12 and 16 since 1951. There is consi- derable overhead supply at 20-22 hat would undoubtedly temporarily halt 'any advance but the potential base suggests a long term possibility of higher levels. The issue presentsian intersting speculation long term capital appreciation. The stock pays no dividend so if income is of im- portance, suggest Northwest Airlines preferred which is convertible into ,1 1/2 shares of common. The prefrred is selling at 23 3/4 as against a value of 21 for 1 1/2 shares of common. The preferred has paid divi',dends intermittently but is cumulative. Quarerly dividends are 28 3/4 .or 1.15 annually to yield approximately 4.8. It should advance 1 1/2 ;'points for every 1 point advance in the common. .I I EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN January 9, 1953 ' -I ',0 . , ;- – /! This memorandum is not to be construed as an offer or solicitation of offefs to buy or sell any seCUrities From t.me to time Waldon, Hoffman & Good…. n may ,'( have an Interest in lome or aJl of the ,ecuritles mentioned herein. The fore90ln9 mllter..,r has been prepared by UI III II mtltter of informllhon only. It IS bllsed l,, ;. upon Informlltlon believed reliable but not neuutlflly complete, is not ;Iuaranteed al accurate or final, lind is not .ntended to foreclose Independent InqUiry /f., -',,- , ' ',' -,' ','2',!,'' ',',,!';.,i.,,t) ',,tJ ' ',',,' , , '''- ,-.. -.,. . '-, ;' -','-'.,. -,',,- ,''- ,',, -'-.,.', ,',;-!'' ,,-,' I