Tabell’s Market Letter – August 14, 1953

, '………….,.. , . .',.', Walston &Co. !. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Swamld) OFFICES COAST TO COAST CONNECTE; BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lETTER August 14, 1953 The market continued very mixed last week with the volume dropping 'pelow 1,080,000 shares for two out of the five trading days. On Thursday, ,the Dow-Jones Industrials managed to edge ahead to a new intra-day high of '273.30 forthe summer advance. Some of the gain was lost on Friday, when the close was 275.71. , The Industrials still seem to have the potential of advancing to the ,280-285 range before the current intermediate-term rally is completed. The 1n1ermediate-term indicators are still not vulnerable. However, the rails are showing relatively poorer action and are locked in a trading range. At Frlday's low of 104.30 they were in between the June and July lows of 99.06 and 102.22 on one hand, and the July high of 108.34, as well as the May pigh of 109.21. ; Over the next few weeks, the rails must be watched very closely to uetermine whether an upside, or a downside, penetration of this important , trading range impends. ' Continuing my review of the various groups brings us to the — AUTOMOBILE PARTS & ACCESSORIES There are 49 issues listed on the New 'York Stock Exchange that fall into this broad classification. On the Auto- motive Equipment average (24 stocks American Investors Service), this group reached a high in March of 1953 at about 37 1/2. The recent low was 32. , Most stocks in the group, from a technical viewpoint, show more or less of ,a neutral pattern with no indication of a decided move in either direction. The long term patterns, in most cases, are relatively good. Of the more fa- vorable patterns, Borg Warner ,perhaps the most interesting. At around , p't'esent levels of 72, the stock yields 6.9. There is good downside support 'in the 70-65 area. On the upside, the technical pattern indicates a slow uptrend to 95-105. The 1953 high was 86 and the low was 70 1/2. Despite the lengthy strike at the Warner Gear division, only a moderate decline in earn ings is expected. 1952 earnings were 9.33 a share. ' Briggs Manufacturing is more speculative than Borg Warner, but it also has a favorable pattern. A high of 42 3/4 was reached in 1953. The 1946 high was 53 1/2. The stock held in a wide trading area between 22 and 40 for over Six years with most of the time spent in the 28-36 area. It was not until this year that the range was penetrated on the upside. The long term pat- tern indicates considerably higher levels and the 35-30 area should furnish good downside support. At 34 1/4, the stock yields over 11 on the 1.00 uarterly payment which was raised from 751 quarterly. 1953 earnings should be considerably better than the 2.93 shown in 1952 because of the steel strike last year. In addition, a non-recurring net profit of 3.40 from ' the sale of the English subsidiary is also available. Chrysler is Briggs' largest customer and there have been periodic rumors of a merger of the cwo companies, but this appears unlikely. From a technical viewpoint,Briggs appears to be an interesting price speculation. Other issues with favorable Jon3 term technical patterns include American Chain, Arvin Industries, imken-Detroit Axle, McCord Corp., Sheller Mfg., Motor Products, Motor 'Wheel, Stewart-Warner, Hayes Industries. In\the neutral classification I would now include Allen Industries, Amet'ican Bosch, American Metal Products, Bohn Aluminum, Bower Roller Bearing, Campbell Wyant, Clark Equipment, Clevite, Collins & Aikman, Dana Corp., Baton Corp., Federal Mogul, Fruehauf, Gabriel, GOUld National Battery,Hayes Mfb Houdaille-Hershey, F.L. Jacobs, Kelsey Hayes, King Seeley, Midland Steel, Murray Corp., National Automotive Fibre, Raybestos, A. O. Smith, Standard Steel Spring, Therrn,oid, Timken Roller Bearing. Most of these issues may work out favorably, but the patterns are not yet quite clear or more ti;n may be needed. . On the unfavorable side of the technical picture are Budd Mfg., Elec triG Storage Battery, Reynolds Spring and Young Spring &,Wire. I would switch these issues into the stocks listed in the favorable group. Although it Ls an excellent company, I would switch Thompson Products into Borg Warner. Thompson recently rallied from a June low of 46 3/4 to 54 and is 'near overhead supply. EDMUND W, TABELL WALSTON & CO. This memorandum i. not to be construed .1 en oR.r or solicitation of offen to buy or sell any lecurltles, From time to tim. Walston & COlor any partner thllreof, may have an Interelt In lome or aJl of the lecurltl.. mentioned herein. ThII foregoing mate,lat hal been prepared by UI as ,. matter 0 Information only It 11 boned upon information believed ,.liable but not nec.starU, complete, II not guaranteed as accurate or final, end is not Intended to foreclole independent Inquiry ' ' ……. … , …,…. ' ' ' … 3.. .,'''''.''''.' .,. . ' , ;. ' ' . . … ….. . . .;' …