Tabell’s Market Letter – November 06, 1953

Walston 5- Co…… ., .', …. L.. , MEMBERS New VORl( SleCt( EXCHAN&E AND OTHER LEAOIN6 STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (SwH…I.ndJ OFFICES COAST TO, COAST CONNECTEC BY DIECT 'ItlYATE WIRE SYSTEM TAB Ell'S MARKET lETTER November 6, 1953 I have just returned from a month's tour of Southern Calif- ornia, Arizona, New Mexico, Texas and t;1e 30ut. The trip has confirm- ed my long term optimism ,09 our economy t;lat was engendered by my earlier trip to the North, Canada, the Northwest and Northern California. The growth potential in our economy is tremendous and, at present prices, the great majority of common stocks in sound, growth companies have not even started to discount the growth potentials. The long term trend of the stock market is, in my opinion, definitely upward. Because of my trip, I have not issued a letter for the past three weeks. My last letter on the general market was dated October 2nd. On that date, the Dow-Jones industrial average closed at 266.70. It had rallied from the September low of 254.36. In our October 2nd letter I anticipated a further rally to the 275-280 level. Today's high was 280.25. Regarding individual issues, I discussed the advisability of buying the blue chip issues that suffered only a mild decline, or buying the issues of above average quality that had suffered severe declines from their highs. I finally reached the conclusion that the wiser policy would be a combination of the two. It has turned out that both groups have advanced, but the blue hip group has turned in the better performance, as shown in the table below. The first column shows the stocks in the blue chip group mentioned in this letter, together with the October 2nd closing price and the November 5th price. The second column shows the price action of the stocks suggested as buys in the group that had already suffered severe price declines Oct. 2nd Union Carbide 65 3/4 General Electric 75 1/8 National Lead 33 5/8 Intern'l Paper 52 Scott Paper 65 1/4 duPont 102 General Foods 56 5/8 Nov. 70 5/8 83 3/8 36 7/8 57 68 3/8 104 3/4 59 Deere & Co. Amer. Cyanamid Food Machinery Amer. Viscose Oct. 2nd 25 1/8 45 3/8 34 1/4 38 3/4 Nov. 5th 26 1/4 48 1/2 37 1/4 39 1/8 My only purpose in mentioning these price advances in both individual stock and the averages is to point out that the market has advanced quite sharply and may be in need of a correction or at least a consolidation. The industrial average is in a, supply area and the rails, which have shown below-average action on the rally, also run into heavy overhead reSistance at 100-102. Friday'S close was 98.25. The intermediate term technical indicator Which signalled a buy on September 22nd has reached overbought territory and signalled a sell on Thursday. This gauge is a purely mechanical indicator, but its record of accuracy in the past has been quite good. , In other wordS, without altering my long term bullishness in any way, I would be inclined to expect at least a moderate sell-off in the near future. If this occurs, it should be a welcome develop- ment and an opportunity to buy selected growth issues at moderately lower levels in anicipation of a long term advance in prices. Any further strength should be used ,to lighten holdings in groups that still show potentially vulnerable patterns for the near term. Some of the Oils, rails and rubbers fall into this category. EDMUND W. TABELL WALSTON & CO. This memotlllnd.llm Is not Ie b. cons'tlled bmel,edheu.p…onlinlnIfnortm.fntltonIn lome or believed II of r.llebl. n off.r or lollclt.tlon of off.n to the sKurltl.. mentioned heln, The fboury.qooirfu 11 .ny tHurlti.l. From tim. to tim. materl.1 hu been prepared b, UI Wolston & Co, a. a matt., of or ,any pertner thereof, information only It is but not n.celledl, com pl…. Ii not 9u.rant..d ., accurat. or finel. end is not Intended to foredose independent InqUiry '.' ,', …..,';., ''',','',,;,.', ;''./'; '' .',.,' , …. . ',' ;…..;….,..;.;., ' ….. …….;.. ,'……;.,;;;;;-…–……-,- …… . . . . . 0… , ; – . . . . . . '. . . . ,. . , . ;.. . . . . .; . ;;.;' . ; . ' . . . . .- . . . . . . . . . . . . . . . .