Tabell’s Market Letter – November 13, 1953

– Walston &- Uo. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO SwH,Id I OFFICES COAST TO COASt CONNECTEC BY OIRECT PRIYATE WIRE SYTEM TAB ELL'S MARKET LETTER November 13, 1953 For the past ten trading days, the market, as measured by the DowJones industrial average, has held in an area bounded roughly by 280 and '275. This area of 280-275 has been my upside objective for the advance from the September low of 254.36. Also, the 280-275 area is one of fairly heavy supply so it is logical to expect a technical correction from last week's high of 280.33. As you know, the intermediate term indicator gave a sell signal last week. However, I do not expect the decline to be severe. In terms of the averages, which mean little or nothing, it would be normal to expect a one-third — two-thirds retracement of the September-November rise which ) totalled 25 pOints. A one-third correction would bring the average down to about 272, and two-thirds down to about 264. This week's low was 274.63. At the moment there are no large tops on individual issues, so it would appear that 272-270 would be a more logical stopping point than 265. This correction in the averages could have little effect on individual stocks. Would continue a policy of buying on minor price weakness. The action of the market over the next month or so should furnish an important clue as to whether the expected long term rise has started or whether it will be necessary to spend a further period of six months or so in the broad 290-240 area in which the market has held since 1951. ,Ability of any decline over the next month to hold in the 270-264 area would be extremely constructive. A decline below that level would probably indicate at least a testing of ' the September low of 54.36. Of course, except for near term indications, the averages have meant very little. The action of indiv,idual issues has been so diverse that one could have been, absolutely right on the course of the various averages, but the net result could have been quite unfavorable if the right issues had not been purchased or sold. ' For example, the industrial average has been at 275 many times over the past two and a half years. In the table below I have selected six days, rather widely separated, when the' industrials closed near 275. The first date was over two years ago. 'The most recent date was last Tuesday. I have also added the closing price of nine stocks on the same date. All of these stocks are part of the 30 stocks used in the Dow-Jones industrial average. September January August' April August November 17, 1951 22,1952 29,1952 7, 1953 17,1953 10,1953 Dow-Jones Ind. 275.09 Amer. Smelt. 47 3/8 Amer. T & T 159 Beth. Steel 55 1/2 Chrysler 72 1/4 Gen'l Elec. 63 7/8 'Gen'l Foods 44 1/4 Nat'l Dist. 35 Std.Oil of N.J. 67 1/8 United Aircraft 31 7/8 275.40 275.04,275.16 50 44 3/8 38 1/2 155 3/4 155 1/2 155 53.5/8 50 5/8 50 1/2' 70 81 3/4 79 7/8 59 3/4 63 1/8 68 '1/4 43 3/8 48 S/8 53 1/2 33 26 '1/4 20 84 3/8,78 ' 70 5/8 32 3/4 35 1/4 33 3/4 275.04 31 155 3/8 50 3/4 69 5/8 77 1/4 55 3/8 18 5/8 74 38 5/8 275.89 28 5/8 155 3/8 49 3/4 66 7/8 83 1/4 58 18 71 5/8 42 7/8 If one had sold 100 shares of Standard Oil of New Jersey on January 22, 1952, and switched the proQeeds into General Electric,his holding would be worth about 11,480 .. If ,the jersey had been held, the value would be 7,200. If one had switched 100 Natio'nal Distillers into 100 United Aircraft on September 17th, 195,' ,the holding would be w;orth 4,200 today. If the National Distillers had been held until today, the value would be 1,800. And yet, on al these six dte, the industrials,sold at the same price of 275. All the stocks 'mentioned' are part of the averages. If stocks outside the averages were used, the results would,of course, be even more startling. Selection is, and will continue to be of primary importance re- gardless of the course of the averages. An issue that appears attractive for price appreciation over the intermediate term is Glenn L. Martin. The stock closed at 14 7/8. Since 1946, it has shown very poor priye action as compared with the average air- craft issue. The 1946 high was 4b3/4. The 1949 low was 7 1/8. For the last four years, while most aircraft issues have been advancing, Glenn L. Martin has held in a wide trading area bounded roughly by 10 and 20. It is in the middle of the range now. It begins to appear that this is an accumulation base. The technical pattern is very interesting. The interme- dlate upside potential is 23-25. The longer term possibilities are even 1fulrtI''TItkYrPa11.ls nt to b, consltl,lld 'trIW/y have an Int.res! 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