Tabell’s Market Letter – May 28, 1954
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Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY eXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO lUGANO (Swih,dd) OffiCES COASl TO COAST CONNECTEC. BY DIRECT PRIVATE WIRE SYSTEM TAELL'S MARKET LETTER May 28, 1954 It has become increasingly evident over the past week that the character of the market is slowly changing. The advance has broadened out and the blue chip investment issues are being replaced as market leaders, by issues of good but slightly lower investment quality. This, of course, was to be expected. The higher-grade investment issues have been in the foreground of the eight-month rise from the September lows. They have ad- vanced, in some cases, as much as 50 to 75 as witness General Electric from 69 to 124, Minneapolis Honeywell from 56 to 92, and Westinghouse from 40 to 73. These advances compare with a 28.rise in the Dow-Jones Industrial Average. Many of the higher-grade' issues-have reacned their immediate upside objectives and, from a technical point of view, are in need of a period of rest or consolidation. While this is taking place, the leadership of the market may be taken over by some of the light blue chip issues that still offer good value and relatively high yields. J'. few of these issues have already scored good advances since the first of the year but issues lik Bullard, that rallied from 26 to 49, Cornell Dubilier from 22 to 32, Cutler Hammer from 39 to 58, Illinois Central from 66 to 98, National Gypsum from 21 to 30, North American AViation from 20 to 34 and Sperry Corp. from 44 to 63 have been in the minority. Most of the secondary issues have not kept pace with the high-grade investment favorites of the institutional investor. However, there are still a large number of secondary issues that still indicate the possibility of higher levels over the intermediate term. Some of these issues have already had a fair advance but still indicate, from a technical viewpoint, a further. rise. Others are still holding in, or have just emerged from long trading areas, and have less downside risk in the event of a normal technical correction. I am listing a few issues below together with their intermediate term upside objectives and near-term downside support levels. They are of varying investment quality but all q,PRar tQ. b .inafE-vorablefundamentaLposition. , .- -. STOCK Allegheny Ludlum …………. . Allied Stores ………. American Potash B.. '.' …….. . Babcock & Wilcox …………. . Blaw-Knox …….. Celotex ………………. Flintkote ………………. Fruehauf Trailer …………. . Gulf Mobile & Ohio ……….. Hewitt Robins …………… Industrial Rayon ………. Lehman Corp ………' ……. Lowenstein M.) ………… Missouri Kansas & Texas Pfd .. Pennsylvania Salt ………… Pullman ……….. Robertshaw-Fulton ……….. Sto Joseph Lead ………….. . Simmons Company ………….. . Union Bag & Paper ……….. Union Oil ……………. United Fruit …………….. . U.S. Steel ………………. . Victor Chemical ………….. PRICE 33 44 44 52 20 20 31 25 30 30 45 39 35 65 47 51 21 39 35 53 49 46 49 33 UPSIDE POTENTIAL 40-44 55-60 55-60 60-65 26-28 30-32 40-45 34-36 40-45 37-38 58-61 46-48 45-50 85-90 57-64 65-70 28-35 48-50 47-52 65-70 60-65 57 -60 60-65 – 39-43 DOVINSIDE SUPPORT .. 30 40-39 40-39 48-47 19-18 18 29-28 24 28-27 28 42-41 36 32 62-60 45 48 20-19 37-36 34-33 50-48 46-45 44-43 44 30 Very few of these stocks are in the Averages so it would be possible for issues of this type to score worthwhile advances without having much effect on the Averages. That is why I have prOjected a trading range of only 335-300 in Dow-Jones Industrials for the balance of the year. EDMUND vi. TABELL WA.LSTON & CO. This may memorandum IS not 10 be hdve '111 onterest In some contrued or all of a 'HI offer or solkdailon of offers to buy or set! any 5eculle5 From I!mc 10 lime the H!(lir,toe5 mentioned herein The foreqoHlg mlerlal h.H been prepared bv us Wdlsion & Co. as a matter of oInr foarnmy atpiaorntnoenr lyther1et ofI, b,Hed upon ,nlorma!oon belleyed relllble but not necessarily complete, is not guaranteed .n accurate or 'lnal, lnd I not Intendd to 'orecloe Indepennl InqUlrv