Tabell’s Market Letter – December 10, 1954

IF,.;)'.. , Walston &- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO Sw;twl..d) OFFICES COAST TO COAST CO'lNECTEC BY DIRECT PRIVATE WIRE SYSTEM TAB Ell'S MARKET lEnER December 10,1954 Both averages reached new high territory during the week with the Dow-Jones Industrials at 395 . 67 and the rails at 137.90. My intermediate term technical indicator, which has been in overbought territory for some time, gave a sell signal at Hednesday's close but, in my opinion, this is not an important signal at this stage of the market. It may result in the usual seasonal irregularity which is common at this time of tye year.There is support at 385-380 in the industrials and 135-132 in the rail average. From the present technical action it would appear that a buy signal will again be given later in the month at a price level not too far away from present prices. I believe the market has enough momentum to carry forward , rails'tofhe -425 level fi1the-industri'al'sanci-1'50-155' ih the'- during il1e – , early months of 1955 with speculative issues leading the advance. DOVI CHEMICAL (44) is my first choice for a long term growth issue. No im- mediate price action of importance is indicated, but the long term trend is very favorable. Vlould hold and add to holdings at the originally recommended level in the 40-38 zone. DRESSER INDUSTRIES (35) is a comparatively recent addition to my recommended list. It has pushed through the heavy reSistance in the 30-33 area. The intermediate objective is 40-45 followed by a long term 60-70. There is downside support at 33-31. Hold and buy on minor price declines. EAGLE PICHER (28) originally entered the list in the 22 area. At the recent high of 29, the stock had almost reached the 1946 high of 30. Long term pattern is favorable and would continue to hold for higher levels. EASTERN AIRLINES (39) has advanced sharply from its originally recommended level of 23. The long term objective is 41. At the recent high of 40, this objective has almost been reached and some consolidation may be needed. Vlould switch into Pan American World Airways which appears to be behind the market. EASTMAN KODAK (69) was originally recommended at 43. The recent high was 72. The stock has reached its intermedte term objective, but the long term' pattern stil'lndicateE -higherlev'ets;However -scinie-cOOscllida't-ion ' may be needed and would be inclined to take profits on further strength. ELECTRIC AUTOLITE (37) has been one of the poorer acting issues in the list. There is overhead supply at 40-45 and I would be inclined to switch into other issues with more favorable capital appreciation prospects. ELLIOTT CO. (26) has been a poor performer and has done little marketwise during the general market advance. There is no indication of any immediate move, but the long term pattern is still favorable and I would consel retention for patient 'holders. EL PASO NATURAL GAS (39) has a favorable long term pattern, but there is no important immediate indication. Hould be inclined to transfer into issues with more pronounced upside potentials. FANSTEEL METALLURGICAL (27) has a very interesting technical pattern.It held in the 21-,26 area from mid-1953 until recently. The upside penetration indicates 31-33 forthe intermediate term followed by a higher long term objective. Purchase is advised. FERRO CORP. (31) is nearing the 32-35 overhead resistance and some consolidation may be needed. Vlould take profits and switch into issues with a better upside potential. FLINTKOTE (40) has roken out on the upBide of the long 33-22 accumulation area. The intermediate term objective is 45-50, followed by a higher long term indication. Hould hold and buy on minor declines. There is'sup- port at 37-35. FRUEHAUF TRAILER (34) has broken out of the 22-27 accumulation area and has reached a high of 35. The objective is 41-43. \IIould hold until that level is reached. GARRETT CORP. (36) reached its upside objective at the 1954 high of 41. Iould take profits on strength. c lengtr.y consolidation area appears needed. GENERAL MILLS (74) is a recent addition to the list. It was recommended early in November at 69 and has reached a high of 78. This is an investment issue for long term holding. The long term objective is 90-105.There is downside support at 70-68 where additional purchases should be made. r. './' . — '''-7'' '',.. r..,,,,…,,1! II IP' 1,,''' ,'9,. 'WI' ''ll , -2- GENERAL RAILWAY SIGNAL (39) reached its intermediate term objective at the recent high of 41. While higher levels are indicated over the longer term,some consolidation may be needed first. Would take profits on strength. GLIDDEN CO. -(42) originally entered the list in the 34-33 range. The long term pattern suggests higher price levels, but there is heavy overhead supply at 42-46 that may slow action. Would take profits. GRAY MFG. (14) has done little marketwise recently. It appears to be building up a slow accumulation area in the 13-16 range and it would appear that a return to the 20-21 area is a possibility. hbility to move above the 1953 high of 21 would indicate substantially higher levels. GREAT NORTHERN RAILWAY (34) has broken out of the long 23-29 accumulation area and indicates an advance to the 40-47 area. Buy on minor price declines. There is support at 33-31. GREER HYDRAULICS (17) This stock has done little marketwise for a long time. While there is no indication of an immediate move, a strong tech- nical pattern appears to be forming in the 16-19 area. An upside penetration would 0 indicate 28- 33. An interesting-specul-a'tion o– – – – – GULF, MOBILE & OHIO (35) The upside penetration of the 27-31 base indi- cated a possible advance to 40-45. A high of 35 was reached in August, but the overhead supply at 35-37 held back a further advance. Enough consolidation has occurred to warrant the belief that the stock will push through the supply to reach the indicated objective. Would continue to hold. HALL PRINTING (19) Would continue to hold for generous yield (7.3) and slow long term price appreciation. HERCULES MOTORS (18) is an interesting speculation. The stock has held in the broad 14-23 area since late 1946. Patience may be required, but an upside breakout would indicate substantially higher levels. At the 1953 year-end, the stock had a book value of over 35 a share and working capital of 26 a share. HERSHEY CHOCOLATE (40) has held in the 38-44 area Since 1951. An upside penetration would indicate considerably higher levels. Recommended for long term 'wIding in investment accounts. HEWITT ROBINS (33) The upside penetration of the long 14-29 range indicates an advance to the 50-60 level. Patience may be required, but the stock has a strong technical pattern. Hold and buy on minor dips. There is support at 30. . HOOKER ELECTROCHEMICAL (28) This recently split stock is in a slow uptrend channel. The initial objective is- 32-34 foIl-owed –by a long term–4-0; An -. attractive purchase. There is support at 28-26. IDAHO POVIER (53) is an interesting growth utility. While mJst utilities have reached their upside objectives and appear in need of consolidation, Idaho Fower still has an objective of 68. Recent high was 57. There is downSide support at 50-49. – INDUSTRIAL RAYON (49) has broken out of the 39-45 accumulat.ion area with an upside objective of 58-63. Recent high was 52. Buy on moderate price declines. There is support at 47-45. INTERCHEMICAL CORP. (38) was first mentioned in the letter in the 20 area. It reached its intermediate term objective at the recent high of 40. How- ever, the longer term objective appears to be 48-53 so I would continue to hold. INTERNATIONAL TEL & TEL (25) has reached its first objective at the re- cent high of 26, but would continue to hold as the next objective of 31 appears likely to be reached. JAEGER Mt.CHINE (28) is another recent recommendation. The stock has broken out of the long 19-26 range in which it has held since 1951. The upside objective is 34 followed by a later 42. Buy on moderate declines.There is support at 28-26. JOHNS MANVILLE (86) recently reached a high of 91. The long term objective is 95-105. Would sell on strength into that area. – – -,- JOY MANUFACTURING (40) has shown improving price action recently.The stOck has held in the broad 25-43 area since 1948. An upside penetration would indicate substantially higher levels. Ability to reach 41 would be ini- tially constructive. KENNECOTT COPPER (9'71 entered the list at 63. The upside objective appears to be around 110. WOUld continue to hold and buy on declines. There is support at 90-85. LEES (JAMES T.) (30) has reached a -new high at 30. Would continue to hold. The initial upside objective is 35-37 followed by a possible higher ob- jective at a later date. – LEHMAN CORP. (45) is in slow uptrend.lnitial objective is 46-48,but longer term pattern suggests an even higher level. Would continue to hold. LION OIL (47) haspushed through the heavy supply at 41-46. Intermediate term ObJective appears to be 55-60. Continue to hold and buy on minor price declines. EDMUND W.TABELL WALSTON & CO. – , ,- .