Tabell’s Market Letter – May 27, 1955

Walston &- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,heddl OfFICES COAST TO COAST COIIINECTfC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER May 27, 1955 At the week's high of 425.66, the Dow Jones industrial average had' recovered ,over 70 of the decline from the April high of 432.76 to the low of 412.60. The rails, at 158.90, had recovered approxi- the same percentage amount of the 8.87 point decline from 162.60 153.73. Volume has been relatively small on both the advance and dec line. – It now appears probable that the lows of mid-May will hold and that the market has already embarked on its traditional summer rise. My technical indicator has not yet reversed the sell signal of April, but -i't is almost-cert-ain that-a'buy signal It- is. – sometimes necessary to anticipate a coming signal and it might be wise to do so in this instance.- Just how far a summer rally can carry is problematical. One thing is certain, however. The advance, if it occurs, will be extremely selec- tive. Technical patterns of individual issues vary from strongly bullish almost as strongly bearish. Selection will be most important. In a market sense, I would be inclined to lighten commitments in the 435-450 area. At that level, the averages would be adequately priced on ohe basis of present earnings and dividends and it would be normal to expect at least some consolidation when that level, or its 'equivalent in individual issues, is reached. Below are some comments on individual issues on our recommended list Allegheny Corporation (9), originally recommended at 3 3/4, has moved above 9 again. The Interstate Commerce Commission has authorized the company to issue new preferred in exchange for outstanding preferred. If the exchange offer is accepted, arrears of 130 on the present preferred will be eliminated. Would continue to hold Allegheny common. Indicated objective is 11-12 for intermediate term and 17 for longer term. Allegheny Ludlum Steel (45) remains one of the most reasonably priced – . stee.l i titanium lend long term appeal. Increasing earnings indicate the possi- bility of a year-end extra. Yale & Towne (65) originally recommended at 45, has broken out on the upside of the 53-58 area. The intermediate term objective is 68-72. The recent high was 65. The longer term objective is 104. The dividend has been increased to 75 quarterly. Earnings for 1955 should be sharply above 1954 results. Pan and Am Ib e'CrlibcansinWcoerldDeAceirmwbaeyrs. (20) has h'eld in a trading shelf between 20 1/2 An upside penetration of this area to reach 21 would have considerable technical significance and indicate a possible advance to the 25-29 area. The long term indicator is above 40, but there is supply between 20 and 30 that may take time to penetrate. For new purchases the following issues have shown the best technical action and would recommend that new commitments be chosen from the list below Price Present Recom. Price Advice Stores 38 58 Buy for 78. Goods 26 30 Buy for 44. Oil Calgary & 59 16 – – 1559 Buy for long term gain. Buy -f,or long –to-erm Cities Service 38 50 Buy for long term 81. Ind. 33 44 Buy for long term 70-80. Eagle Picher 22 32 Buy for long term 61. Hewitt Robins 25-30 36 Buy for 43,then long term 85. Lion Oil 35 49 Buy for growth. Mont.Dak.Util. 26 27 Buy for long term 45-60. Penn Salt 45-48 48 Buy for slow 69. Simmons Co. 36 45 Buy for long term 71. EDMUND W. TABELL WALSTON & CO. J iI — —-