Tabell’s Market Letter – January 27, 1956

– – — Wdlston &- Co. – – – – – I n c – – MEMBUS NEW YORI( SroCK EXCHANGE AND OTHER lEADING STOCI( AND COMMODITY EXCHANGS NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,I,Id) I ' OFFICES COAST TO COAST o.;OlNECTEC BY DIRECT PRIVATe WIRE SYSTEM / ' TAB Ell'S MARKET LEnER , January 27, 1956 Market action continues nervous and uncertain with volume remain- ing small. So far nothing in the technical pattern has occurred to change the thought that the downside penetration of the two-month trading area between 490 and 477 in the Dow-Jones industrials indicates at least an intermediate term decline to the 445-435 range. After reaching a low average staged a two-day rally the first overhead supply leveL The subsequentdecHne- readhed an intra-diii low of 463.33 on Friday. It appears that the market is now'undergoing a test of the 458.21 low of Monday. h downside penetration would pre- sumably indicate at ,least a decline to the 445-435 level. tbility to hold around the 458 intra-day low would be constructive for the shorter term and indicate a possible rally to 477-482 where there is very heavy overhead supply that will be extremely difficult to penetrate. The market, as measured by the Dow-Jones industrial average, has held in a range between the 490 high reached in September before the announcement of President Eisenhowerls illness, and tested again on several occasions, and the October low of 433. A downside penetration of this six-month trading area would indicate a downtrend but the objective would not be certain. There is support at 420 and again at 410 and again at 385. I doubt very much if the industrial average would decline below 385. This was the 1955 low reached about ten months ago. of the above is of only academic interest to the long term investor. The favorable fundamental factors that have been with us since the start of the 1949 rise are still with us and regardless cf temporary -tooc.orrections, issues may have -moved-ifiead tQ\'rd higher levels. Some- , rapidly an'd maybe in -need ofcOi1SOli– – -,-,- dation and temporary correction. I expect an upside market for most of 1956. I do not expect the industrial average to move above 1955 high of 490 or below the 1955 low of 385. This does not apply individual issues and groups. 1956 may be quite similar to the 1951-1953 period when some groups were declining while others were advancing and-still others were in consolidation phases. Eventually, in a piece-meal fashion, the,entire market consolidated the rise from 160 to 295 in the industrial average and was ready to move ahead again. I believe we are going through the same price action today with some groups in downtrends and others in uptrends and still others consolidating regardless of the movement of the averages. Under these circumstances, it would appear that in capital appre- ciation accounts it still seems advisable to have a portion of funds in reserve in the hope of purchasing selected issues during periods of pos sib Ie vleakness. However, with the longer term trend favorable and with continued selective price action in prospect, commitments in situa- tions that still appear undervalued should be held ,and added to on minor pr.ice …weakness. '- I believe the issues in our recommended list, which is reviewed on the following page, fall into this category and would confine present commitments to situations of this type. From a technical Viewpoint, the downside risk appears small in comparison with the passible appreciation Most of these issues have been reviewed in recent Blue Letters. rnark(!t letter not, and under no Clrcum,;tanCi!II no to be eOfUltrued 1.1, an oftet' to MU or .. 8Ohcltatlon to buy any MCuntus referred Ul The InformatIOn contained bereln I' not lIuarant.eerl as to or and the f'urn1l!hlng thereof d not, and under nf) C11'euml!otanee5 lSI to 8. re'Presentatlon by Wal…t.Jn & ('0 Ine Ail exprSiOnl!o of O'Plnl0n are to ehanKe WIthout notlee. Wa1.lton A Co.., Inc, or any Offleer, DlfIeetctr or Stockbolder thereof, may h.1ve an 111 the ,ecUfltle! mentIOned I'lerelll This leta!,)J ltlwndl and merely a Informal commentary on day to day market news and nt 11. analYSl9. Adiluonal informatJQn WlUl restleCt to aDlT Ie!untlell referre-d to — h-e–rein -W- l\l be furnlahed upon request. WN 3Ul -.- . ,,' , . . — -2- Present Price Price Recom. Yield Alleghany Corp. Allegheny Ludlum 8 31 Allied Stores 52 American Can 44 American Chain 39 J.mer. Potash B 96 kssoc. Dry Goods 32 Barber Oil 63 -Bltlck & -Decker —,- – — 35- Calgary & Edmonton 21 Celanese 19 Chain Belt Cities Service 58 57 Coca-CoLa 125 Colgate-Palm. 60 Dubilier 35 Cutler-Hammer 77 Dow Chemical 58 Dresser Ind. 51 Eagle Picher 39 Gen'l RvJY. Signal 66 Hall Printing 21 Hewitt-Robins 39 Joy Mfg. 36 Magma Copper 109 Monsanto Chemical 43 Mont.Dakota Util. 26 Pacific Petrol. 13 Pan Amer.-iJorld !- 17 3 16-15 38 4630-33 40 26 59 – 19– — 1631–37 30-35 38 122 6021-22 5738-40 33 22 59 – 23 75 31 26 11 11-13 Objective 12-17. Support at-7. 4.8 Objective 75. Support at 28-26. 5.8 Hold for income. 4.5 Object.60-65. Support at 40-38. 6.4 Hold for income. 2.6 Object.120-150.Support at 95-85. 5.4 Hold for income. 4.0 Object. 80-115. Support-at 50-48. 2.9 – –Object .-68 .Support at32'-SO. 0.5 Buy for long term speculation. 2.6 Hold for long term specutation. 5.2 Object.78. Support at 4.2 Object. 81. Support at 52-50. 4.0 Object. 200. Support at 125-115. 5.0 Object. 100. Support at 56-54. 6.8 Object. 547 Support at 32-30. 4.7 Object.120-140. Support at 65.1.7 Hold for growth. Support ftt 52-50. 5.0 Object. 857 Support at 4.6 Object. 61-r7. Support at 36-35. 4.5 Obj ect. 140-150. Support at 65-62. 6.7 Hold for income. 5.1 Object. 85. Support at 37-35. 5.1 Object. 75. Support at 35-32. Object. 200. Support at 90. 2.3 Hold for growth. Support at 42-40. 3.7 Object.45-60.Support at 25-24. Buy as long term speculation. 4.7 Object.27-45.Support at 16. Sinclair Oil United Fruit Western Auto Yale & Towne – …. – 57 46 5.4 52 47-50 5.8 35 25 4.6 67 45 4.5 43'40 — Object.65-89.Support at 53-50. Hold for income. Hold for income. Object.105.Support at 60-58. In addition to the issues listed above I would add the following issues to the recommended list if the buying levelS mentioned below are reached Stock Jan.27th Close Buying Level ,Blaw-Knox ,Butler Bros. Chicago Corp. Emerson Electric ,r.od Machinery International Nickel Kennecott Copper – Masonite Pittston Co. – 28 1/2 28 1/4 24 7/8 31 53 1/2 79 7/8 116 1/4 35 l/ 39 1/8 27 51-49 70-65 105-100 34-32 34-32 — -.— These issues have not been reviewed, but they will be if buying levels are reached. EDMUND W. TABELL WLSTON & CO. INC. – – – – – – – – – – – – – – – – – – – – – – – – – – – – – ..0