Viewing Month: November 1957

Tabell’s Market Letter – November 01, 1957

Tabell’s Market Letter – November 01, 1957

Tabell's Market Letter - November 01, 1957
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———————————————– NEW YORK Wdlston &- CO.—–Inc. Members New York Stock Exchange PHILADELPHIA LOS ANGELES SAN FRANCISCO 8ASLE (Swi,,.,I.ndj OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER November 1, 1957 As mentioned in last week's letter, the quieter market of the past fortnight has given time for a calmer appraisal of the market probabilities over the nearer future. A number of points should be stressed. (1) The Dow-Jones Industrials at the October 22nd low of 416.15 dropped just a shade below the first broad support level of 440-420. The low on the Standard & Poor 500-Stock Index at 38.84 was at a comparable point. It is possible that this may be the low of the move, but is by no means certain. A lot depends on the business picture, which, from car loadings and other indicators, appears to be deteriorating. A lot depends – also on -wnen the -Pe'd-eral Reserve-Board reverses-'its tight money'policy. lot —, depends on the foreign picture. (2) How much farther can the market go on the downside if the recent lows are penetrated One clue from a technical viewpoint is the top formation built up on the Stan- dard & Poor 500-Stock Index. The top has several downside potentials that can be pro- jected. While some interpretations count lower than the one mentioned below, the most plausible reading is a decline to 37-36 as against Friday's close of 40.44. This would be roughly equivalent to 400-375 in the Dow-Jones Industrials. Such a decline would be a 50 retracement of the entire advance from the 1953 low of approximately 254 and would also be a 25 overall decline in the averages. This would be equal percentage wise to the 1946 decline. There is a broader, more uncertain formation that has an even lower po- tential. (3) How far can the market advance A normal technical recovery of a decline like the 107-point drop from the June-July highs usually retraces a third to one '-half of the drop. This would indicate a possible advance to 452 on a one-third retracement and about 470 on a half retracement. However, there is now the broad supply area overhead which consists of the broad eighteen-month trading range. This overhead resistance starts at slightly above 450 and is particularly heavy from 460 to 470. It will be extremely difficult for -t-his-ar,ea-to-be pedodLs-consumed-in-building-up a new base sufficiently strong to push into the heavy overhead supply. (4) A great many individual issues have reached downside objectives, but many others could work lower. However, most potential base patterns have been destroyed by recent market action and, as noted above, it will take a long time for new patterns to form (5) Some groups have not destroyed their potentially favorable patterns. In most cases, the groups are in the consumer goods areas. The following groups fit into this category Food Chains Tobacco Finance Food Products Utility Soft Drink Retail Chain Drug Containers Electronics-TV ..,.- This falls in line with fundamentals. It would appear that personal income will remain high and unless a more drastic dip in business occurs than is now anticipated, consumer spending should also hold up very well. I believe portfolios should be strong in the above groups. \ (6) There are certain other groups that appear to be nearing bottom and that could enter the favorable classification. These groups should be watched closely for such a signal. Candidates for this gr.oup includePaper, Rubber,Glass, Aircraft Manufacturers, Chemical, Natural Gas, Building Supply, Automobiles. (7) Would continue the 50 liquid position in semi-investment and intermediate term trading accounts advocated in last week's letter. The 50 held in stocks should be mainly in the favorable groups mentioned above. When there are more certain signs of a market bottom, the balance of funds should be invested. This is not yet apparent from my work. (8) The long term favorable outlook for the economy and the market based on an increasing popUlation with increasing needs and the ability to meet these needs is still the important thing for the long term investor to remember. Whatever periods of price weakne that will occur in tj1e next year or so will probably present the last opportunity for the long term investor to purchase sound common equities before they rise to a higher plateau in the J ThIS market letter 15 not, Ilnd uncle no clrcumstnnces IS to be ns, an oEDMlaJrNd)nlWnJlO;J1ABELbrltw5 referred to herem The mlocmnllOn Lontnlncd he ('In IS not g1l.1rnntccd to 3'Clll..tcy or completeness and the furnlshlnJ, theru)f not, 'Inri no… I to be con;ti ued as, a representa- tlOn hy & Co, Ine All c'lpre5Slons of OPInIOn are subject to and Officers, Directors, Stockholders and E1Y1II1oyC'e5 theleof, purchMe, sell and m'l.Y ha\c an In the ;e(urltJe; mar e Id'h.r Ittended and merely 8S II general, lllfolmnl ('010l11en1ary fin to ,lal( nl!llklt news nnrl lint a5 n complete A,ldltilln.li lllformntion '\Ith lC&pect to nny ;;\l('UrtlICS refclred to heleln wilt be fUII1I;hed upon rellllcst \\\ 301

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Tabell’s Market Letter – November 08, 1957

Tabell’s Market Letter – November 08, 1957

Tabell's Market Letter - November 08, 1957
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&Co.Walston—-Inc. Members New York Stock Exchange NEW YORK PHILADELPHIA lOS ANGELES SAN FRANCISCO BASlE (Swaml.nd) OFFices COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER November 8, 1957 President Eisenhower's address failed to have the tonic effect expected and the Dow-Jones Industrials dropped to the middle of the week's range of 440.60 high and 425.46 low to reach a low of 432.11 on Friday and closed at 434.12. The high of the advance from the October 22nd low of 416.15 was reached on October 31st at 446.06. This is just a shade below the heavy upside resistance at 450-470. The market is undergoing another test of the first downside support level in the broad 440- 420 range. A dip to a new low would probably indicate 400-385 in the Dow-Jones Industrials and 37-36 in the Standard & Poor 500-Stock average. tance continues at 4 5 0 – 4 7 0 . – – – – . – The upside .- res.is-.- A few more random observations on the market are noted below. (1) The market is much lower than the various averages indicate. While the Dow-Jones Industrials and Standard & Poor 500-Stock Index declined around 20 from their highs, many individual stocks and groups declined 40 or 50, or more. Trendex of San Antonio, Texas, issues a weekly composite trend of all the stocks on the New York Stock Exchange. This index recently was at a level equivalent to where it was in July, 1954. At that time the Dow-Jones Industrials were selling at about 340 as compared with the recent 417 low and the Standard & Poor 500-Stock Index was selling at roughly 30 compared with the October 22nd low of 39. (2) This discrepancy is partially explained by the fact that the equities of the larger companies that are favored by institutional investors have held up relatively better than stocks outside the range of the favorite fifty. General Electric, for example, at a price of around 60, is selling at approximately twenty times earnings to yield 3.3. On the other hand, American Brake Shoe, a good quality issue that has shown a profit every year since its incorporation in 1902, was sellingi,at.its recent price of, 37, at-under seven-times anticipated earnings and at a probable yield of above 7. There are many price discrepancies of this nature in the present market. (3) Over the nearer term of the next six months or so, yield issues like bonds and preferreds, have a clearer pattern than that for most common equities. Inflationary tendencies seem to have temporarily receeded, and a slow and gradual relaxation of tight money is indicated. The result should be a firmer bond market gradually gaining upside momentum in the next few months. Where it is possible to find bonds and preferreds convertible into common and selling at reaso n able price levels, a double advantage is gained. A list of favored issues is being pre- pared and will be issued shortly. (4) In the contemplated lengthy period of consolidation and adjustment indicated in the stock market, there will probably be as much diversity and selec,.. tivi ty as was experienced in the advancing phase. Several groups appear to be forming potential base patterns, although this may take more time. Some aircraft manufacturing issues are a case in point. Downside objectives were reached early in the decline and fairly good potential base patterns have been formed. The electronic group alSb has been showing above average action as well as the consumer goodS' groups such as the drugs and food chains mentioned in letters over the past few months. Would continue the policy of concentrating on groups with favorable patterns and eliminate unfavorable groups on strength in order to build up a 50 liquid position to take advantage of later buying opportunities. EDMUND W. TABELL WALSTON & CO. INC. ThiS '!1nrket leHer IS not. and under no Circumstances IS to be construed as, an offer to sell or II sohcltatlOn to buy any SeCUTllle8 referred to herein The mformatlon (ontrllnecl hC!rC!1n IS not ItllnranlC!cd as to or completeness and the thereof IS not, and un del' no crrcumstall('es IS to be construed as, a reprll!cnta- 1!on by &. Co, Inc All expre;SlOns of OPInion are subject to chanJ!e Without nohcc \\'alston & Co, Inc, and Officers, DIrectors, Stockholders and F,mplo(.'Cs theleof, sell and mfl.Y hn.. e an Illtcrest In the mcntlOned herem ThIS mnrket letter IS wtended and presented mcrely a! a general, Inform,1i commentary on .iay to dny market nes and not as a complete Rllalyu; A,(dltlOnal mfOlmntl0n \\Ith 1CllJect to nny sccuntze' referred to herein ill be fUI up')n request \\.. 301

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Tabell’s Market Letter – November 15, 1957

Tabell’s Market Letter – November 15, 1957

Tabell's Market Letter - November 15, 1957
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Walston &Co. Inc. ….;….;;..; Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE ISwit,l.nd) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER November 15, 1957 The reversal of the tight money policy of the Federal Reserve Board late Thursday afternoon by a cut in the discount rate from 3 1/2 to 3; brought about a sharp rebound in both the bond market and the stock market. Stocks opened sharply higher and retained most of their gains. At the intra-day highs, the Dow-Jones Industrials reached 442.82 and the Standard & Poor 500-Stock Index attained 40.65. These prices compare with the October 31st highs of 446.06 and 41.58. The close was at 439.35 and 40.33. In the past four weeks the market has ranged back and forth in a wide trading a.rea.- This-hasbuilt up-apotentlsTbase paRer'fiwl1n a rally posslbiTity–somewhereirt' – the 450-470 range in the Dow-J ones Industrials and 42.50 – 43.50 in the Standard & Poor Index. This about coincides with the heavy overhead supply in both averages and also the attainment of a third to a half retracement of the decline from the June highs to the October lows. As mentioned in previous letters, would take advantage of strength to switch from unfavorable groups ,as far as the intermediate term technical pattern is concerned, into groups with more favorable potentials. In the process of doing this, I would set up a 50 liquid position in order to take advantage of later buying opportunities. In the favorable classification are included such groups as – Food Chains Tobacco Drugs Utilities Department Stores Meat Packing Natural Gas Soft Drinks Containers Fertilizer Electronic – TV Cement – – These groups, it will be noted, are mainly in the consumer goods category. per-Bonal hold up of a in business and that consumer spending will be well maintained. It is probable that con- sumer goods stocks will regain some of their former popularity when they were the leaders of the 1942-1946 advance. As the pattern gradually clarifies, other groups will be added to the favorable category. Groups showing unsatisfactory technical action and to be sold on strength includ Steel Machinery Aluminum Railroads Sulphur Business Machine Coal Air Conditioning Oil Most of these groups are in the heavy industry or capital goods category. With the recent Business Week survey indicating a probable 70/0 decline in capital spend- ing for 1958, it is doubtful whether these groups will show above average action. How- ever, capital spending will be on a high plateau and will again eventually expand. How- ever, a long period of backing and filling will be needed before they are again ready for a full scale advance. ' In last week's letter we mentioned that bonds and preferreds had a clearer upside pattern than most common equities and, with inflationary tendencies receding, a slow and gradual relaxation of tight money was indicated. This week's action by the Feder-al-Reserve Board the first of severarsteps to-graduallyreverse a- policy that has been in effect for a long time. Probably more than one step will be needed to reverse the drop in business pattern since mid-1957. It must be remembered that it took over two years for the tight money policy to reverse the business boom which the Federal Reserve Board thought was excessive. The first upward change in the dis- count rate was in April, 1955 when the rate was increased from 1 1/2 to 1 3/4. In six successive steps, culminating in August of this year, the rate was raised to 3 1/2. It is probable that over the next year or so further downward adjustments will be made before the business pattern finally consolidates and adjusts and is ready for another advancing phase. In the meantime, Just as in the recent advancing phase, there will be coptinned SAlectjvjty dJJring the perjod Of consoljdatjon and adjustment market letter IS not, nnd under no ClfcumstaTICcs IS to be construed an offer tu ;ell or II herem The mformatlOn umtninc(j hmcln nut ae; to nCClIIRC) or and the tlrnlshlnl thereof IS as. a representn tlon by \\'nlston & Co, Inc All or opinion are 'lubJcct to ('hnnle WIthout noticc…. Stockholders and bmpoyee'!. thereof. pult'hase, sell and mal hn\'c an mterest m the securltlCs mentIOned herem merely Il'l a general lnfol m.ll Comm!!ntar) 01\ dll) to dllY nlflrh.!!t new'!. and I\ot as a complete analYSIS Addltmnal Lllformatlon \\ Ith respect to an) 9ccuntics rEferled to herem will be furm.,hed upon reque'lot ' \ \ ' I \ ' 301

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Tabell’s Market Letter – November 22, 1957

Tabell’s Market Letter – November 22, 1957

Tabell's Market Letter - November 22, 1957
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Walston &- Co. – – – – l n c , – Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swaml.nd) OFFICes COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER November 22, 1957 After declining on Monday and Tuesday with the Dow-Jones Industrials reaching a low of 427.23, the market reversed the trend and rallied sharply on increased volume for the balance of the week. Intra-day highs of 445.64 and 41.13 (Standard & Poor's 500-Stock Index) were reached on Friday as compared with 446.06 and 41.58 reached on October 31st, the day of the high since the October lows. The market has now spent twenty-four trading days in a thirty-point trading range. As mentioned in last week's letter, there is now a sufficient base to indicate a rally potential into the lower part of the heavy overhead supply area above the market. This-overhead'supply-extends between the450-470-area with-the-concentration-between 460-470. Short term indicators point to the probability that this level can be reached unless sudden international developments alter the pattern. The market has suffered a severe decline since the July high of 523.11, the third of a series of triple tops on the averages. If the highs of each individual stock in the Dow-J ones average since 1955 are used, regardless of when the high was reached, the average reached a high of around 590 assuming that all the highs were reached on the same day. It is interesting to note that some stocks like Chrysler, General Motors and Westinghouse reached their highs in 1955. Only nine stocks out of the thirty reached their high around the time of the July, 1957 high in the averages. A decline from 590 to 417 is equivalent to roughly 300/0, as compared with an actual 200/0 decline from 525 to 417. After a decline of such magnitude, investor confidence has undoubtedly been badly bruised. It usually takes a considerable period of time to repair the damage. For example, after the 1946 drop of 250/0, the market consolidated from September 1946 until November 1949, a period of thirty-nine months. After the 1937 decline, an even longer time period was required. \ The recent market decline, from a technical viewpoint, destroyed a large -.- . number'of potentialpatterns. It will require a considerable period of time to these patterns. In some cases, these patterns can form very rapidly, particularly if the news is dynamic. For example, the missile stocks formed base patterns in under a month. However, most groups will require longer time periods. It took Bethlehem Steel three years between 1951 and 1953 to form the pattern that indicated the move from 12 (adjusted) to 50. It took Joy Manufacturing almost eight years to build the pattern that suggested the move from 12 to 75. These are extreme examples, but probably quite a lengthy time period will be needed depending on the volatility of '. each individual stock. Thus it would appear that after a rally, the market will again drop back into a broad trading range in order to enlarge the potential base. This backing and filling movement could occur several times. If the October lows hold it is possible that b\oad trading range may be within the confines of roughly 470-420. The easing of tight\money would indicate that any drop in business might be held within reasonable bounds even if the 420 level were broken it ,,ould appear that the 400-385 level woIld be the next support point. This does not imply that the market will be a static affair. Individual stocks Inwill have selective action both on the upside and downside. Some groups have held patterns intact. included this classificatio;'; are- – Containers' Drugs Electronics Food Chains Soft Drinks Tobaccos In addition, there are m,any individual securities in other groups that also have retained their potential patterns. We will try to draw your attention to such situations in subsequent letters. EDMUND W. TABELL WALSTON & CO. INC. ThiS market letter IS not, and under no Circumstances 15 to be construed as, an offer to sell or a soiLcltatwn to buy any seCUritIes referred to herem The InformatIOn contamer! hClem IS not Iuarll.nteed ns to accuracy or completeness and the furmshinl therc6f IS not, and unrler no UTcum;tllfices 1; to be ('onstrl.lcd as, fI leplcscnta- lIOn loy \Vulston & Co, Inc All expreSSions of opinion are subject to wlthuut notlcc alston & Co, Inc, and Officers, Directors, Stockholders and Employees thereof, purchase, sell ani! may ha\e an mterest m the seCUrities mentiOned herem ThiS market 1('tter 1; Intended and presented merely all a genera\, 1l1formnl commentary on rldY to day market nc\\s and not a; a complete analYSIS Additional mrornmtloa With rcspect to nny securitIes referred to herein \\111 be fUI upon I equesl \\;..; 301

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Tabell’s Market Letter – November 29, 1957

Tabell’s Market Letter – November 29, 1957

Tabell's Market Letter - November 29, 1957
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Wdlston &Co.I —–Inc. Membe,'s New York Stock Exchange NEW YORK ' PHILADELPHIA ' LOS ANGELES ' SAN FRANCISCO ' BASLE (Sw;hed.,d) OFFICES COAST TO COAST CONNECTED 8'1' DIRECT PRIVATE WIRE SYSTEM I TABELL'S MARKET LEnER November 29, 1957 The sudden and unexpected news of President Eisenhower's illness brought about another week of wide and hectic fluctuations in the stock market accompanied by a heavy volume of trading and a late tape. The Dow-Jones Industrials reached a low of 434.34 on Tuesday and a high of 452.49 on Friday. The comparable range on the Standard & Poor's 500-Stock Index was 40.00 and 41. 95. 'What technical implication can be drawn from the wide price swings that have occurred in the market in recent weeks On the constructive side, the averages, in their decline from the July highs, have held at a level just a shade below the first support -level-of-44-420(42-4)onthe-S-&–PIndex)'envisioned in my 1957 After reach– ing a low of 416. 15 on the Dow-Jones Industrials on October 22nd (38.84 on the S & P Index), the market rallied to 446,06 and 41. 58 on October 31st and held well above the October lows on four declines since October 31st. It has now penetrated the October 31st highs. However, it must be realized that there is heavy overhead supply above the market. The Dow-Jones Industrials held in a range between roughly 525 and 450 from late 1955 until early October of this year. The market has rebounded to the lower part of this area. From a technical viewpoint, it would appear that it will be extremely diffi- cult for the averages to do much more than attempt to advance to the lower part of this area at this time, Probably 460-470 is the most optimistic projection prior to a lengthy basing out period in the broad 470-420 area, or somewhat lower if the business picture deteriorates at a greater pace than now envisioned. This is the technical pattern suggested for the general market. Individual issues have quite different patterns with some indicating above average action and others below average. Under present circumstances it would appear wise for the inter- mediate term investor to use current strength into the 450-470 level to eliminate the poorer acting groups; establish a 50 liquid position and replace issues sold with better acting groups during periods of weakness. The groups showing the most favor- !!lle least favosable rel,.atiye.strength havel;eel! listedip.r.ecent.bulletini . . Some of the groups listed as favorable have shown excellent price action in recent markets. The food chains are a case in point, with some issues reaching new high territory. AMERICAN STORES (64) which we have mentioned as an .interfsting buy in September, reached a new high last week. The TV-electronics have also outperformed the market with ZENITH RADIO (132 1/4)one of the group recommended, showing particularly impressive action. A few other attractive issues are listed below AUTOS – Chrysler BAKING – Sunshine and United Biscuit CONTAINER – American ELECTRONICS-TV – Mo tCoraonlaa, nRdayCthoenotani,neMr aCgnoarpvox, Hoffman Electronics. FARM MACHINERY – J. 1. Case FER TILIZER – International Minerals & Chemical. FOOD CHAIN – First National, Grand Union, Winn-Dixie. FOOD PRODUCTS – General Foods GLASS – Anchor Hocking RETAIL CHAIN – Federated, Gimbel SOFT DRINK – Coca-Cola, Pepsi-Cola UTILITY – Central Southwest, Florida Power, Gulf States Util. , General Telephone. Other favorable issues include LILY TULIP, BELL & HOWELL, HOUDAILLE INDUSTRIES, ABBOTT LABORATORIES, JOHNSON & JOHNSON GENERAL TIRE and HERTZ CORP. Strength in steels, machinery issues, oils, aluminums, railroads, coal, should be used to switch into issues like the above on price weakness. EDMUND W. TABELL WALSTON & CO. INC. Tht; market letter IS not. and unuer no ell cumstanccs 15 to be construed as. an offer to ;ell or a sohcltallon to huy any secunhes referred to herem The lniOrmlltlf)ll (,OIILIlInCII hcr('lfi IS n ….t as to ,\CC\ll UC'y 01' an,l the thereof 15 not, nntl l1nder no ClrCllm..tHnce; IS to he Cllstrueu as, fI repre;entn. tl(!1 hy Wldston & Co, in(' All ellre'lSlcHI of PI1\IOn me ulJject to ehdnl!';c WIthout lItlee Wulston & Cu, In(' nnd DlIectms Stockholders nnd thereof, nnd m.l) ha\'e ,m In the ,ecuntlcs mentIOned herem This market letter 15 lntended and lllesented merely 11'1 n general. Infolmal '01\11\1entar) on 11ft to nl.lrl-'t news allcl not flS fI complete analysIs AddltlonallnformntlOn '\Ith l'espeel tft securIties referred to herein …. 111 he fill upon r e 1 I u e ; l . \\ X 301

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