Tabell’s Market Letter – June 27, 1958

NEW YORK ' SAN FRANCISCO ' LOS ANGELES ' PHILADELPHIA ' OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER June 27, 1958 After declining to a low point on Tuesday of 467.37 on the Dow-Jones Industrial Average and 44.52 on the Standard & Poor 500-Stock Index, the averages rallied back to intra-day highs of 478.09 and 45.18 on Friday. This falls within the classification of a half to two-thirds retracement of the decline from the June 17th highs of 482.11 and 45.57. The important points to watch for near term technical action are the highs and lows of the past two weeks. Because of the heavy overhead supply in the averages, a downside penetration would be of more significance than an upside penetration. A decline 455-450 and 43-42. ' '–. -,,– – – –at Most of the averages have reached the lower part of the long trading areas of 525-460 and 49-45, in which the averages held from late 1955 until the Autumn of 1957. This huge overhead supply of almost two years duration constitutes a definite upside barrier for the averages that may take considerable time to penetrate. It is, in my opinion, highly improbable that this overhead supply will be penetrated on the first attem t While the above is true of the industrial and combined averages, the rail averag s are still quite a bit below the overhead supply at 138-1BO. The Dow-Jones Rail Average has shown good technical action in the recent decline. At Friday's intra-day high of 119. 2 it had recovered most of the decline from a June 17th high of 120.44 to the week's low of 116.34. The utility average, of course, has an enhrely different pattern. It never had the overhead supply that existed in the other averages and is now in all-time high territory. From the viewpoint of the upside potentials bases, most of the industrial and combined averag7fohav The rail average, however, has an upside could work somewhat higher. It is probable that at (\l,t9\md r 0stober-February e objectives. an e utility average highs, the industrial average has about reached its potential for sohfe furtlier strength inlne rails — g- move. The posslbihty of com15ine-d average-s'to a — slightly higher level. As stiedi e y, I continue to anticipate a broad trading area in the averages 't' e of roughly 4BO-430 and 45-40, with ex- tremely selective acti l i, ' . I l ' A further broadening of the base is needed for an eventual ' e t n e heavy overhead supply. I continue to advise lightening undesir i ts in the upper part of the wide trading area in the averages and adding 0 h gs in recommended issues in the lower part of the trading range. In lookmg over my recommended list (last reviewed in letter of May 29th) I find that profit-taking appears indicated in two situations. Raytheon was originally mentioned in the 1B-20 range. It has reached a high of 35 and closed Friday at 33 l/B. It has reached its initial objective of 33, and while it could work somewhat higher, I am suggesting taking long term profits. The last sale on First National Stores was 69 and the high has been 69 3/4. It is approaching its objective of 70-75 and we are dropping it from the recommended list. I would continue to hold the balance of the recommended list, most of which show nice profits at present levels. The only two that have shown relatively poor action are International Minerals & Chemical (26 7/ B)and United Biscuit (31 5/B). However, both of these issues have interesting long term potentials and I would continue to hold despite poor immediate action. The balance oLthe list-follows, American Can (49 l/B) Anchor Hocking Glass (52 1/2) Carolina Power & Light (31 3/B) Container Corp. (21 1/4) Family Finance (2B 1/4) Hoffman Electronics (2B 1/2) Lily Tulip Cup (75 3/4) National Gypsum (47 l/B) Pan American-World Air (16 3/4) Philip Morris (52 1/4) Wilson & Co. (21 7/ B) Zenith Radio (83) I intend to add to this list during periods of market weakness. EDMUND W. TABELL 3UAJ STON Sr CO mc, mnrk('t letter not, nnd under no circumstances IS to be construed ns, an offer to sell or a !!OhClwtlOn to buy nny securities referred to herein The infrormntlOn rnntame.\ hf'rem 1'1 not ns to IIccura('y or completene!.s and the urnlshmg thereof 1'1 not, and under no ClrCUm&tances IS to be construed as, a reprcsentn- tlln by . Co, Inc All e,preSSlOns of opmHm are 'lubJcct to IIntll'C \\'nl;ton & Co, Inc, and OffIcers, Dlrectrs, Stockhulder'! and thereof, purchase, sell and may ha\'c an Interest III the securitIes mentIoned herelll market letter IS Intended and prCClenled merely tUI II genera, Inrrm,11 cnmmentnr on tin)' to dny market news and not II.S a complete annhSl' Addltl,onuililformatlon '\lth rc'!pe('t to securlbes rderred to herein .,111 be fUi m ..h(1 \111()fI X JOI .- —