Tabell’s Market Letter – October 10, 1958

. ,5 NEW YORK W—-a–l-s-tIonnc–&—-C–o-. Members New York Stock Exchange SAN FRANCISCO LOS ANGELES – PHILADELPHIA OFFices COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER October 10, 1!35 8 , In last week's letter, I mentioned the oil group as a hitherto laggard group that is eginning to show improving technical action. Another group in this category is the chemicals. The Standard & Poor's chemical group index reached a high of 51.54 in ril, 1956, and declined 26 to a low of 37.97 in November, 1957. At Wednesday's level of 46.84, the chemical group index had recovered 630/0 of the decline as compared with a recovery of 110 by the Standard & Poor industrial stock index. The action of individual stocks in the group has been quite diverse as noted in the table below. Reduction l.n,..w.d Chemical erican Cyanamid rican Potash Chemetron Diamond Alkali Dow Chemical DuPont Hercules Powder Hooker Chemical Monsanto Olin Mathieson & Haas I,,,Ill''' Chemical ltllftpl Chemical Carbide r low 1956-1957 1957 High- — -Low 653/4 1291/2 48 1/4 66 3/4 503/8 605/8 827/8 2493/4 51 1/2 52 1/4 525/8 647/8 71 510 77 1/4 83 1/4 1333/8 45 3/4 68 1/2 33 1/8 333/8 30 297/8 49 160 3/4 35 22 1/2 297/8 311/2 48 1/2 285 45 1/4 545/8 83 DeCline 30 47 31 50 40 51 41 37 31 57 43 51 32 \Y — Oct. 9th Decline Pri-ce .. — RecoverecF– 71 7/8 943/4 52 1/2 49 373/4 43 663/8 204 47 1/2 35 1/4 373/4 1l2 /4 80 115 1/2 131 43 128 47 38 43 51 49 78 43 35 28 93 69 63 89 64 44— – Air d amid have the best record. They declined the ast and have mo t heir entire loss. If it were not for the above aver- e performance of s is , the chemical group index would have shown a much oorer performance. . 1956, most of the chemical stocks have been among the st performers in e market — not only from the viewpoint of the steep decline f-rom high, but also in their mediocre recovery from the lows despite the sharp rise in the Ige,neral market since the first of the year. However, the technical action of many of the issues in the group is beginning to show definite signs of improvement. Chemical companies have been plagued since 1956 lowered profit margins which is the main reason for their poor performance. There some ind1cations that this situation is changing for the better. There have been indi- Ic,us of improving profit margins in the general business pattern. The third quarter 1,rnLnP''; reports of the chemical companies will be scanned eagerly to see if there are as t tangible signs of this development in the chemical industry. From a technical viewpoint, quite a few of the chemicals now appear to be a pur- I,b for long term,holding. HERCULES.POWDER-(48 1/8) 1S showing favorable technical lacuu'n and I am adding it to my recommended list. Earnings have held up comparatively for the industry w1th 89 a share shown for the first six months of 1958 compared 1.03 in 1957. Company faces better prospects for the second half of 1958 due to elief from plant start-up expenses and the contribution to sales made by the firm's new stic, polypropylene.According to management, this product opens a whole new field of stic chemistry. This company will be reviewed in more detail later. The technical pat- rn is good. An upside penetration of the broad 35-51 range ,in which the stock has held since early 1955, would indicate an ultimate potential of 75-95 from a technical viewpoint. Other attractive technical patterns in the chemical group include HOOKER (35 1/2) SANTO C (387/8) and PENNSALT CHEMICAL (71). The stock of a ;;HllalJ''I –,