Tabell’s Market Letter – August 21, 1959

Walston &- Inc. Co. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVeRSEAS TABELL'S MARKET LETTER August 21, 1959 A selling wave on Wednesday carried both averages below the August 10th intra day lows of 647.93 on the Dow-Jones Industrials, and 160.79 on the Rails. This week's intra-day lows were 639.34 and 157.60. The subsequent recovery brought the averages back to 655.39 and 163.20 at Friday's close. The action of the Industrial average see s to be following normal technical procedure. There is strong support at the 640-630 level. From mid-April until the end of June the Industrials held in a trading area between 648 and 611. The various tops of this ten-week trading range, excluding the absolute top at 648.65, were between 640.92 and 630.24 and this week's low was within these support levels. The Rail pattern is quite different. At this week's low of 157.60, the Rails were practiZally atthe year's low of -157; 20 reached in February. This action contrasts with this week's low of 639.34 in the Industrials, which is some 68 points or 100/0 above the February low of 571. 73. The Rails have been marking time for seven months in the 174-157 range. A prolongation of the steel strike much beyond Labor Day could quite adversely effect rail earnings and could cause a downside penetration of the long trading area. This, from a technical viewpoint, would indicate a decline to about 143. Of course, on the other hand, ability to hold above 157 would be quite constructive and indicate an advance to at least the 185-190 level. The timing of the ending of the steel strike will determine the intermediate term course of the Rail average. It has been the thought of this letter that the market would consolidate during July and August and then start an advance in September that would carry through for the balance of the year. Nothing has happened in the technical pattern, as yet, to change this opinion. One thing that could cause a temporary weakening of the technical pattern would be the prolongation of the steel strike to a point result in a serious squeeze on consumers. This probably would not s the strike lasted beyond September. As this possibility appears to ote eel that selected issues should be bought during periods of market w a ess fo x months or longer holdmg. – Ift- arket;,, Some-stocks have – -.. probably seen their highs for a orne, but not all, of the aircrafts and electronics probably . They can rally from present levels, but will need long peri la . n to build new patterns before a sizable ad- vance is indicat There a nr , however, that indicate higher levels before this final phase of the 10 ter dvance is completed. Among the groups that still indicate higher levels are the iles. AMERICAN VISCOSE (48 7/8) is on my recommended list and I believe it as had a sufficient technical correction from its recent high of 55 3/8. The aluminums also appear to be in an uptrend that should carry further. I continue to like KAISER ALUMINUM (58 1/4) and U.S.FOIL (67 1/4). The paper issues appear to be on the verge of an upside breakout of long trading areas. WEST VIRGINIA PULP (49 1/4) appears most interesting. Its 500/0 interest in Clupak, the extensible paper, adds to its potentials. CLUETT,PEABODY (521/2), which holds the remaining 500/0 interest in Clupak and has a much smaller capitalization, is also on my recommend- ed list. Another paper company with an interesting upside potential is GREAT NOR THE PAPER (54). This is the largest newsprint company in the United States and the fifth largest on the Continent. It appears to have been under slow accumulation since late 1957. The.meat packing group, with the prospect of improving profit margins, continues to indicate higher levels. Most issues in this group look higher. My choice has been WILSON & CO. (45 1/4), originally recommended at 15. INTERNATIONAL PACKERS (16 3/41, while quite speculative, has a tremendous upside potential. Other issues showin above average relative strength include COCA COLA (152 1/2), FANSTEEL METALLUR GICAL (59 3/4), MONSANTO CHEMICAL (52 3/8 NATIONAL DISTILLERS (30 5/8), PEN SANT CHE1IIlICAL (31 1/2), SCHENLEY INDUSTRIES (44 3/4), SINGER MFG. (54 1/2) and WESTINGHOUSE ELECTRIC (89 1/2). EDMUND W. TABELL Dow-Jones Ind. 655.39 WALSTON & CO. INC. Dow-Jones Rails 163.20 market letter IS not. and under no circumstances IS to be construed as, nn offer to sell or a sohcltation to buy any securities referred to herem The mformntIon contnined herem IS not guaranteed as to nCCUracy or completeness and the furnishmg thereof IS not, and under no Clrcumswnces is to be construed as, n representa- tIon by Walston & Co. Inc All expressIOns of optOlon are subject to ChallR'e WIthout notIce Walston & Co, Inc, nnd Officers, Directors, Stockholders and Employees thereof, purchase, sell and may ha\'e nn mterest in the secuntles mentioned herem ThiS market letter IS mtended and presented merely as a general, mformal commentary on day to day market news and not as a complete analYSIS Additional mformatlon With respect to any secuntIes referred to herem will furnished upon r e q u e s t . ' \\-; 301