Tabell’s Market Letter – January 22, 1960

t;r Walston &- Co. FILE CO Inc Members New YOk Stock Excilange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER January 22, 1960 The market continued its decline in the early part of the week and the Dow-Jane Industrial average reached an intra-day low of 641.40. The RaIl average, at the week's low of 154.42 was stlll above the December 31st low of 153.36 and is the only one of the four Dow-Jones averages that is higher than the year-end closmg. The Industnal average is down over thirty paints. The market appeared to develop some resistance as the week ended. As I wired early in the week, there is a support zone at 640-630 which should furnish at least temporary resistance. Also, a number of leading issues have reiched or are approaching downside potentials for the shader term. There is no chang as yet in the unfavorable breadth of the market, but this will take time to develop. A few groups are beginning to show improvmg relative strength, but this also will take time to develop. Aircrafts, mining and smelting and natural gas are showing improvmg patterns. There is quite a divergence between individual issues in each group, however. The stocks mentioned m my recommended list for long term 'holding are also showing divergent relative strength patterns. The following are showing the best longer term relative strength action Butler Bros. (375/8), Cluett Peabody (58 1/4), Coca Cola (154), Consolidation Coal (36), Electric Storage Battery (60 1/4), Fansteel (63), Ferro Corp. (46 3/8), Fruehauf Trailer (26 1/2), Great Northern Paper (50 7/8), Great Western Sugar (31 3/8), Heinz (86 1/2), Kaiser Aluminum (49), Magnavox (36 1/8), Monsanto (49 1/2), National Distillers (33 1/4), Rayonier (25 7/8), Singer Mfg. (55 1/2), U. S. Foil B (41 5/8), West Virgima Pulp & Paper (52), Westinghouse Elec. (103 1/2) and Wilson & Co. (40 1/8). The last stock, Wilson & Co., has been held of its plants. It would appear that a full operation of pla t i troubles at some probabIlity and that the growth trend in earmngs will be resUd.,Af e urr abor trouble is ended shortly, it would appear that earnings of 5.p01 share Id be possible for current year ending October 31st. cause of labor problems and a flre ur' t s ,in\tM' 1 iscal year were cut ber probably cost the company 25 a share in earnings. Earnin s ar 1959 of 3.85 were well above 1958 earnings of 3.10. In Limited (18 1/8) also appears to be an interesting p ki of its South Am 'c 0 u more speculative than WIlson because selling around six times estimated earnings of 2.80 to 3.00 fo . Other issu s i list have been showing less favorable relative strength, but appear to be ne ownside potentIals. Amencan VIscose (40) may work a bIt lower into the 39-35 support levels, but should be a good long term holding. Earnings will be somewhat lower because of the tlre yarn price war, but are estimated at 4.00 to 4.50 a share for 1960. The aircrafts have shown poor long term relatIve strength action, but the shorter term Implications are Improving. Northrop Corp. (30) and Rohr (16 1/2) could rally from present levels. The oils have been below average performers, but Royal Dutch (43 3/4) has been showing some improving technical actlOn. Would switch Shell Transport (21 3/4) and Union Oil (38 5/8)into Royal Dutch (43 3/4). Getty Oil (17 1/2) can be held for a rally. The airlines are approaching downside potentlals and appear oversold. Northwest AIrlines (27) which reached its technical downside potentlal of 24, appears more attractive tha-n Pan American (20 1/8). Chicago; & Pacific (24), m the group, has shown better technical action recently and merger possibilitles with Rock Island indIcate the stock still has most interesting long term potentials. Newport News Shipbuilding (35 1/2) and Schenley (31 3/4) are near support levels, but may be slow. Dayton Rubber, International MinErnls and Pennsalt Chemical are showmg average relative strength, but I am removing them from the list in favor of the group m the second paragraph. EDMUND W. TABELL Dow-Jones Ind. – 645.85 V;C;,LSTON & CO. INC. Dow-,rone s Ralls 155,63 Thl mnrket letter IS not, and under no clrcumstl\Tlces IS to be const-rued as, an off!' to sell or a sohCltution to buy any 8ccunbes l'.efcrrcd to herein The informntlOTl contamed herem 15 not gunrnntccd as to aCCUl'ncy or completeness nnd the furnlshmg thereof IS not, and under no Circumstances is to be construed as, a rcprC'lentahon hy \\'alston & Co., Inc All e'tpresSlOns of opinIOn nre subJect to change Without notice Walston & Co, Inc., nnd Officers, Directors, Stockholders and Employees thereof, purchase. sell and may ha\'e an mtcrest m the SecUritIes mentIOned herem ThiS market letter IS Intended and presented merely as a Itencrnl, mformal commentary on fin)' to ilay market news and not as a complete analYSIS AdditIOnal mformntlon With respect to any securities rderred to helIn furm;hed upon request. – —-….-.;;