Viewing Month: February 1960

Tabell’s Market Letter – February 05, 1960

Tabell’s Market Letter – February 05, 1960

Tabell's Market Letter - February 05, 1960
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I Walston &Co. Inc. Mernbe,'s New York Stock Exchange fiLE COPt NEW YORK SAN LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER February 5, 1960 After two days of rally that carried the Industrial average back to an intra-day high of 640.30, the market drifted lower for the rest of the week. Friday's intra-day low was 623.63 as compared to last week's low of 619.51 and the September low of 613.3 There is no change in the unfavorable action of my breadth-of-the-market mdicator. I am always suspicious of unanimity of opinion. In the past several months there have been three almost unanimous forecasts by economists, analysts and news commentators – (1) At the year-end there was an almost uanimous opinion by government and econorriists-tlllif busineil'S- would reach nevni.ighsiIi-the first -halfof 1960 and then level off in the last half, and that the 1961 outlook was doubtful. (2) Most stock market analysts m their year-end forecasts believed the stock market would reach its high in the first half of 1960 at the 700-750 level and that the year's lows would be reached in the second half. (3) In the last two weeks, almost every newspaper, business magazine and business service has had a feature article on either the wavering bull market or the end of the bull market. In my opinion, there is a pretty good chance that all three of these forecasts could be somewhat off base. The business pattern might not be as optimistic as expect- ed in the first half of 1960, but could hold up well into 1961. In my letters and address- es in Octobe r and November, I also expressed the thought that the averages could reach 700-750 in the first half of 1960 and then react. The fact that everyone else seemed to have the same opimon made me rather uncertain, and when the breadth-of- the-market indices failed to move ahead with the stock market averages in December, I became extremely cautious. The way it looks now, very pOSSibly double cross the experts and make its low in the in the second half. As far as the end of the bull t ha f i ce its high ,maybe we saw the highs in the averages in August, but it would u al to have a market reach its top at a-time when many people -, usually end during a period of . I have expressed started in October, 19,.7 is t f . ad time that the advance that of the long term advance from the terrific 1S at the 1949 lows. When the move is com- pleted, it will be ekWa and lengthy consolidation period before a broad overall advance s. 1S period could be quite similar to the 1946-1949 period when the neld in a narrow 15 trading area for three years. When the low is reached, itwill probably be around the 550 level. When the low will be reached is problematical. The upper limit of the range could be around the 700 level. It is entirely poss1ble that three years from today the averages will be right where they a re-m'day, but possibly with stock A twenty points higher and stock B twenty points lower. This hardly fits the concept of a classical bear market, but it must be real- ized that swings in the stock market have been narrowing in recent years. The yearly range from high to low was over 44 in pre-war markets and has narrowed down to 19 in the past ten years. Selectivity has increased. Holders of quite a few blue chip question the been in a bull market for the past several years. You might have bought a very good growth stock like duPont at 250 in July, 1955, and almost five years later found it was sell- ing at 235 despite the fact that the Industrial average has moved from 460 to 625. On the other side of the picture, the declined 20 in 1957, but in utilities, drugs, food chains and tobaccos would have shown a good profit. In the market I envision for the next several years, stock selection will be much more im- portant than abihty to catch the moves in the averages. Dow-Jones Ind. 626.77 Dow-JonesRails 151.50 EDMUND W. TABELL WALSTON & CO. INC. This market letter IS not, and under no circumstances IS to be construl!'d tIS, an offer to sell or n soliCItatIOn to buy ll!'-Y secuntles referred to herem The mfl)rmatlOn con tamed herein IS not guaranteed as to aCCUfllCY or completeness and the furmshmg thereof Iq not, and under no Circumstances 19 to be construed 1l5, Il representa- tion by Walaton & Co, Inc All expreSSlOns of opinion are subject to change \\.lthout notice Walston & Co. Inc. and Officers. Directors. Stockholders and Employees thereof, purchase, sell nnd may have an Interest In the securities mentioned herem This market letter 1; Intended and presented merely as a general, mformal commentary on day to day market news and not as a complete analYSIS. Additional mformatlOn Ith respect to any securities referred to herem will be furmshed upon request \\)j 301

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Tabell’s Market Letter – February 12, 1960

Tabell’s Market Letter – February 12, 1960

Tabell's Market Letter - February 12, 1960
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Walston &Co. Inc – – – – – FILE 111embers New Yo,-k Stacie Exc/wnge NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER February 12, 1960 There appears to be little change in the market picture from that outlined in last s letter. A new intra-day low of 610.17 on the Dow-Jones Industrials was reached on 1I''''''1'-J1' and a new closing low of 618.57 was attained on Thursday. As of this writing, breadth- the-market indicators have given no indlcation of improving action. Short term indicator are approaching oversold territory and a technical rally remams a possibility. On an m- termediate term basis,nevertheless, the trend is still neutral to unfavorable. However, as was pOinted out last week, the market is fairly close to the bottom of the range we envision for the next two-three years. Further weakness, therefore, would seem to provide an' opportunity to make well- selecfecI 1iU'rCliasesorCi'Tong range' basis; Recent action of the various market averages has provoked much discussion of the Dow Theory and its interpretation of the current market. This Theory is probably the oldest and best known of all technical tools. It was first advanced by the late Charles H. Dow at the turn of the century, and has since been enlarged upon by many market student particularly William P. Hamilton and Robert Rhea. In highly Simplified form, the conditions are necessary for the Dow theorist to predict a change in a longer term llD,trenll (1) The market must make a clearly-defined top. (2) The top must be followed by a clearly-defmed decline. (3) A subsequent rally must fail to penetrate the previous top made in (1). (4) A new low must be made under the low made in (2). Obviously, action, the reverse of the above, indicates a change from a bear to a bull market. Such action must take place not only in the Industrial average, but must be con firmed by the action of the Rail average. Failure of the average to the other usually mdicates an uncertain or sideways mar t. us' students of the Theory have added many other factors to v po t ove rules. We have recently made a study of the perform n of e Theory from 1929 to date. T,he -e.ached wererather est! n. which may, of cou-rse, differ-from that of 24 . nals were given in the period under study. Nine of the signals re t ai 10 or more from one signal to the next opposite signal. fi .sjq;jtM'S were whipsaw signals, i. e. bull mar- ket signals given at a vel a bear mar ket signal,or vice versa. However, ;CUJiethe gains on the v li – on whipsaw signa . re nsive enough to wipe out occasional small losses ss incurred was one of 15, based on the average. On the other hand, 0 ose to 70 were recorded on two occasions, the 1930-32 bear market and the -56 bull upsurge. It wl11 be noted at the Theory, as is the case with all technical devices, lS prone to whipsaws. It has, however, successfully pOinted out all major turning points in the market beginning with 1929 and including 1932, 1937, 1942 and 1949. It has been' particularly ineffective in a sideways and trendless market, as exemplified by the pe- riods 1938 to 1942 and 1946 to 1949. Occasionally, valid bull and bear market signals were mterrupted by whipsaw slgnals. This occurred m 1929-1930 and in 1952-1953. The current standing of the market in the hght of the Theory is somewhat question- able. Using the Dow averages, the fact that the Industrials made a new high in January cancelled out any immediate slgnal under the Theory. Even had the Industrials not made a new high, any signal given at the recent lows would have been disregarded as the Rails failed to confirm it. USing-Standard & Poor indices on the -other Dow Theory .0- bear market slgnal was given as both the Industrials and Ralls failed to make new highs in January and posted a new low in the early part of thlS week. Even were a signal to be glven, however, its value by itself as a tool in determining investment policy would be somewhat in doubt. As has been noted above, the Theory is prone to giving whipsaw slgnals in essentially sideways markets. This is, of course, the type of market we look for in the early 1960s. Thus, the obvious conclusion is that whl1e the Theory is an extremely helpful technical tool, it must be taken in con- Junction with other indicators, such as breadth-of-the-market, volume indicators, pOint and figure counts, etc., in order accurately to gauge market probabilities. AWTamb . EDMUND W. VVALStOrJ & TcAolBmE\L…L-. be construed ns, an offc! to sell or a ObCltatlOn to Eu), any sccurl les rererred to herem. The mformatIon contained lierem IS t'iJh'ivletencs9 anli the CurnishIn.t thereof IS not. and under no Clrl!umstanl!es 15 to be construed n';, a cpresenta- 'Ql'.llij,Qo!.All opmlOn arc subJcct to chanve Without notice Wal'lton & Co. Inc. ond Officers, Directors, Stockholders anr! !faYe an Intercst m the securltlcs mentioned herein ThiS market letter IS mtended and pr.esented merely as a general. mformal commentary on dllY to day market news and not as a I!omplctc nnnlY';I'; AdditIOnal mformatlOn With I espcct to any securities referred to herem Will he furnisher! upon request \\TN 301

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Tabell’s Market Letter – February 19, 1960

Tabell’s Market Letter – February 19, 1960

Tabell's Market Letter - February 19, 1960
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Walston &Co. Inc. Members New Yorle Stocle Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER February 19, 1960 After reaching an intra-day low of 603.34 about midway in the trading session on Wednesday, the Dow-Jones Industrial average sharply reversed itself and on increased volume reached a high of over 615, closing ahead on the day. The rally continued on Thursday and Friday, with Friday's intra-day high being 630.26. Short term indicators have turned favorable, and this week's action may help eventually to improve intermediate term prospects. However, it must be emphasized that after a decline which lasted thirty-one trading days with practically no interruption, a fairly sharp technical rally can hardly come as a surprise. Prudent investment policy would di'ctate watching for improving breadth-of-the-market aiicfTormation of a basebe- fore aggressively making new purchases. In speaking of the market above, we use the familiar Dow-Jones Industrial aver- age. The average is a useful tool, but it is, after all, only the product of the individual action of thirty different securities. The followirg table compares the action of the aver- age with two of its components, American Tobacco and Union Carbide during recent market history. 1956 High Sept. 1959 Low Feb. 19, 1960 Close Dow-Jones Industrial Average 524.37 613.30 628.45 American Tobacco 84 1/4 96 1/2 106 3/8 Union Carbide 1333/8 132 1/4 132 1/4 As can be seen, the unlucky purchaser of Union Carbide at its 1956 high would have been just about even at the September 1959 bottom, despite the fact that the aver- ages were some 17 higher. He would have also been en at Friday's close despite the fact that the averages had improved another . in tr9lst, the buyer of American Tobacco at the 1956 high would have in 1 S mber and, even more interesting, a 26 gain at this week's close.\.Yv Obviously, this is another version the facfth-at movements in individual st so en by this e- far re important thari those of the averages. A study of these two r, provide an important clue for in- vestment policy over the To demonstrat this, 0 I cPo go back a little further, to 1952. In that year Union Car d 0 57 on earnings of 3.10 a share. In 1959,earn- ings had improv 0 per share, but the risein the stock carried it to a high of 150 1/2 for 1 4 0 rovement. In other words, about half of Union Carbide's rise was due to impro 0 earnings; the other half of the rise was caused by an increase in the p/ e ratio fro 8 to 26. Anerican Tobacco, by contrast, earned 4.79 in 1952 and sold at a low of 54 3/8. The earnings improvement of 93 to 9.23 this year was better than that of Union Carbide. Yet the rise of the stock to a high of 109 7/8 was only 102, a figure not much higher than the actual earnings improvement. Thus the p/ e ratio at the 1952 low was 11. 3 and at the 1959 high only 11. 9. All this may provide a clue as to why American Tobacco's action has been some- what superior to that of Union Carbide in recent markets. At some stage, a point must be reached where improvement in a stock's price must be generated on earnings im- provement alone, rather than expansion of the pie ratio. Union Carbide's earnings may well continue to grow at the 1952-59 rate. If they do, over a period of time, the advance in the stock should parallel the earnings growth. It is difficult, however, to project much in the way of further expansion of the already high pie ratio. On the other hand, if the earnings of American Tobacco continue to expand at their current rate, there would appear to be plenty of room for improvement m the mul- tiplier of 12 now being applied. Thus, the price of the stock could expand not only on growmg earnings, but also on improved investor confidence in the company. An analysis of stocks having the most at1ractive long term technical patterns would seem to indicate that a large proportion of them are companies like American Tobacco, where growth potential is coupled with a low multiplier which could improve as growth becomes a reality. EDMUND W. TABELL IS to be construed us, nn offer to sell or a to herein The informatIon MMfR Q rJill'f\ffi,tla'ti.tecdlali' .cYtWacy or complcten(!8S anrl the furnlshllll/ thereof IS not, and under no circumstances IS to be construed as, a l'epre.enta- twn by \Vnlston & Co Inc All sell ex nn pressIonS d mny ha of ve OPInion nn mtere nr st es In ubJect the sec to chn urities nge men tWiointheno.uht enroetmic e T Wa his lston mark & et Co, Inc, and Officers, DIrectors, Stockholdcrs and letter IS intended and presented merely as a genera, on dny to dny mat ket news lind not as a complete analYSIS. ArI(litlOnnl mformatlon With respect to any securIties referred to herem will be furn1shed upon request WN 301

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Tabell’s Market Letter – February 26, 1960

Tabell’s Market Letter – February 26, 1960

Tabell's Market Letter - February 26, 1960
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—————–,——- —- FILE COpy Walston &Co. lnc – – – – – M embe8 New Y O'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS CHICAGO TABEll'S MARKET lETTER February 26, 1960 The market appears to be approaching a fairly crucial stage. The rally which began on February 17th continued this week and the Dow-Jones Inddustnals reached an intra-day high of 636.30 on Friday. The action of the next month or so should give some indication as to whether the current strength constitutes a technical rally, or the beginmng of an intermediate term market upswing. It will be remembered that the various downside potentials of the late 1959-early 1960 distributional top ranged between 605 and 550. It will also be remembered that the February.17th)ow was 603.24. As noted lasLweek, a ,shoIt term buy,.,signal certaiDly proven valid by this week's actlOn, was given. In order for a major change in trend to be indicated, a number of things would have to take place. (1) Strong base patterns would have to form in the various averages. Current bases give upslde objectives between 639 and 655, certainly not far above current levels. Continued backing and fillmg in, roughly, the 605-650 range could produce a much higher indication, however. (2) Breadth-of-the-market and other intermediate term indicators would have to turn favorable. This process may have begun, but it is by no means complete. In short, it does not appear to be wise to be an aggresslve buyer of equities at the present moment. However, the time is fast approaching when such a policy can well be pursued. This buying could take place at,or slightly above, current levels, if the conditions men- tioned above are fulfilled, or as new lows are made and the lower downside objectives between 605 and 550 are approached. On November 8, 1958 this letter published a seventeen low-priced issues. It was stressed at the tim ha of issues should be bought as a package in order to provlde the a i n ece y in a specu- lative list of thlS nature. The advisabillty of such icy a en borne out by ac!ion4s nc, . v ,geg.rr.oma7.1')Lgain ' to a 50 loss. Over-all, the gain in each stock, would have been just ed n equal dollar investment 0 or ghtly less than the gain in the Dow-Jones Industrials '. The original th or bull market, 10 market. If indeed theory would still be current price follow lined !if;n mendation was that m the final stage of a at' stocks tend to perform better than the general 11 is not completed, as may well be the case, this The ongmal list, together vnth recommended price and ssues especially attractive for current purchase are under- Recommended Price Avco 9 Chemway 11 Curtis Publishing 15 Decca Records D1VCO- Wayne 0 Fedders Corp. Freuhauf TrailerHome 011 A and B 18 17 19 17 20 Current Price 14 12 11 21 26 18 29 10 Recommended Current Price Pnce Hotel Corp, 7 6 Intern'l Packers 15 20 Kaiser Industnes 15 13 National Can Oliver Corp. Pacific Petroleum 12 19 18 10 19 11 E1Jlijicker Ind, 10 11 Rayomer 18 22 Uniterl Industrial 13 17 Adjusted for stock dividends. RIM(/.. Arrived at by adding prices of new common and preferred received via merger. AWTamb Dow-Jones Ind, 632.00 Dow-Jones Rails 150.86 EDMUND W. TABELL WALSTON & CO. INC. Thlfl market letter lS not, nnd under lHl ell cumstances is tn be conlrucd ne, nn offer in sell or n snbcltntlOn to buy flny Bccurltie; referred to herem The mformntlOn contained herem lS not Ituflrnnteeil as to OCCUtflC\' or completeness and the th'rcof IS not, and under no CHcumstances LS to be constI ued as, n -representa- hon b,. \\fnJeton & Co, Inc All expreSSIOns of opinIOn are suh)ect to change \\Lthout nO!lCe Walston & Co, Inc, and OffLcers. Dlrector'l, Sto(kholders nnd Emplo),!!Cq thereof, Il\Lrchnflc, sell and maY have an mterest 111 the F;ecurLtIes mo;ntLOncd herem ThLs market,letter L5 Intended and presented merely as a general, mformal eomment.nr) on day to day mnrket news and not as a complete nnah'SL!! AddItional mformntlon with respect to any secUl'Itle-; referren to herem furnIshed upon request

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