Viewing Month: March 1960

Tabell’s Market Letter – March 04, 1960

Tabell’s Market Letter – March 04, 1960

Tabell's Market Letter - March 04, 1960
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o Walston &CO. Inc Members New Y01'k Stock Exchange FILE C1 NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER March 4, 1960 In the emotional climate of Wall Street, it is very easy for the most obj ective of analysts to be swayed by near term market action. From February 17th to the begin- ning of this week traders were becoming progressively more optimistic as the market rallied from a low of 603.24 to a high a week ago of 636.30. This week saw five conse- cutive days of market decline and the atmosphere of hope turned abruptly to one of gloom and doom. Fuel was added to the flames of pessimism by a rather questionable Dow Theory bear market signal purportedly caused by a new low in the Dow-Jones Rail average on Thursday. As the Industrials, after reaching an intra-day low of 600.36 on – Friday, -rallied sharply in th-e last h-our of trading and era-sed most 6fth-e loss-es, opti. mism again began to run rampant. Despite all these near term swings, the one point which must be emphasized is that this letter's thinking concerning the market has changed not one iota since early January. At that time it was pointed out that breadth-of-the-market action was deterio- rating and that prudent investment policy dictated the sale of unfavorably situated hold- ings and the accumulation of a cash reserve. It has never since been recommended that this cash reserve be reinvested, nor is it so recommended now. For us to make such a recommendation, one of two things would have to take place. Either the market would have to approach the 572-550 level, which has previously'been suggested as a possible downside objective, or it would have to hold around current prices with breadth action improving. Until one of these two courses of action takes place, a cash reserve position should be maintained. For the investor who failed to establish a reserve at a higher level, the market is currently rather low to consider aggressive selling. object- ive of 550 is, of course, only less than 10 below 7Jt,rren e t 'n margin such as this gives little room to turn around except on is. Despite the recent desultory action of the still ms to make a good . deal of seRse -to consider ,- -rchase on-fur-tber market – weakness. The Dow-Jones Rail id 19ht at 141. 83. A count across the distributional top formed in W', ownside objective somewhere in the 137-133 range, – e In terms of the Standard & Poor's Rail h d Lt30. 57, the downside projection is 29. In- dividual rails ar. I 1 0 ide objectives. The list which follows gives the closing prices of a e es, together with downside potentials based on chart action. In most case , t potentials are intermediate term while long term patterns can be interpreted t' lcate much higher levels. Atchison, Topeka & Santa Fe Chicago Great Western Northern Pacific Den var & Rio Grande Western Great Northern Southern Railway Western Pacific Downside Potential 24 34 40-35 15 47-43 42-40 19-16 March 4, 1960 Close 24 1/8 34 1/2 42 1/8 16 3/8 45 1/4 45 19 Not only are the rails close to support, but if dOViTIside objectives mentioned above are reached, they would be as statistically cheap as they have been in some time. A close study shows that at its year's low each year, the Dow-Jones Rail average tends to sell at around 7 1/2 times earnings. Projecting earnings for this average in 1960 at 17 -18, the low of 133 mentioned above would give a p/ e ratio of between 7. 8 and 7. 3. There is, furthermore, ample reason for fundamental optimism concerning the in- dustry. Without attempting to go into detail, there are several fundamental changes that could, slowly to be sure,result in an improving picture. Briefly, they are (1) a gradual elimination of unprofitable passenger traffic, (2) elimination over a period of time of the more onerous featherbedding practices, (3) gradual elimination of unprofitable branch lines, (4)the sale of costly terminals and stations, (5)the rise of piggy-back operation, and (6) possible savings by mergers. While near term action may be rather slow, selected rails seem appropriate for accumulation on any further weakness and over the long term Qsule sHe,.-, 813979 ever age is; estHleH.t f3erfepffi8Flee. rihl; mnct letter lSrl)21innJi. WlJler /I,nlrcumstances is to be construed us, an offer to sell or n The Informatlon UOWm.d&nIilS or completeness and the iurnlshmp thereof IS a.s, a reprC'lenta. nlAll.by lJ.lWQll..& 13P… J,;.. of opinIon a.re subJect to chllllpe WIthout notice htd Stockholders and U1J,.WtlJlJUntM;j. an interest 10 the secUTItleS mentIOned hClr.1Il ThiS market letter IS intended and present.ed merely as Il gencrlli, IIlforma.I. on nay to day markd news and not as a complete nnalysls Additional IIlfOrmatlOll With respect to any secuTities referred to herein will be WN 301

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Tabell’s Market Letter – March 11, 1960

Tabell’s Market Letter – March 11, 1960

Tabell's Market Letter - March 11, 1960
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—————————————————————————————————-. FILE CQPV W—-a–l-s-tlonnc–&–C—o-. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFices COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER March 11, 1960 The Dow-Jones Industrial Average continued to slide this week with rallies on Wednesday and Friday failing to erase earlier losses, which carried the average to a low. More encouraging was the actlOn of the rails WhlCh finished the week above last Fric a 's close and which actually advanced on Thursday despite a decline in most of the rest of thE market. Basically, there is little or no change in the investment policy outlined by this letter for the past two months. Stocks should be bought either because they are at a low level or the trend appears upward. Either the market wlll continue to slide off, in .- – ..,. — -.-;–,;; – case selected stocks will appear to be cheap from a level point of view, or breadth and vitality will improve, m which case the k-rend will have changed from downward to upward. Until one of these two phenomena takes place, it appears wise to postpone aggressive stoc purchases. A decline such as the recent one offers an excellent chance to test the relative strength of individual issues, especially when their prices at the low point of the decline are compared with prices at a previous low. The table below does exactly this with Stand ard & Poor's group indexes, showing each index's percentage change from its September low to its February low. As can be seen, desplte the fact that the February bottom was somewhat lower than the one posted 5 months earlier, 18 out of the 62 group indexes wer higher last month, and 29, or almost half, had shown better action than the index as a whole. As we have often pomted out, in recent markets it has been far more important to own the nght stocks than to guess the action of the averages. The individual mvestor can and probably should scrutinize his own holdings very carefully, comparing their current prices to those at the September bottom. He lS ample reason for continuing to hold those stocks which v sure that there oor relative tt Electromcs 17.5 sug(;r;l – 3.1 Radio-TV 14. 8 – 3.2 – – Electrical h (\\\ \\Household Appliance 12.0 – Pipeline s – 3.4 Steel Alloy . Prmting Auto Truc w Publishmg 4.6 Office Equipmen 4.0 Metal Fabric g 3. 9 Soaps 3. 9 W..'\Jparel-3.5 t' Chemicals – 3.5 Small Loan – 4.0 Railroads – 4.3 Coal – 4.4 Machmery – 4.4 Lead & Zinc – 4. 7 Textiles – 5.6 Soft Drinks Food Broadcasting 3. 7 3. 1 3.1 Tires Distillers Finance Companies – 5. 7 – 5. 7 – 6.1 Cigarette s 3. 0 Electrlc Utilities 2.8 Carpets 1.2 Shoes Unchanged Drugs – 0.3 Mming & Smelting – Gold – O. 5 RallEquipment – 0.5 Natural Gas Distrib. – 1.1 Ship Building – 1. 2 Confectionery – 1. 3 Alrcraft – 1.5 Motion Pictures Retail – 1.5 – 1.5 COMFOSITE – 1. 8 Auto Parts Building Materials – 1. 9 – 2.3 Sulphur – 6. 3 Machine Tool – 6.9 Contamers-Paper – 7.4 Cigars – 7.8 Papers – 8.0 01113 Rayon – 8. 8 Vegetable Oil – 9.0 Agricultural Machinery -10.7 Aluminum – 11. 4 Coppers -11. 9 Automobile -12.7 Brewers Steel -13.3 -15.4 Shipping -15.9 Air Transport -20.0

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Tabell’s Market Letter – March 18, 1960

Tabell’s Market Letter – March 18, 1960

Tabell's Market Letter - March 18, 1960
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—————— — Walston &Co. FILE Mem bers N elO YOT; Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER March 18, 1960 Stock market cycles have a tendency to repeat themselves. On February 17th, the Dow-Jones Industrial average made a new low at 603.34 and then rallied sharply for the next few days. At' the time, as was pointed out in this letter, short term indicators turned favorable but there was no improvement in such intermedlate term graphs as upside-downside volume, the advance-decline raho, etc. The short term buy signal shortly reversed itself and the averages made another low on Wednesday, March 9th. From that point the general market turned upward and the high..-f 90 Wednesday. Sq far, th!'\VeekslI!arket action has been very similar-to that of three weeks ago. Although a short-term buy signal has been given, intermediate term indicators remain unfavorable to neutral and, so far, the market has not built up a sufficient base to indicate an immediate upside mov of other than trading-rally proportions. However, two months have now been spent in, roughly, the 595 -640 range. Further backmg and filling within this range would be the most healthy thing that could happen to the market and, if it contmues, a base could be built up for quite a worthwhile move. Meanwhlle, prudence remams the best policy. As was pointed out last week, declmmg and consolidating markets provide excel- ent opportunities to single out individual issues which are acting better than the market as a whole. Such issues can be consldered strong candldates for purchase on any minor weakness which may take place. Relative strength measurements have recently turned sharply favorable on two major groups, grocery chains, and building materials compa- nies. Wlth this in mind, two stocks in each of these groups are being added to our recommended list. Grocery chains were one of the outstanding equity to early 1959, during which period many stocks in t ver 1000/0. Smce that hme, most issues have held m rather t 'ng ges, thus form- ing sizable potential bases. Recent improvement i(\..le)lativ ength indicates that the breakout from- these trading-ranges te'upstde-;— — — — — — WINN-DIXIE STORES (45) 1951. Latest full-year 2& gs increase in every year since for the year ending June 30,1959 and results for the first hal 1 m 'is one of the few co p tt s year were 1. 27 vs. 1.11. The stock onthly dividend and the 10 monthly rate provides a yiel 0;, c ' lly, ability to reach 47 would indicate 70. KROGER COl\ Y 5 rned 2.06 per share in 1959 vs. 1.76 in the prior year, and further ex a is possible for 1960, as an aggressive modernization program is pursue he recently-raised 1. 10 dividend provides a 3. 170 yield and upside objective is 46 followed by possible higher levels. Many of the building materials stocks have also held in narrow trading ranges recently and upside breakouts would indicate considerably higher levels. Abihty of BESTWALL GYPSUM (41) to reach 43 would indicate 71 and a penetration to 58 on GEORGIA PACIFIC PLYWOOD (49) would indicate 87. Both these patterns could broaden. Bestwall Gypsum is the third largest factor in the gypsum industry and is currently in the midst of an important modernization program designed to improve efficiency and increase capacity. While no immediate improvement in residential building activity is looked for, any future increase would probably have a more bene- ficial effect on Bestwall than on its competitors and eventual earnings could be well above the 2.40 earned per share in 1959. Heavy capital requirements have made it impossible to pay cash dividends but small stock dividends have been paid annually. Georgia Pacific has greatly enlarged its timber holdings in recent years and these holdings give the common stock impressive asset value. Earnings in 1959 were 2.55 per common share, and the current dividend rate of 1.00 has recently been ,upplemented by quarterly 170 stock dividends. The stock is regarded as an attrac- hve long term holding. Dow-Jones Industrials 616.42 Dow-Jones Rails 145.44 EDMUND W. TABELL WALSTON & CO. INC. AWTat ThiS market letter is not. and under no Circumstances IS to be constl'ucd as, an offer to sell or a sohCltatlOn to buy any securitIes referred to herem The mformation contnined herem is not gunrantced M to accuracy or completeness and the furntshmg thcrco! IS not, Bnd under no Circumstances IS to be construed as, a representa- tIOn by Walston & Co Inc All e.prCSSlOns or opmlon are 9uhJcct to chllnge wIthout notice Walston & Co, Inc, ond Officers, DIrectors, Stockholders find Employees thereof, Bell and may have an mtcrest in the SCCUrIties mentIOned ,herein Thl'l market letter IS Intended and presented merely as 11. general, mformal commentary on day to day market news and not as a complete anniYSl9 AdditIOnal mformatlOlI with respect to any secUrIties referred to herem Will be urmshed upon r e q u e s t ' \\'N 301

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Tabell’s Market Letter – March 25, 1960

Tabell’s Market Letter – March 25, 1960

Tabell's Market Letter - March 25, 1960
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Walston &- Co. Inc Members New Ym'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER March 25, 1960 The Dow-Jones Industnals closed lower on Friday after reaching an intra-day high of 627.86 earlier in the week. The average has now spent almost two months in roughly the 600-640 range and could be in the process of forming a base pattern. At the moment, this potentlal base is not broad enough to indicate an extensive advance. Probably more time will be needed to broaden the potential base. My technical indicators gave short term buy signals at both the February low of 603.44 and the March low of 596.20, but as yet they have not given an intermediate term buy signal. This will also probably re- quire more time. My breadth-of-the-market index, which warned of the market top in- early January, 'nas-turnerupward, but not — upward trend. The downside count of the top formed by the highs of August and January at around the 680 level indicated, from a technical viewpoint, three possible downside objectives, depending on which type graph was used. One objective was 604. a second was 578, and the third and most pessimistic was 550. The first poss1ble downside ob- jective was reached at the February and March lows. Whether these lows prove to be the lows of the move is not yet certain, but improvemcnt in my breadth-of-the-market index would go a long way toward confirming this possibility. The rail average has had a sharp recovery from the March low of 137.63 to reach 147.37. This average reached the top of the 137-133 downside indication of the d1stri- butional top formed early in 1959. The rail average is now running into heavy overhead supply in the 145-160 area and 1tS action from here on should give some clue as to the ultimate possibihty of pushing through this overhead res1stance. The utility average has been the best performer of the three. At this week's high of 88.83, the utility average was back to the January fj1is is quite re- markable when it is remembered that the January Jgh in t e tr' average was 688.21 and Friday's close was 622.47. Also, a as the only one It ' 111. well its Actually, the price interest. Harold X. in a recent talk. Despite th a e more or less of only academ1c rJJ p, Inc. pointed this out very neatly average of thirty industrial stocks at 625 is 100 r in the industrial e e high of 525, sixteen of the thirty stocks their 1955-1957 tops. One is as much as 500/0 lower, and all six lower by an average of 200/0. In fact, only e1ght of the thirty stocks hav a y acted better than the average itself smce the 1955-1957 highs, and only four e really accounted for most of the rise in the average. They are General Foods, Eastman Kodak, Procter & Gamble and American Telephone & Telegraph. Proper selection between two stocks would have been the difference of 1000/0 profit and a 500/0 loss if both stocks were bought at the 1955-1957 highs. Regardless of the movement of the various averages, indiv1dual selections of . stocks w1ll be cf considerable importance in a market that will probably hold in a rela- tively narrow price area for quite some time to come. I envision a possible 700-550 range for the Industrial average for the next few years, with individual issues and groups showing diverse action. Ab1lity to find these issues and groups will be much more 1mportant than the ab1lity to forecast the swings back and forth in the averages. In the letter of March 11th, the groups thaLhave acted better than the market smce the September lows. You will note that most of the groups fall into two categories. The first category includes electronics, radio-TV issues, elec- trical equipment and office equipment. These are mostly glamor type groups in new industries with a vast growth potential. They are 'all selling at high price-earnings mul- hples. The second category mcludes telephone, soaps, soft drinks, food, tobacco and utilities. These are more or less defensive type'lssues selling,in most cases, at rela- tively reasonable price-earnings ratios. In the March 11th letter we also listed the groups that have been acting worse than the market. In this category you will find steel, automobiles, aluminum, oils, papers, rubbers and chem1cals. It is interest- ing to note that many of the m the Favonte Fifty of institutional investors are to be found in these groups. This might indicate an important switch in mvestor preference. ' ED1V1UND tV. IABELL llTrrod and ner-e'r'n'i's &'t.. lS to be construed as. an offer to ;cll or 11 solICitatIOn to buy any seCUritIes referred to herem The InformatIon iU!t.d'nhcuracy or completen(ss and the furnishing to be construed as, n represcntn. Alll'W,SSIJ1t1J1 of opllll!)n are subJect to change wlthouPMIhl'-\Vntl3'(dti &-.xco. M, aM'IOfflters. Directors, Stockholders and an lllterest In the securities mentIOned herem ThIS '!arket letter IS mtended and presented merely ns a genernl, on day to day market news and not as a complete analYSIS Addlltonal Information With resPect to any securities referred to herem Yufni!!il1'!d

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