Tabell’s Market Letter – May 12, 1961

FILE COpy Walston &- Co. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS CH,lCAGO TABELL'S MARKET LETTER May 12th, 1961 Individual issues have had wide price movements during the past month but HIe general market has held in a trading range outlined roughly by 670 and 700 on thie Dow Jones industrial average. This appears to be a normal consolidating peridd after a sharp 230/0 rise in six months. There are no signs of a long term deterior- ation in the technical pattern. Breadth-of-the-Market action, both in advances and declines and on upside and downside volume, continues to indicate a further advance in prices. It would appear that business reached its low in March. As usual, the stock market moved ahead before the low in business and bottomEd out in October. As is also usual, stock prices make their major move after a business low'has . ….een reached. This suggests that the stock market uptrend has still further to go. However, the sharp and rapid rise of the first six months might cut down the size of the ultimate potential. Our technical work indicates a broad objective of some- thing between 725 (which seems low) and 825 (which seems high). Probably the hesitancy in the market at the moment is the result of the completion of the first phase of the market advance with leadership switching from the defensive issues and the overvalued high P IE ratio glamour issues to the more basic group. In the last two letters, we outlined this trend and mentioned ten groups that were still selling considerably below their highs of recent years. We noted that most of these groups were currently showing below average relative strength but appeared, from a technical viewpoint, to be slowly forming accumulation patterns. In last weeks letter we mentioned the two groups that were showing the best immediate action, airlines and coppers, and discussed the issues in these two groups that are ;r\\\represented in our recommended list. 0 Of the remaining eight groups, there is no ic of upside break- out. Probably the textiles show the most pa for the near term. American Visi0SE' ( 49) is part of our rec ende It moved ahead fro!!, an low of 35 to a Feb . . hi I . d.has.done little . . since. Recent action has been attraction for not only the ap are! -P d' ( 63 ) has long term teJ;; s half interest in Clupak, the extensible paper. Reeves B. recommendation that has reached new high territory b t ti a ve. In the low price list, our recommenda- tions are Burlin 1 nd Manhattan Shirt ( 21 ). The chemical g a n a bit more work but in dividual issues have been already moving ahea recommended list consists mainly of specialty chem- icals. They are A an Potash (58), Hercules Powder ( 97), Heyden Newport ( 26), International Minerals and Chemicals (46 ), Tennessee Corp (64 ) and U. S. Borax (46). All of these issues have moved ahead sharply since their original– recommendation but they still appear attractive. Commercial Solvents ( 32) Foote Mineral ( 26) and Sun Chemical( IIi ) are part of our low priced list. Our favorite for long term holding is International Minerals & Chemicals. The steels may also be near an upside breakout on relative strength. Our reco- mmended list contains only one steel, Granite City Steel (49). It has moved ahead faster then the group and has recently reached a new all time high. We prefer the specialty steels like Granite City. We are adding another,speciatly steel, Carpenter Steel 47) to our recommended list. ' In the paper group, our only representation is in Great Northern Paper ( 64); the largest American newsprint company. The 1956 high was 108 r 12. Allied Paper (13 ) is on our low priced list. Of the remaining groups, Reynolds Metals ( 48) is recommended. in the alumin- um group and Ford Motors (85) is the outstanding issued in the automobile group. 'live have no immediate recommendation in the rubbers and the rails will be covered'in a forthcoming letter. The recent F .P.C. decision on the rate case of Panhandle Eastern Pipe Line ( 43) was quite unfavorable. The company lost its fight to sell its own low cost gas at the fair field price. The decision will be appealed to theCourts but it will tnke time. The stock has d,clined below our ori inall recommended level to