Tabell’s Market Letter – August 04, 1961

fiLE COpy -. , Walston &Co. NEW YORK Members New Y01k Stock Exchange SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 4, 1961 There is not much to be added to last week's comment on the market. To quote From a technical viewpoint, the pattern suggests a strong triple bottom formation and the odds favor an upside penetration of the four-month trading area with a minimum ob- j ective of 725-750. The Dow-Jones Industrial average penetrated the May intra.,.day high of 714.69 to reach a new high of723.57 on Friday. The breadth index also advanced, but did not confir the new high reached by the Industrial average. This we hope will occur in the near futur .. The strength-in the-market'has been quite-selective. lett r the leaders of the advance so far have been the stocks of the larger companies of higher i vestment quality. The glamour issues have shown little rallying tendencies. Despite the new high in the Industrial average, which consists of better-grade companies, some of th glamour issues have shown little rallying power and are selling considerably below their highs of the year. For example – Stock Avnet Brunswick Corp. Transitron Universal Match 1960 High 68 1/4 74 7/8 42 3/8 62 Friday's Close 38 53 3/4 23 3/4 39 1/2 0/0 Decline 44 30 45 37 We expect this diverse action to continue. The rails have been a definitely also. are fundamental reaso s why this is so. June quarter earnings were the'lowest in and the I.C.C. ruling that it will not rule finally on any important ii ast a year has also depressed sentiment toward this group. How if a pated revival in business continues, the railroads should on ound in earnings in the 'second this – If t urs- couldstagea-sharp-rally- At Friday's close of 140. 37 ,the Rail OOe' quO bit below the year's high of 152.72 reached in March, and viewpoint, the Rail av 0 high of 174.41. From a technical n up a potential base pattern with a 170 indic – tion if the March hi h i e e he rails have rallied only modestly in the past tw weeks, but have ti owntrend line from the May high of 149.14, although the more importan 0 ntr rom the March high of 152.72 is still intact. While the rails have many majo blems still to solve, they present interesting intermediate term profit possibi es and moderate purchases are advised for those interested ina cyclical turn. There are only two rails on our recommended list of issues selling above 20 a share. They are Northern Pacific, selling at around 42 with a yield of 5. 10/0, and Seaboard Air Line, selling at 28 with a 5.70/0 yield. Both of these issues appear attractiv for purchase. Other issues that appear attractive at this stage are Atchison, Topeka & Santa Fe (25 7/8) with a 5. 60/0 yield, Canadian Pacific (24 5/8) with a 6. 30/0 yield on the present dividend, and Southern Railway (54 1/2) with a yield of 5.30/0. Our low-priced list includes one rail, Chicago, Milwaukee, St. Paul & Pacific selling at 16, with no dividend. This is more speculative than the issues mentioned above, but technically appears to be slowly forming a base. Chicago & North Vvestern (19 1/2)' which-may eventually merge with St. Paul,-also is in,the process of forming a possible base pattern from a technical viewpoint. Another area of the transportation field, the airlines, also have above average profits potentials. Two issues on our recommended list, American Airlines (26 1/4) and United Airlines (49 1/4), are still suitable for purchase. Dow-Jones Ind. 720.69 Dow-Jones Rails 140.37 EDMUND VV. TABELL -vvALSTON & CO. INC. ThiB market letter is not, and under no circumstances lS to be construed us, nn offer to sell or n solicltntlOn to buy any SeCUritles to herem The informatlOn contninC'd herem not guaranteed as to accuracy or completeness and the furmshmg thereof is not. and under no cireumstnnces is to be construed as, a representn- tion by Walston & Co. Inc. All expressions of opmion are subJect to change v.lthout notice Walston & Co. Inc. and Officers, Dlreetors, Stockholders and Employees thereof, purchase, sell and may have an mterest In the sccurities mentlOned herem. ThiS market letter IS mtended and presented merely as a genct al. mformal commentary on day to day market news and not as n complete analYSIS Additional mformntlon WIth respect to any securltlcs referred to herem will be . '' . I JOt