Viewing Month: September 1961

Tabell’s Market Letter – September 01, 1961

Tabell’s Market Letter – September 01, 1961

Tabell's Market Letter - September 01, 1961
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r—————————————————————————— filE COpy Walston &Co. Inc Membe,'s New yo,'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH,lCAGO OFFICES COAST TO COAST AND OVERSEAS lABEll'S MARKET lETTER September 1, 1961 As was to be expected, the stock market put on a rather dull performance in the pre-holiday week. A number of issues showed above-average performance, but they were offset by an equal number of stocks that showed declining tendencies. Despite the fact that the various Industrial averages reached new high territory in August, both market breadth and upside volume are considerably below the peaks reach ed in April and May and, on a twenty-five-week moving total, there are almost as many stocks declining'as advancing. -The indiscl'iminate'buying of new stocks in the early part of this year has left its mark on the market pattern,and the fast trading speculative buyers of early Spring have become involuntary investors with most of their buying power tied up in issues that are considerably below the highs. The overspeculation in April and May also caused some uncertainty in more erudite circles and has resulted in the confining of purchases to better grade securities with clearer nearterm prospects. The irregular action of the past several months has not been brought about by any great increase in selling pressure, but rather by a diminution of the buying urge. On our shorter-term volume indices, selling volume reached its peak in June-July and has been de clining ever since. However, there has been no increase in buying volume. Our ten-week moving total of upside volume is near the low of the year. If there is going to be any increase in both the speculative and investment buying urge, it should begin to show up pretty soon. Just what will be the cause of an increasing desire to buy is problematical. The obvious answer, of business pattern. Economists are practically unanimous in e futbu ' ess for the of 1961 and into 1962. Earnings on the Dow-Jones 0 second quarter of this year will be around 8.20. This is up ly the ' quarter earnings of WuT5.70 C By-tne fourth quarter it is pos-sible t – 'aI-average will' be 'earning -at – the rate of 40.00, even though year of 1961 may not be above the 32.30 earnings of results. Earnings in 1962 could reach the r sli t ' r.'i The quest' t arket has already discounted the anticipated earn- ings increase. Ea' Industrials for the twelve months ended June 30th were approximately 9.30 t present price levels, the Industrial average is selling at 24.6 times earning is historically high PIE ratio is obviously discounting a sharp earnings rise. n 1950, the Dow-Jones Industrial average earned 30.70, which was just about the same as the earnings of the past twel ve months. However, the Dow- Jones Industrials in 1950 sold at a high of 235.05, or at about one-third of present levels. Obviously, the market was greatly undervalued in 1950, but also obviously such under- valuation does not exist today. This letter has not changed its general market views expressed in this letter for quite some time. It is our opinion that the stock market is in the final wave of an ad- r-rance that started in 1949 at the 160 level. Our objective is 725-835. The lower part of that level was reached this month at the intra-day high of 730. 17. Although some preliminary warning signs have been given, no indicatin asyet that the top has been reached and it it our expectation that the averages will work higher into the 725-835 range. Most of our objectives center around the 750-775 level. However, it must be realized that the risks are greater as the market approaches closer to what we think is the upside objective. It must also be realized that selectivity will increase. Probably a great many stocks have already reached their highs. For the intermediate term, the groups showing the best relative strength action.,which-ar..e-still some distance from their upside potentials, include' Automobiles, Auto Equipment, Chemicals, Gold, Paper, Rails, Rubber and Textiles. Dow-Jones Ind. 721.19 Dow-Jones Rails 144.19 EDMUND W. TABELL WALSTON & CO.INC. This market letter is not, and under no Circumstances lS to he construal DS, an offer to sell or a sotlcltation to buy any seCUrities referred to herein The mformabon contnmed herem IS not guaranteed IlR to nc'uracy or completeness and the furntshmg thereof not. and under no circumstnnccs 19 to be construed as, a repre!ent..a- tlon by Walston & Co. Inc All (X1)rCSSlOns of opmion nre subJect to clmnge without notlc(! Wnlston & Coo, Inc, and OffIcers, Directors, Stockholtlero; nnn lmployees thereof, purchase, sell an,l may have an mterest in the securIties mentioned herem ThlS market letter IS lntcnded and presented merely as a general, informal commentary on day to day market news ani not as a complete analysls Additional mformatton WIth respect to any secunttes reicrr'(!d to herem wIll be furrushed request WN 31

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Tabell’s Market Letter – September 08, 1961

Tabell’s Market Letter – September 08, 1961

Tabell's Market Letter - September 08, 1961
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fILE COpy Walston & Co.– Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS CHJCAGO TABELL'S MARKET LETTER September 8, 1961 The Dow-Jones Industrial average reached a newall-time top on Thursday's in- tra day high of 733.53. The New York Times 50-Combined Stock average and the New York Herald-Tribune 100-Stock average also reached new high territory. Standard & PoOr's 500-Stock Index failed by a fraction to equal its August 22nd high. The breadth-of- the-market or internal action of the market, however, presents a quite different picture. Our breadth index, which encompasses the entire market rather than the relatively few stocks in the averages, has failed to better the May high despite the new highs in the aver ages. This has.cr-eated a must be corrected before the marketca resume a broad advance. There is still a possibility of this happening, but the index is nearer its July low than its May high, and a new low would be a discouraging development Volume indications are on the unfavorable side also. The twenty-five week total of upside volume has dropped from a May high of 565 million shares to a twenty-five week total of 276 million shares for the week ended September 5th. Downside volume for the past twenty-five weeks has increased, but at a comparatively modest rate. Upside volume on the twenty-five week moving total has declined 50/. from the May high showing a definite loss of upside momentum despite a new high in the averages. Downside volume has in- creased only about 12. This indicates no greatly increased liquidating pressure, but rather an increasing reluctance to add to commitments. Most of our breadth indices pOint to the probability that the market, as far as the majority of stocks are concerned, made its high in the April-May period,despite the fact that the Dow-Jones Industrials reached a high of only 714.69 at that time,as compare to a high of 733.53 during the past Some new develo occur to restore the buying urge and move the market higher on a broad s e. however, if the market loses its upside momentum after a steep asc , let h occurred from October to May, it is difficult to renew buying inte y'whiI rket is still up. Buy- . . h ion of the overbought pattern. For a long time, this t e Dow-Jones Ind ustrial average had a series of upside . to 835, with the majority of objectives centering around the 7 -775 v. e aWage has reached the lower part of the sug- gested upside pot t 1 i n poor breadth action, it seems doubtful that the average will atta jective on the present move, illthough it may do so at a later date. It 1 S g that intermediate-term trading accounts maintain a 25 liquid position until th eadth indications improve. The prese pattern is unusual from a timing viewpoint. In both the 1953-1956 advance and the 1957-1959 advance, the rise did not start to lose momentum from a breadth viewpoint until sixteen to eighteen months after the advance started. The present market began to lose its upside momentum after only seven months of advance. This suggests the probability that after a correction of the overbought situation brought about largely by the rather indiscriminate overspeculation in new issues and speculative glam- our stocks, the market might resume its advance deeper into the 725-835 range after the breadth pattern is corrected. Despite the fact that many indiVidual stocks have declined sharply, the market, as measured by the averages, has not had a rea!..correction since the present advance started in October, 1960,at 565. The decline from the May high of 714.89 to the-June low of 673.49 was less than 6 and retraced about 28 of the previous advance. A normal one-third to one-half retracement from this week's high of 733.53 would bring the average back to the 677-649 level. A possible indication that this could be the course of events, would be indicated by a downside penetration oftheAugust low of 709.54. Despite the cautious tone of this letter, it does not mean that we are overly bearish. It is only suggested that some buying power be held in reserve in the event of a technical correction due to poor breadth action. Would continue to hold positions in groups that are showing the best relative strength action. The groups mentioned in last week's letter fall into this category. They include Automobiles, Auto Equipment, Chemicals, Gold, Paper, Rails, Rubber and Textiles. During the 1960 decline in the market, many issues bucked the trend. In the event of a nearby correction, the same thing will occur, but probably the better acting issues will be in different groups than

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Tabell’s Market Letter – September 15, 1961

Tabell’s Market Letter – September 15, 1961

Tabell's Market Letter - September 15, 1961
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FilE COpy Walston &Co. Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH,lCAGO OfFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 15, 1961 The market in the past week twice declined to near the August intra-day low of 709.54 on the Dow-Jones Industrials, but held above the low point on both occasions. The Monday low was 710.47 and Friday's low -was 710.23. The Industrial average closed 4.61 pOints lower on the week. Breadth action showed no improvement. The poor breadth action since the May top in the breadth index has been the result of a technical correction of the speculative excesses of the Spring splurge in glamour stocks and new issues rather than any fundamental change in either the international picture or the business outlook. Locked-in speculativebuying power has brought-about a loss of upside momentum in the speculative favorites of the early part of the year. Best' price action in recent months has been in the better-grade investment issues. Regardless of the action of the averages, the outlook is for an extremely selective market over the nearer term with individual stocks moving in both directions, but with the majority working lower. Of the over 1,500 individual stocks that we cover from a technical viewpoint, probably a third have favorable or above-average technical patterns while the remainder are either unfavorable or negative. In an uncertain period of this -nature, when breadth action is poor, it is wiser to concentrate holdings in issues that are acting better than the market rather than attempt to guess the bottom of a downtrend. From a group viewpoint, the groups that show the best technical action and are still selling below their upside potentials include Automobiles, Automobile Equipment, Chemicals, Electrical Equipment, Gold, Paper, Rails, Rubber and Textiles. The groups showing the poorest technical action include Airlines, Aluminum, Electronics, Farm Machinery, Fertilizers, Glass, Moving Pictures, Oil, and Soft Drinks. The remaining groups are more or less neutral in their c io ture is compli- cated by the fact that there is even diverse action t e oup mselves. The fertilizer group, for example, is acting very Inte onal Minerals & w -another fertilizer -issue, Tennessee Corp. (59 3/4) is showin be – ge nical action. Both issues are on our recommended list. A swit e ti al Minerals & Chemical from Based on thi s eo' g number of other switches in our recommended llst are suggest n ' ues are showing below-average action at the mo- menh American A' i s ) , American Broadcasting (44), Barber Oil (53 3/4), Bestwall Gypsum (3 1/ eere & Co. (505/8), Garrett Corp. (461/8), General Pre- cision Equipment (6 ), Heyden Newport (21 3/8), Richfield Oil (403/8), Tennessee Corp. (593/4), Thompson-Ramo Wooldridge (56 3/4), Twentieth Century-Fox (35 1/2), United Airlines (41 7/8), and U. S. Borax (36 1/2). We are dropping these issues from the recommended list. The following issues in our recommended list have higher upside potentials and are suggested as replacements for the above issues American Viscose (60 1/8), At- chison, Topeka & Santa Fe (27 1/4), Chicago & Northwest. (21 1/4), Colgate Palmolive (471/8), Daystrom (34), Diamond National (431/2), Dome Mines (24 1/2), Goodrich (72 3/8), International Minerals & Chemical (491/2), Kerr McGee (41 1/2), Newmont Mining (73), North American Aviation (53), Penney '1./8), Raytheon (39), and Wool- worth (74 3/8). — – Also being dropped from our recommended list is Columbian Carbon (66 3/8). This company is to be merged into Cities Service Company with each Columbian Carbon stockholder receiving 0.67 shares of a new Cities Service convertible preferred per share of Columbian Carbon. This stock would carry a 4.40 dividend and each share would be convertible into 1.63 shares of Cities Service common. For the long term investor the new preferred carries a relatively generous 4.40/0 yield and offers a conversion feature which may ultimately be extremely valuable. On this baSiS, the stock may be held, but the investor interested in intermediate-term capital gains would probably find the stocks mentioned above more suited to his purpose. Dow-Jones Ind. 716.30 EDMUND vV.TABELL B e.. . n cfls'ias !i4a. SXC)N & CO.ThIC. This market letter is not, and under no circumBtnnces IS to be construed as, an offer to sell or a soliCitatIOn to buy any securities referred to herem The mformatlon conwined hereIn is not guaranteed lUI to accuracy or completeness and the furnlshmg thereof IS not, and under no Circumstances IS to be construed as, a representa- tIOn by Walston &, Co. Inc. All e.presslOns of opmion are subJect to change Without notice. Walston & Co, Inc.. and Officers, Directors, Stockholders and Employees thereof, purchase, sell and may ha\'C an mterest m the securities mentioned herem ThiS market letter is intended and presented merely as a general, informal commentary on dny to day market news an9 not as n complete analYSIS. AddltlOnal information WJth respect to any feCurltlcs referred to herem wlil be .. . . . . WN 301

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Tabell’s Market Letter – September 22, 1961

Tabell’s Market Letter – September 22, 1961

Tabell's Market Letter - September 22, 1961
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FILE COpy Walston &Co. Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHlCAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER September 22, 1961 Continued weakness in a number of over-exploited growth issues caused enough uncertainty in the general market to push the various industrial market averages below their August lows. The Dow-Jones Industrials, which had held in a 30/0 trading range between 733.53 and 709.54 for five weeks, broke out on the downside of that area to reac a low of 698. 70. Volume on the decline was small, as has been the case since the current irre- gularity started. Despite the fact that the averages reached their high earlier this month the majority of stocks made their highs in April and May when our breadth index reached – its-high.- This inteI'est'rather-than increasing selling pressure. Our technical indicators show that buying power has been , steadily decreasing since April and is now lower than at any time since January when the Industrial Average was in the 620-657 range. This loss of buying momentum has been the main technical reason for the current irregularity. It would appear that a strong resurgence of the buying urge is needed to cause mo than technical rallies in the general market over the nearer term. This renewal of buyin ,momentum could be brought about by some new and unexpected bullish development, but that does not appear to be in the cards at the moment. A decline in the buying urge after , a strong advance like that witnessed from October, 1960 to May is usually corrected by a decline to a price level where the market again appears attractive. It is difficult to renew the buying momentum while the market remains high. From a technical viewpoint, there is a strong support area in the 700-675 zone. , The small top formed since August at 730-720 has a e Petial of 690-680. The broader top formed across the May and September highs a 0 7lCO indicates a possibl 645. A normal one-third to one-half correction of – oi v since October 1960 would bring the Industrial average back to 677 0 consider the 680- 650 area a favorable buying zone for a new' in 25-835 area in 1962. , — h-er' -alWaysIJe-manysituations- that will show better or worse relat' a mpared to the general market. As an example, Ford Motor at 107 1/8 while Texas Instru- ments reached a low f ii;n Texas Instruments reached its high of 256 1/4 in May, 1 6 se' in the 67-70 range and the Dow-Jones Industrial Average was arou the average is ll li' h r 0 s prices, Texas Instruments is down about 600/0 while ord is up over 500/0. V/hile the ave s may work somewhat lower first, we believe that after the correction of speculative excesses earlier in the year is completed, the market will probably reach new high territory early in 1962. There are several situations in our recommended list that merit buying attention, including the following. Goodrich (73) expects earnings in the third and fourth quarter to top those a year earlier by a substantial margin and also expects that 1962 will also show improved earnings. The stock appears attractive. International Minerals & Chemical (493/4) has arranged a loan for 40 million with Prudential for development of its extensive potash properties in Canada. This is one of our favorite issues for long term appreciation. U. S. Plywood (48) forecasts a gain in 1962 fiscal earnings. This issue has a very strong technical pattern. We are parficlilarlyimpressed bylliEi a-ction offhe moved above its downtrend line from the 1959 high of 174.41 over a month ago and has held up very well ever since despite the decline in the Industrials. At Friday's intraday high of 145.13, the Rail Average was close to the August high of 145.88. If, as expected, the business pattern continues to improve, some rails have defensive qualities with the better-grade issues showing yields of over 50/0. The better-grade rails on our Recommended List are Atchison, Topeka & Santa Fe (26 1/4), Canadian Pacific (24 1/2), Northern Pacific (42 1/8), Seaboard Airline (28 5/6,and Southern Railway (56 1/2). The more speculative issues are Chicago,MHwaukee, St. Paul & Pacific (16 7/8) and Chicago & Northwestern (223/8). Neither of these issues are on a dividend basis at the moment.

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Tabell’s Market Letter – September 29, 1961

Tabell’s Market Letter – September 29, 1961

Tabell's Market Letter - September 29, 1961
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fiLE COpy W- – -a-llsnt ocn. -&– -C-o-. Members New Yo,'k Stock Exchange NEW YORK SAN FRANCISCO lOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER September 29, 1961 I For the past four weeks this letter has been drawing attention to the somewhat , discouraging action of our breadth-of-the-market indices and of upside volume indices. It I was pointed out that the Dow-Jones Industrial average by early September had already reached the lower part of the upside potential range of..725-835 suggested by the 1960 base I In view of the fact that breadth-of-the-market and upside volume had been in a more or I less steady decline since April, it was regarded as extremely dubious that the upper part Iof this range would be reached before some sort of correction or consolidation. It was further pointed out that a downside penetration of the August intra-day low of 709.54 on th Dow would indicate at least moderately lower levels. – – – – — Such a penetration occurred on September 18th and reached a climax on Monday of last week, as the Dow retreated almost ten points to reach an intra-day low of 688.87 on volume of 3,700,000 shares. The decline was widespread with 863 declines against only 228 advances. Action for the remainder of the week was indecisive. A great part of the loss was actually recovered with advances Tuesday and Wednesday on reduced volume. On , Thursday and Friday the DJI drifted, although on both days the rails, strongly outperform- ed the industrials. The end of the week found most averages about the same as on the previous Friday. It is quite true that the Monday decline, followed by two days of rather sharp re- I covery, had a climactic appearance. It seems, however, a bit early to revise the cautiom attitude suggested by this letter over the past month. It was pOinted out last week that the ! small top formed at 730-7213 had a downside potential of This has been reached. , However, the broad top formed at the May and Septembert;. rQUnd 710 indicates a possible 645. A one-third to one-half correction of'ithe n . c st October would bring the Industrials back to somewhere between 6 T ,while it is quite possible to become enthusiastic about new — easy to get terribly at present level 6 d 650, it becomes less d)ul. urthermore; – Monday's bottom turn out to be the undue haste in new ives at last week's s, m\QJi)) appears to be no great reason for reached Ion g,..term downside objectbacking andJil.ling will be required be- fore stocks of Moreover, a gooa many of the speculative favorites of early-. ,' furthermore, been i'l( \ in\.pro 0 have more room on the downside. There has, ent as yet in the breadth index even on a very short- term basis and at this week's , unlike the Dow, the short-term breadth index had come nowhere near recov g to its levels of last week. It would appear Ito be the prudent course to await a turn in some of these indices before becoming unduly optimistic. Of course, in any market decline, many stocks prove-qUit e resistant to the general market weakness. This has proved to be the case in a number of equities on our recommended list. International Minerals & Chemical (52) consistently mentioned in this letter, reached a new high of 52 1/8 on Friday despite the recent market we,akness. Another stock which has resisted the decline is Anderson Clayton (41 5/8)' the huge cotton- merchandising organization now selling at the mid-point of its 1961 range. Earnings for the year ended last July were sharply penalized by an income tax charge in connection with the liquidation of a foreign subsidiary, but, underthe stimulus,of,improvement in cotton marketing activity, should show a sharp improvement in 1961-62. The 2.00 dividend provides a yield of close to 50/0. Other stocks on our recommended list have declined along with the market, but have reached what appears to be attractive buying levels just above important support zones. Kerr McGee Oil reached a low of 38 1/4 at mid-week, largely due, it is understood, to stop-loss orders placed under 40. The stock recovered nicely to close the week at 40 1/8. September quarter earnings for this oil and uranium producer are expected to be somewhat lower than in the comparable quarter of last year due to lower refined products prices and a wildcat strike at one of its uranium mills. The company will still be able to meet its uranium contract obligations and earnings should be con- siderably better in the final three quarters. Any near-term weakness should provide an excellent purchase opportunity. A 'T'A BELL e'ircumswnces 15 to be construed as, an offer to scJJ to herein The mformatlon D A'rtlrnJ.ifI1ibnlyrJ..h.Etre.ifto Ii or completeness and the furnishmg thlfcof IS not, and under no Circumstances IS to be AB, n represcntll- of opinIOn arc subJect to change without notice Walston & Co, Inc, and Officers, Directors, Stockhohlers lind Employee'! thereof sell and may ha,\c an Interest m the secufllae!! mentIOned herem This market letter IS intended and presented merely as a general, , mformal on da; to day market news and not as a complete analysis Additional mformatlon with respect to any secUrities referred to herem will be

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