Viewing Month: January 1963

Tabell’s Market Letter – January 04, 1963

Tabell’s Market Letter – January 04, 1963

Tabell's Market Letter - January 04, 1963
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Walston &– Co,Inc Jll,/hl' .Y( /1' '(JI II Stuc/; E rclianq(' NEW YORK SAN FRANCISCO LOS ANGELES PHILADElPHIA OFFICES COAST TO COAST AND OVERSEAS CHICAGO TABEU'S MARKET LETTER January 4, 1U63 We see no reason to alter the advice given in our letter of December 21st WhlCh sald – Our technical objective for the price advance from the October low of 549. 65 was the 650-685 level. The lower part of this range has been reached, but we belleve the Indus- tnal average will move above the early December hlgh during January. A sizable number of techlllcal patterns on individual stocks suggest moderately higher price levels, and no dlS- trrbutional top pattern of lmportance has as yet been bUllt up. Market strength in January should be used to lighten commltments in issues wlth below-average prospects. The Dow-Jones Industnals have penetrated the December rntra-day high of 658.76 to reach a high of 665. 66 on Friday. Breadth-of-the-market action remains good and LS 'shll-no' 'Die marke't'stll1 appears ati1Fto' advanCe —..'– closer to the heavy overhead supply rn the 685-740 area rn which the market held for over a year between May 1961 and 1962. We would use periods of strength to eliminate issues wlth unfavorable long-term prospects. . As we have mentioned III prevlous letters, we expect 1963 to be an lllslde year wlth the market, as measured by the averages, reaching neither a new high nor a new low as compared to 1962. This suggests a broad tradlllg area III which the actlOn of indivldual stocks wlll be much more important than the achon of the various averages. The market has now recovered over 60 of the 2J5-pornt drop in the Industnal aver.- age from 740 to 525. This is about the expected normal techmcal recovery after a decline of the proportions Wl tnessed in May and June. For the mal'ket to advance further wlll requlre a powerful stimulant. On the business front, there mdlcahon of an increas in earlings in 1963 of sufficient proportions to generate a w wra9 et. The one factor that could change the plcture is tax reductlOn. In i , tel rtance of tIns factor cannot be overemphasized. The only questlOn lS timl grrhe ch es appear to be no better than even that lmportant tax reduchons will . 19 . The chances for 1964 will be much better. If no lmportant tax leglslatlOn e ted 63, the market wlll undoubtedly a – wlde tradrng area wlll ult,mat e\th) ,sWTor a broad advance in 1964 and 1965. ThlS fits mto the techlllcal pat e during the past six months is not sub- stantial enough to Ii he pa ttern is substantially enlarged. TIns wlll probably R r' 0 cking and filling. While thlS is true of the general market, many rndiv ssue ve already formed base patterns that require no further work. ThlS is partrcul rly e of the cyclical-type lssues that reached their highs rn 1956 to 1959, and have bee dually basrng out for a number of years. Purchases should be concentrated in th,S group. Why is tax reductlOn so lmportant A quote from the December 29th lssue of Buslness Week explains this l1lcely. After notrng the excess capacity tha t eXlsts rn most industries since 1955, the artrcle says – What has caused demand to grow so slowly tha t the nation's industrial capaclty has been underemployed for half a decade The chlef culpnt, vlrtually all economists now agree, has been a tax system con- structed to fight inflatlOn durrng World War II and rernforced during Korea. But by 1957 U. S, economy had moved out of the so-called 'postwar period' when private demand for all sorts of goods – especially autos, housing, appliances – seemed lIlsatrable, into a period when prlvate demand flagged. The tax system constructed for earlier needs lmposes excess,; lve restrant ordhis'later'-e'corlOmy-'n — The U, S. tax system has been hailed as our most important 'automatic stabilizer', a powerful check On recessions. Increasingly, economists have come to see tha t the tax system is also a powerful damper on expansions. For rnstance, from the spring of 1958, the trough of tha t recession, to the sprlllg of 1960, the peak of the expanslOn, GNP climbed 15. But tax revenues climbed 29'70 – tWlce as much as the rise in incomes. Thus taxes cut heavlly into final demand for goods and ser- Vlces, causlllg the expansion to lose momentum and flllally fade out. Again, in the Kennedy years, GNP rose 11'70 from first-quarter 1961 to third-quarter 1962 – but the tax bite in- ..creased 18/0 — again nearly twice as fast. EDMUND W.1TABELL Dow-Jones Ind. 662.23 WALSTON & CO. INC. Dow-Jones Rails 147.51 …. , T ' \ m.\\ 1,,\ I(!lh \ ,,I ,\I\d 1,,11 1, \le'd ,h ,\1\ I' ld II ,,,It, it .tlu tu \'U\ UI ,('c' Il,c \, I,, lui \ hC ' '\ II( ll'f,,' II Il, ,III.II!I(',1 111'lelrl 11t ('lIdl,lllt,f'd to ,U( HI \ '11 ,,\ll\plt'tI\( –.. ,llId tilL' fUlllhh'lI\.. 11'1.r I\t ,,,,llIlId,, 1\, \1( lill! h to I'L' dI I- t n 1 .. 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Tabell’s Market Letter – January 11, 1963

Tabell’s Market Letter – January 11, 1963

Tabell's Market Letter - January 11, 1963
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Wdlston &- Co. Mem/,.,'. Xell' YOJ'k Siock Euha110e NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS CHICAGO TABELL'S MARKET LETTER January 11, 1963 The market continued its favorable action during the past week and all three averages reached new high territory for the move. Declines were minor in nature. The Dow-Jones Industrial average at the intra-day high of 674.23, is still quite a distance away from the all- time 1961 high of 741. 30, but the Rail average at 151. 38 is very near the 1961 high of 153.60. The Rail average, of course, reached 182.54 in 1956 and 174.41 in 1959. The Utilities, at this week's intra-day high of 134.05, are also quite close to the 1961 all-time high of 136.57. So far, the technical pattern has worked out just about as anticipated. The Industrials are now well into the 650-685 area which this letter predicted in October would be the upside objective. However, as yet, the market shows no signs of deterioration. The breadth index continues to move ahead with the market and has even advanced on days when the averages have declined. Volume indications also remain favorable and there is no sign of a distributional top pattern. The plethora of investmen t funds probably is an important element in the present mar- ket. We mentioned this before in our letter of November 16th after the averages hadadvance over fifty points from the October lows. We said – Most of the seers who have now swung sharply to the bullish side of the fence now claim that the successful confrontation in Cuba has, in some magical way, made stocks worth more today than they were a month ago. This is, in our opinion, tenuous at best. The rise in stocks that followed Khrushchev's backdown is another one of a long chain of examples of the market's finding an excuse to do wha t it was in a technical position to do in the first place. A more valid explanation for both the magnitude and sharpness of the rise lies in the fantastic end of October, poised and waiting to enter the equity mar t.' that were, at the 0 After citing the sharp increase in time i ui i Y . utual funds and the increase in the short interest, the November 16th Ie 0110 e . h – What, however, does all this mean for investment policy at position of the investor. If he had the courag 0 , hi pends largely on the current e a ely invested position at the end of October, there is verY'little y essarY'for him to maintain this posi- tion. The rapidity of the position. They are, indeed, w . i that most investors are not in such a e 'WPortunity to add to holdings on any minor de- cline. The great dUfic decline is not like 0 any potential equity buyers in this position, any It is much more probable that a correction, if there is one, will nor' cope. Meanwhile, the upside objective of our technical wor continues to be 650-68 0 Dow. A large number of stocks have higher percentage upside potentials and, above ,it is probable that a large portion of the potential equity money mentioned above is still waiting to enter the market. In view of all this, those investors still having cash reserves are probably best off committing them at the present time. From what we can observe at the moment, there is still a large amount of money seek- ing investment at lower prices. It would appear that selling on balance on strength has con- tinued and cash holdings have increased. This indicates no drastic declines in prices until most of this potential investment money has been committed. It also indicates that, barring unforeseen international developments, the dramatic swings up and down that occurred in 1962 will not be repeated in 1963. It will be a much less dramatic year with the averages remaining in a relatively narrow trading area as compared to 1962. Probably, it will be wiser in 1963 to stress the price action and values of individual issues rather than the gyrations of the general market. The situation today is quite different than a year ago when the market was near the completion of a distributional top after a speculative binge that had carried many stocks to unwarranted heights. The May-June decline has corrected a good portion of the over-valuation and today the market appears to be in the process of forming a long-term accumulation pattern that needs a longer time period for completion. This will declining phases as well as advancing phases, but the swings will be more moderate than In 1962. Among issues in our recommended lists that appear attractive at these levels are Beaunit Mills (221/2), J. Ray McDermott (231/4) and Varian Associates (36 3/8) for price appreciation, and Crown Zellerb3.ch (49) and Gulf Oil (39 1/2) for quality and growt.h, nd National Can (12 1/4) as a low-priced speculation. In our complete recommended 11st issued January 4th we inadvertently omitted Chrysler (80) which we recommended in June at 41 1/8. Our present advice is Hold-Buy at 75.-70!1 EDMUND W. TABELL Dow-Jones Ind. 671. 60 Dow-Jones Rails 148. 68 WALSTON & CO. INC.' lllHrhct letl!r …. und under no circumstancc' IS to he COntl'lIed nn 'lITe. tu ,,('II 01 1 bnhrltnt'''11 tu lillY lin (,,lilltIC 11.'('1 I cd lu hel ('In The mClll1'lt\lI (ntnmed herein IS nut ,. to .,c(,l1rruy 01 ('umilletene-s lind Cut th, cur lint, nnol 111101('1 lin (1\ ('1I111Stllll( es I to he (()I1 … 1\ I bn hy \\'nlston & Cu. Inr All eprc;slOn…..r nJlllllon arc … uhJcrt to) (hung-e 1'lth'Hlt Iwlle \\'nl … t,m & Cn, h\(', IInll Off,ce, … DlIC(tnlb. Stml..hl,h.'I' lon,1 theroof. rlillchnKc. 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Tabell’s Market Letter – January 18, 1963

Tabell’s Market Letter – January 18, 1963

Tabell's Market Letter - January 18, 1963
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Wdlston &Co. —–Inc MrIll1,el'. Xrl' rod.. Stork Exchange NEW YORK SAN FRNCISCO LOS NGELES PHILOELPHI OFfiCES COAST TO COAST AND OVERSEAS CHICAGO TABEll'S MARKET lETTER January'18, 1963 The market continues its impressive show of strength. At Tuesday's high of 680.80, the Dow-Jones Industrials had almost reached the part of the 685-700 objective this letter has constantly suggested was the upside potential. Our feelings concerning the equity market at the moment ean be summed up in three state- ments. (1) – It is difficult to read, from the base formed between May 1962 and October 1 an upside potential of much higher than 685-700 on the Dow. This figure, moreover, coin- cides with the heavy overhead supply that exists between 680 and 740, the original 19.61-62 which produced the sharp decline in the early part of last year. '–(2) would, therefore, be il1ogiCaltci- expect an advance-substaiilially above the 685 -700 level without some correction or consolidation. Such a correction or consolidation would enlarge the base and make a higher reading possible. It is impossible at this point to predict what form this sort of action may take. Certainly, no distributional top has been formed and the market does not appear immediately vulnerable. (3) – The most important thing to remember, however, is that all of this is part of the process of forming a long-term base for a new major advance. Here again, it is im- possible to ..predict, at this early stage, the timing of such an advance, and it is probable that its beginning is months, or possibly years, away. It should, however, ultimately ca the market into new high territory. If this indeed is the shape of things to come, it behooves the analyst, even at this early stage, to examine the factors which might lead to the next bull market. At this week's high, the Dow-Jones Industrials were selling t 1 r eg their latest twelve months earnings, a level which, interestingly e e c a only in 1961, just before the 215-point break in the averages. It is al xio at' at before any major upside move takes place, there must be a tia' re n the earning ability of common stocks and a move out of the earnin eau t as been in existence since 1955. – It .is-in, this ' . -,pa.st-te.w week.s,–tha twe-feeL thE'.. P ing tax legislation is of c been made of the Administration's tax program in the business pres I ensaSIl'ed a reversal of the economic thinking of the past thirty years and I' n theories of the late Lord Keynes. This is a bit strong. Indeed, e' the tax cut, both implied and stated, seems largely Keynesian in its ass p on. trong case can be made, however, that the President's tax program, if enact combined with those measures already enacted, would reverse a trend in tax policy t as largely prevailed since 1935 and start the return swing of a pendulum which had a most certainly moved too far in one direction. What the Administration has proposed includes an eventual reduction in the corpo- rate income tax to 470/0 (a move which, by itself, would add 100/0 to the post-tax earnings of corporations). Already, depreciation schedules and investment credits have been enacted allowing business to invest in the capital equipment necessary to increase profits, and the proposed reduction in the top tax bracket to 650/0 would free a large portion of the income of the upper bracket tax payer who is in a position to invest new funds in business enterprise. As noted above, the recent history of taxation in the United States may be viewed as a pendulum. Throughout the 1920's, under Treasury Secretary Andrew Mellon, gradual re- ductions were made in corporate and high bracket taxes, and these taxes reached a nadir in the late 192b's. 13eginning wi'th the Revenue Act of 193-5, the emphasTs shifted heavily to raising surtaxes and corporation income taxes, and these revenue sources increased in im- portance with very little interruption, spurred on by the demands of World War II and the Korean War. We are, in other words, on the threshold of the first major lightening of the business tax burden since the 1920's. It may be left to analysts of varying political and economic persuasion to argue about the effects of this move On the economy as a whole over the long term. It seems difficult to doubt, however, that the result for the business commu- nity over the next few years could be a move out of the eight-year profits stagnation which has hobbled it to date. Just such a move will be needed before any major advance in com- mon stock prices can take place. Dow-Jones Ind. 672.52 Dow-Jones Rails 146.25 ANTHONY W. TABELL WALSTON & CO. INC. ThIS milt ket lIot, and under no CLrCum.,tnnce'i IS to he contl tied IlS, nn ffet tn hclt III n sulicltntm to 10\1) nllY I dell ell 'til hel eln The infm malliln l'ontnlncd herein not j,l1nrnntcl'llI; to nCCUlIH') tn nnrl the fill I not. ,lnd 111ldel IH ('II til he (l)u(llierl n lcplc-.cntl' hy Wnlstan l.. Co, Inc All C'l(pre!blOnb of o)lnJUn nrc bublcct to ehllnl-'!' \\ltllPlit nuhec & Cn, 1m' 111111 DIIC(OIS, ,Ind hmllinyees thereof, l'lIlehnRc, m'l.Y hn\c nil mtl'cst III the oCClIllt!C rncntlHllcri helClIl, 'fhi' mnlh('t Icttel mClcly II lCIl,-llll Infor'mlll cummentllry nn lIny tn ,IllY nl.lrket new. nnd lIut n…. (I complete AlldltlllIll11fulmlltlon \\lt11 If) llll\ ..crllllh…, l'cfcIICe! tu h,-'ICIII III fUl upon request \\ 301

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Tabell’s Market Letter – January 25, 1963

Tabell’s Market Letter – January 25, 1963

Tabell's Market Letter - January 25, 1963
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Walston &- Co. Inc MemiJe.'il SeIC Yn1i, SIne E,fchal1ge NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO COAST TO CO….ST AND OVERSEAS TABEll'S MARKET lETTER January 25, 1963 There is not much to add1olast'week's letter. Since the Cuban crisis in October, we have beeri suggesting an,advance to the 650-685 level in the Dow-Jones Industrials with a possibility of a somewhat higher pote,ntial of 700. For the past ten trading days the average has been hovering around the 680 level, hut our breadth indices and other technical indica- tors show no signs of deterioration. The only immediate reason for caution is the fact that the averages are reaching their upside potential. Also, there appears to be little fundamenta reason to expect a broad extension of the advance from present levels, Earnings estimates for 1963 on the Dow-Jones Industrials center around the 37,50 – 38, 00 level as compared to a 35.60 estimate for 1962. However, at 680, the industrials are selling at 18 times esTiinateo'l1J'63earnings an — — The general market has reached a stage where it is fairly close to its upside potential and a new pattern must form before a sizable move in either direction is indicated. This will take time. It must be remembered that it took almost a year to form the distributional top in 1961 that indicated a 200-point decline, and it took about five months to form last year's May-October accumulation base that indicated the present advance. At the moment there is no indication of wide price swings like those which occurred in 1961 and 1962. The situation today is quite different than it was a year ago. A year ago at this time the market was not much above present levels. It was approaching the 686.89 January low just prior to the final rally that carried the industrials to an intra-day high of 727.14 in March. This was followed by the 200-point decline in May and June. However, the technical pattern was quite different a year ago than it is today. A year ago the in a speculative binge with so-called growth issues of third and fourth grade qua y u if'llg most of the activity. The market was forming a broad distributional top ani breadth index and other technical indicators were slihw;' s I 0 tial of 550-525. The eriorating action. The May-June decline corrected a large part 0 t exc es. The downside potential was reached with the dreamboat issues , but pulling the entire market 'down with them. There were . June wh.,ich .a' b 'n investment-quality issues in May- e market has -;; good-por- tion of the 1962 losses in the there have been comparatively few ex- cesses. The and gambling parti aiW, 'nl'n l'nvestment-quality issues, and the speculative t 1961 has been absent. No distributional top has been formed and the bre .i other indicators have as yet shown no signs of a danger- ous pattern. On the 0 r h ,the market has almost attained most of its immediate ob- jectives and probably n a mild correctionary move in order to enlarge the base patterns and indicate ultimatel ighe r levels. The present pattern suggests that the action of the averages over the foreseeable future will be much less important than the action of individual issues. This area of the mar ket is covered by our supervised recommended list. The last compilation was made at the year-end and is available from Customers I Representatives. On the last list, most issues were marked Hold, but a goodly number were given a Buy- Hold rating. The'list of the Buy-Holds in the Price -Appreciation Group is reprinted below Close 12/28/62 Close 1/25/63 Alside 27 1/2 29 1/2 Atch, Top. S. F. 24 5/8 26 11 8 Close 12/28/62 Close 1/25/63 Kern County 735/8 77 McDermott, J. 23 1/4 26 3/8 Beaunit Burlington Ind, Cluett Peabody Consol. Coal Ex-Cell-O Intern'l Minerals 203/4–26 453/8 35 41 3/4 41 23 118 281/4 461/4 39 118 453/4 43 5/8 McKesson, R -40 1/4 Reynolds Met, 23 3/4 Schlumberger 66 Stevens, J. p. 29 5/8 Union Bag 35 1/4 US Plywood 45 42 26 67 3/8 30 5/8 36 3/4 47 7/8 Intern'l Tel & Tel 423/8 47 5/8 Universal Oil 39 5/8 38 5/8 In cases where the price rise has not been too steep, the Buy- Hold rating is still in effect. Remember, these are recommendations for long-term holding and not for trading vehicles. EDMUND W. TABELL Dow-Jones Ind. 679.71 WALSTON & CO. INC. 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