Viewing Month: September 1963

Tabell’s Market Letter – September 06, 1963

Tabell’s Market Letter – September 06, 1963

Tabell's Market Letter - September 06, 1963
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Walston &Co. – Inc – – – – – Memler. Xel/' Yor' Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFices COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER September 6, 1963 The Dow-Jones Industrial average has penetrated the December, 1961 closing high of 734.91 on Thursday to reach 737.98. The 1961 intra-day high of 741. 30 was bettered on Friday with the Industrials reaching 742.66. The 1961 highs in both the Rails and Utilities were penetrated earlier in the year, but neither the Rails or Utilities followed the strength of the Industrials during the past week. The Utilities, after a high in midAugust, have been holding in a narrow trading range for eighteen trading days. This average is just about at its 1929 high. The Rail average has been partfcularly sluggish and has so far failed to better its June intra-day high of 177.92. This average is also near new aU-time high territory. The 1956 high was 182.54 and the 1929 high was in the 189-190 area. As this letter has stated many times before, we continue to feel that the action of individual stocks is much more important than the action of the averages. There are many stocks that have attractive fundamental and technical patterns. There are also many issues with mediocre prospects. The greatest importance of the averages is in the background they create. When the averages are moving forward, the good stocks are in a position to move to new highs, while mediocre issues move grudgingly higher. When the averages are moving lower, the unfavorable background brings the mediocre issues into new low terri- tory while the stocks with good prospects move grudgingly lower. It continues to be our thought that the market is in a broad reaccumulation area with the ultimate result being a much higher price level over the longer term. issues are at differ- ent stages of the pattern. Some are in a bull market of th I are in the early stages of a bull market. Others are still forming s me of a bear market. P. 10 the final stages The important thing at the moment is price level as it was pecember, ous technical pattern that market is vulnerable only to t dustrial average is at the same d is entire1y different. The dangerarly 1962 does not exist today. The For the e emains favorable. The breadth index has moved into new high terr even a bit better than the averages. There has been no divergence betwe t t ndices which is a necessary preliminary before the begin- ning of technical deterlO on. For the shorter term, the market has had a steep 55-point rise in a little over f' weeks and some indicators are reaching overbought territory. Thus, some consolidation is probably needed at this stage of the pattern. The strength in the averages has brought up the possibility of the speculative public coming back into the market on a broad scale. The smaller market operator has been a seller on balance since September – as is evidenced by the odd-lot figures and other indicators. This is not an unusual pattern in the preliminary stages of a market advance. It usually occurs after a sharp decline when the public becomes disillusioned and sells out on the first indication of strength. Sometimes it can last for quite a period of time, and the market may have had a good portion of the rise behind it before the smaller buyer reenters the market. Whether the recent market strength will turn the odd-lot sellers into buyers, is still problematical. There are a great many individual stocks with favorable patterns. We would expect these issues to move higher regardless of the fluctuations in the averages. We still advocate the policy of buying on weakness. Excellent opportunities presented themselves this year in March and again five weeks ago. A new recommended list will be in the hands of your Account Executive next week. Dow-Jones Ind. – 735. 37 Dow-Jones Rails' – 173.48 EDMUND W. TABELL WALSTON & CO. INC. This mnrket letter IS not. and under n(l Circumstances 18 to be con'\tl ued as, nn offel to ..('II ,II 11 801lCl1lltlllli to lou)' Ilny dic retc! t e.1 \0 hel eln The In((I1 mntlUn (,,,nt/tined herem IS not f;Ufllantceti a9 to ilccurney or conllllctcne-.s nnd the fill thm'cor ' (IVt, lind un,l('1 Ill) .. 111 to ue (,Oflbtllll!(l (HI, It lcplcentn. lIon by Wnlston & Co, Inc All expressIOns or pm ion llre hubJcct to ChIlIlI-!' \I'lthput nuhce Wnh,tufl & (;0. Inc lind Offu'et't, Dlle('\III, Stl.lckh,,)dcl'I un.) JomllloyetS theroof, )IUICha;e, sell find may hale an mterest 11'1 the IlCCliratle'l mcntlUnCII hCICl1l 'fhl! Illnr….'t Ictter I., mtcnded lind re,cllled merel)' Db n j.!(.'ner.t.I Inrnrmui commentary on tiDY to da) market news and not as a complete annlYlllo A.hhtlllltl Illflll mnllUn \\ Ilh til IIny SC('U1 IIIC refClled to helcm Will rurIllshed upon request \\.\ ;01

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Tabell’s Market Letter – September 13, 1963

Tabell’s Market Letter – September 13, 1963

Tabell's Market Letter - September 13, 1963
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Walston &Co. .l1('lJIhl''S XI'/I twk Stock E.l'('ilan(l(J NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS CHICAGO TABELL'S MARKET LETTER September 13, 1963 UNITED FRUIT COMPANY Current Price 24 The United Fruit Company is the world's Current Dividend .60 largest grower and importer of bananas. In 1951, Current Yield 2 1/2 the stock, which had earned 7.54 and paid 4.50 Funded Debt Common Stock None 8,034, 625 shs. in the previous year, sold at over 70. By 1960, earnings had eroded to 25 a share;dividends had been omitted for nine months, and the stock reac Sales – 1963-E Sales – 1962 Earn. per sh. -1963-E Earn. per sh. -1962 Mkt. Range -1963-61 310,000,000 319,790,000 1. 10 1. 30 \ 301'/2 – 171/8 f'd a low of 14 7/'8. The -Fabulous Fifties, in United Fruit's Cdse, Werf' something than fabulous. The redsons for the decline in the compa- ny's fortunes bear examining. In tl)e mid-1950's, a plant fungus, called Panama disease, began ravaging Central America, and the company was forced to move to areas unaffected by the disease. This was the proverbial leap from the frying,pan into the fire. High winds In the new growing areas caused frequent blowdowns which destroyed fruit and caused heavy expenses. As if all this were not enough, in the late 1950's, banana prices collapsed. Quotations which had been as high as 9.00 per 100 lbs in 1957, dropped as low as 3.50 per 100 lbs in 1960. It is interesting that each dollar pnce change 2.75 per share before taxes to United Fruit. 0 Even after all of its misfortunes, United r n ev ,can hardly be call ed cheap. After a good earnings recovery to 1. 32 s ar, blowdowns adverse- ly affected this year's results —– estimated at 1. . Th ck is thus selling at over twenty times earnings and the 60 dividend a y' of only 2 1/2. Clearly, the new – – in inheI'lted-a- raft of problems And yet there is evidence 0 borrow a phrase from the\ sport s page, has no where to go but up. li of the fall, up could be a long way. As'noted above ' t major difficulties have been impaired production due to disease and ws erely depressed product prices. The answer to the former problem lie eI anana which win probably account for almost all pro- duction by 1966 and is ot 'ect to Panama disease or blowdowns. In the area of product prices, there is some ence that the long downtrend has ceased. In addition,a major ef- fort now being undert en by United Fruit should allow the company more control over prices. The company is now packaging bananas in the tropics and shipping them in boxes rather than on the stems. Bananas are being labeled with the widely advertised Chiquita brand name – a proprietary asset of no small importance. In addition, it is felt that boxing will ultimately reduce transportation cost and losses. Thus, two besetting difficulties seem to be in the process of elimination. There is, in addition, yet plus factor. The company's balance sheet is excellent and cash gene- ra tion has exceeded capital expenditure for the past two years. It seems likely to continue to do so. Additional cash is being provided by the associated grower program under which lands are being sold or leased to local producers. This cash inflow allowed the company to acquire 426,000 of its own shares this year, and it is in a position to continue share acqui- sition or to buy earning assets for cash. In addition, any improvement in earnings can easil be reflected in better dividends. From a technical point of view, ability to reach 31 would indicate a possible 54. The stock appears to be a buy in the 24-20 range as a speculation on the ability of an able management to rehabilitate an historically strong company. Dow-Jones Ind. 740. 13 Dow-Jones Rails 172.79 ANTHONY W. TABELL WALSTON & CO. INC. ThiS mflrket letter is not, and under no Circumstance'! 1'1 to be ('Ontrl1cd as, nn olfel t(l ..ell 01 1I bohcltntwn tn hllY fID seeUlltle,., lefCllcd 10 hClein The informnhn COlltnlnert h('Tein is not J.(uarnnteet.i fie to lIccufacy or oomilletenebs anlt the fUlnl!hll1J! theleuf It 110t. IlnCl un,I('1 11( to hc n rC\lleentl\- tlUn by Walston &. Co Inc All expreSSIOns tlf oPinton all' ouhJctt to chnnJ!e wlthul llntlte. Wulton & C, 1m, untl OffICt'U, DIIl'CtIJlS, Stockh.,ldcl … nlHI theroof, pUlchasc, sell and may ha\c un mterest In the seeurltlCl mentUlm.\ ht'ICIti mat).,ct lellt')' IS mtcntled lInt! IIre…cllted merely ao n J!enernl Informnl commentary (In Clny to day market and not as n complcte Atltlltl,,ul IIIrUl'mnt,n \\llh to uny 1('(('1 led to helCl\l \\111 (Ul'nt,.heo,l u,pon request \\.\ lUI

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Tabell’s Market Letter – September 20, 1963

Tabell’s Market Letter – September 20, 1963

Tabell's Market Letter - September 20, 1963
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Walston &- Co. —–Inc —– Mrill !lei',' S rH' Y ol'k Siock E.TChange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 20, 1963 After holding between roughly 745 and 735 for almost two weeks, the Dow-Jones In- dustrial average finally broke out on the upside of the narrow trading area to reach an intra- day high of 749. 27 on Friday. Neither the Utilities nor the Rails were willing to participate in the advance. The Utility average is still within the 142-145 range in which it has held since mid-August, and the Rails are still below the June intra-day high of 177.92. The failure of the Rails and Utilities to move ahead with the Industrials casts some doubt on the near term action of the market. As for the longer term pattern, we see no reason to alter our constructive attitude. Since the 1962 May-June lows, we have felt that the market was in a broad reaccumulation area tharwould ultffia tely resUIflril. higher level of prices overthe longer term. 'Our basic investment philosophy has been to buy on weakness. The Cuban crisis last October, and the declines in March and July of this year, offered such opportunities. We believe that the accumulative process continues, but it has not taken place in all stocks at the same time. As a result, we are having, and will continue to have, selective market action. Various groups and individual issues, from a technical viewpoint, are in various stages of the pattern. Some groups, like the oils, have been building up accumulation bases for a long period of time. The oils are one of the groups that did not break their 1960 lows in 1962. They have completed their base patterns and indicate l1igher levels over the longer term. Other issues are still in the early stages of breaking out of base patterns, and others are still in the process of forming bases. Still other issues are probably in the final stages of a bear market and have not even started their base patterns. As we have continually stressed, in an overall patt n . rtiture, the action of individual issues and groups is of much more That is why we have not set any price objective on t t a e c' of the averages. s is move. The figure of 800 is often mentioned by commentators. see no justification for this figue. We susp mate for the Dow-Jones Industnals ally m chnical point of view, we l ' arr', , at,by using a earning,s esti- c hzmg-lt at'twenty-tlmes-earmngs; – Actually, the base count of 730; suggests 760. The only other s the averages held from April to August for the Industrial average is to consider the 1960 low of 565 upside objective w There has b c ns' e 5 part of a broad base pattern. In this event, the r above 800 for the longer term. e discussion of late on the unfavorable near term action of market breadth. T b th theory has gained considerable public following recently and is evidently being , ly used. We have been using breadth action for a long time, but mainly on a long We have found that the minor deviations of breadth are quite confusing and extremely difficult to interpret, The longer term signals occur only occasion- ally and in the past have been proven quite valuable as witness the poor action of the breadth index in 1961. The only important signals are given when a major divergence occurs between the averages and the breadth index. At this point, our long term breadth index is moving along in about the same pattern as the average and there is no major deviation at the moment. Therefore, subject to normal technical corrections of 30/0 to 50/0, we continue to believe the trend is upward. Our original recommendations since mid-1962 were largely confined to issues that did not break their 1960 lows in 1962 because, from a technical point of view, these issues indicated that they were already in an advanced stage of an accumulation pattern. These groups included airlines, automobiles, oils, rails, textiles and utilities, among others; So far, these groups have been largely the market leaders since the 1962 low. As time has gone on, however, and new base patterns have been forming, we have included issues in other groups in our recommended list. For example, the paper group has in the last couple of months shown improving technical action and is now among our favorite groups. Another in- teresting group that has shown rather disappointing action in recent markets has been the machine tool group. It has been moving sideways while the market has advanced, but both the teclinical pattern and the fundamentals suggest a possible upside breakout over the not too far distant future. Sundstrand (22 1/2) and Ex-Cell-O (38 1/2) are a part of our recom- mended list. Some further patience may be needed, but this group indicates interesting long term potentials. Dow-Jones Ind. – 743.60 Dow-Jones Rails 173.11 EDMUND W. TABELL WALSTON & CO. INC. ThiS market letter IS not. and undCI no elreumlltnnccq IS to be const! l1ed as, nn offer tu ..ell!)) II Hohdtnh,, tn btl) IIny securihcli reCel1 cd 'to herein The Information contained herein IS not gunrnntcN as to nCCl1rncy or coml'leteneqs and the (UI nwhllll! thcleuf I not, and Ilmlet no CllCUlmltancC'! 1'1 to be constilled as, tI relll escntll hon b) Walston & Co., Inc All elCpreslons of OpIniOn are BubJect to ('hun)!c \qthullt notl('(' Walbtlln ell, Inc nnel 01(1('('1'1., DIICCt01S. Stod.hoillcrb IIno. thereof, sell and may hllve an Interest m the !lecuntlCs mcntmncd hCleill rnnlket lettel IS jlltemlctl nnd llre!cnted merely aB II J,lenerllt. mformal commentnlY on day to day market news and nol as a cumplete AddltUlnlll miUlmatlOn 'Ith 1('I1)('('t to lin)' ..erUllhe. I'cferlcd to hCl'eln \\111 he furmshed u,pon request \\-.. 301

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Tabell’s Market Letter – September 27, 1963

Tabell’s Market Letter – September 27, 1963

Tabell's Market Letter - September 27, 1963
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Walston &- Co. —–Inc —– femhers Xell' York Stnck E.l'cha11ye flL IE NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES CQA,ST TO COAST ANO OVERSEAS TABEll'S MARKET lETTER September 27, 1963 The Dow-Jones Industrials reached a new intra-day high of 753.04 on Wednesday. This price level intermediate term objective indicated by the 730- 685 base formed during April-August. The new high was followed by a sharp decline with the Industrials reaching an intra-day low of 731. 55 on Friday. Short term breadth has been deteriorating for the past two weeks and the averages appear headed for somewhat lower levels over the short term. There is no important top pattern in the Industrial average, but a normal technical one-third to one-half correction of the 68-point advance from the July low of 684.41 would bring the average back to the 730- t'720-range-'I'he 'pote-ntial- top In-the-Ra ibledeciine-'to the-165 -1'60 .- support level. Despite the poor action of short term breadth, the longer term pattern has not I i changed. As we mentioned in last week's letter, we prefer to follow the major changes in market breadth rather than attempt to interpret the short term fluctuations. As yet, under our interpretation, there has been no major divergence between breadth and the averages. Both indices reached new high territory above the June high and the 1961 high early in September. The averages continued to move ahead by a small amount (about 10/0) for two more weeks while the long term breadth index declined. This, in our opinion, is a short term indication rather than of longer term significance. At the moment, both indices are moving down together. A major divergence would occur if, on the next rally, the average reaches new high territory and this action is not confirmed by the breadth index. Even if this occurs, it is usually a preliminary warning signal. rallied back to about its previous high after giving a Industrial average It was twelve months before the market declined drastically. In er continued ahead to new high territory after giving a warning breadth sigi\!aGrAlnd it s almost eight months be- Lfore a drastic decline occurred. In the breadth index showed a diver- . . .a..new high.a'!Q..c!i9 not decline . drastically until seven months later. i f ).l!!.-, possible that the long term breadth I index will, on the next t action of the shorter term in- dex. If that occurs, we ould our ba lC investment philosophy to selling on strength' rather than our prese t otJA)\o u' on weakness. Breadth a ' . l b'hPy of many indicators that must be used in a technical ap- proach to the market. T indicates that the marke e action of individual stocks on point and figure graphs still in a long term accumulation area and different issues and groups are in various stages forming long term base patterns that will eventually result in a higher price level. Unfortunately, in order to form a base, a stock must move down as weI as up. It has been our opinion for quite some time that, after the drastic 1962 decline, the market would have to spend a lengthy period in backing and filling in a trading range. This p'rocess of stocks moving from weaker hands to stronger hands takes time. We believe it is taking place in a large number of issues, but individual issues are at different stages of development and, therefore, the actlOn of individual issues is of much more importance than the action of the averages. We continue to advocate the policy instituted in mid-1962 of buying on weakness. We would suggest the following issues for purchase for long term capital appreciation at price levels m.entIoned below – . . . .-.. . . Beaunit Corp. Cenco Instruments Clark Equipment Container Corp. Cluett Peabody Disney, Walt First Charter Fin. 26-25 47-45 42-40 32-30 47-45 40-38 40 International Minerals Korvette (E. J.) Inc. Storer Broadcasting Sundstrand Corp. Swingline, Inc. United Fruit U. S. Plywood 56-55 30-28 40-38 23-22 35-33 22-20 60-58 Dow-Jones Ind. 737. 98 Dow-Jones Rails 170.165lils l'IU. -'L.i EDMUND W. TABELL WALSTON & CO. INC. n\nr\et Il!tWI IS not. and undcl no ClrCl1mstnnc('S 1; to be con.,tll1c(\ no., nn ..tre! to …ell UI n ;Uhtlt.ltlU to buy ,InY ,CCUlltlC, I efl'll 1',111 hel ('In The mfl111atltln 'untmllcfl lereln lb nut gl1,nantc(,j tOl1c('nrucy 01 ('ompleteness find the the-I('ur h nul, lU.1 un.lt'l nn (II UI11't,111I C-. 1-. to hc 'UII.,tllll.. I1 11 lle.,ent.t. lIOn hy 'nlston & Co, In!' All of OillnIOn lllL' bulll'lt to \\lth,,l l1lIl'C V.'uhtn &; ClI, Irw, und Dllcctnls, Rtl;(')hohlclb l!HI …c' thl.'rcof, llUILhn'e, clI 'lnl\ mny hn\(' nn In thc mcntloned h,ICIIl I11nl)e1 lettel lIItell,I('.i ,inti m('lcly Ii… n 1!('lIct,d, mformlll commcntury on flny to rlny nlJ.rket ne nlld nnt nb 0. completc Addltlnnl ItlfmmnllOn ith I('.Jlccl In ,til) ICfetled to hC1CItl wll be fUI Illsh('d u,pnn request.. \\ .'. ,1)1 .-

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