Viewing Month: July 1965

Tabell’s Market Letter – July 06, 1965

Tabell’s Market Letter – July 06, 1965

Tabell's Market Letter - July 06, 1965
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r- Walston & Co. —–Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS lABEll'S MARKET lETTER July 6, 1965 The Dow-Jones Industrial Average entered our suggested 850-820 buying area and rebounded sharply on heavy volume to close 20.80 points higher on the week at 875. 16. An intra-day low of 832.74 was reached on Tuesday and was followed by an intra-day high of 878.40 on Friday. Considering the sharply oversold condition of the market after an 11. 8 decline in eight weeks, it is difficult to figure just how far the rebound in the Averages might carry. Steep declines, caused largely by emotiJnahcharrgesllI'ather than by specific economic developments, can reverse quite sharply. A comparable 11.80/0 decline in eight in April of 1956 was followed by a complete retracement of the decline in two months. Our opinion on the market pattern for the foreseeable future is that the uptrend channel . rom the October, 1962 low has ended arid -will b-e-roeplaced oy a b-ioad-trnding-area with U wide price swings both up and down. During this period the action of individual stocks will be far more important than swings in the market averageiwe would watch closely stocks that are showing above average relative strength and would concentrate our attention on issues that at last week's low held above the low they had reached in December when the Industrial Average was at the 850.19 level. One such a stock was Radio Corp. of America (34 1/8) which, at this week's low,fail- ed to penetrate its December bottom of 31. The technical action of RCA has been interestin Early in 1964 it reachd a high of 35, then reacted and, throughout most of 1964 and early 1965, held in the 27-34 range. Early this year it posted an upside breakout from this range. In our June 14th letter we recommended its purchase on any reaction to the support level of 32, and the dip to this level subsequently occurred. The objective of over 60 per share. to have an upside 0 Such an objective appears attainable over e this growth compan Obviously, the most interesting aspect of RCA at company did most of the initial research and largest individual prOducer of tubes. Sales i a color television. The in 's area and is now by far the 'on sets have been growing at an astronomical rate, they are will no doubt accelerate as more pro .to 500/0oincrease.this year. The trend W cast in color, and yet the market is far from saturated. At the is a color Yet televis' n y of every seventeen television sets in use V a e only string to RCA's bow. Its data processing oper ation has recently itt ack; backlog is up; and its new Spectra 70 computer line is expected to achiev re ely favorable reception. Defense business is sizable and NB profits continue good. sent prices mark the stock at just over twenty times estimated 1965 profits of 1. 60 er share. The stock is added to our recommended list for quality and long term growth. While certainly not of the quality of RCA, Automatic Canteen (20 3/8) also, on re- cent break, held above its December low. It also appears to have a highly interesting growt potential. The company is both an operator and manufacturer of vending 'TIachines, but the greatest portion of revenues comes from vending operations and food services rather than manufacturing. Total revenues have shown an increase in every year since 1955, but net earnings have been erratic, due to various non-recurring items and other factors causing pressure on margins. Nevertheless, 1964-1965 earnings (the fiscal year ends September) are expected to reach a new peak at 1. 10 per share, and further growth appears in pros- pect as the demand for fooa service continues to grow. It now appears that any change in coin silver content will not seriously affect the company or the industry, and, therefore, one potential cloud On the horizon appears to have been removed. On the assumption that per-share net can more closely approximate sales growth in the future, the stock appears to have merit as a growth speculation. The technical pattern, meanwhile, is highly attractive. The stock from 1962 to mid- 1964 held in a base formation in the 10-17 area. The upside penetration of this base indi- cated a possible 40, and good support exists not too far below current levels. Other stocks mentioned in our June 14th letter, anclca.'ddieu;to.our recommended list as buying levels were reached, includeAmerican Hospital Supply (27 1/8) bought at 25, and the previously mentioned American Potash (401/4) bought at 39, International Paper (313/8) bought at 31, Interstate Motor Freight (27 1/2) bought at 28 and Perkin-Elmer (51 1/4)bough at 48. EDMUND W. TABELL Dow-Jones Ind. 875.16 Dour-Jones 97 70 WALSTON & CO. lNC. ThiS market letter IS published or )our COil nlenre 1'11' I/lirmntlon and 1; ,!l fTr to '1,,11 or J\ w\lrlh\tlon to b\l\ Rn seeuntiM thsrU''1ed Th(' \J\- formation WI\' obtaln('(i from !IOU ret's We! lilliCH, to 1. f.hallle, but \' ito not gu,'l,lnt(. ll(UI 1('\ \\',,J.lun S. C, In. olnd It!! dlrt'dor'l or emJ'llo)ei'!l rna) have nn interest In or .lIltj ;,1 uf'II!'.! to nl'I!I

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Tabell’s Market Letter – July 12, 1965

Tabell’s Market Letter – July 12, 1965

Tabell's Market Letter - July 12, 1965
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– Walston &- Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal'Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER July 12, 1965 After two desultory trading sessions at the beginning of the week, the Dow-Jones In- dustrial Average advanced Thursday and Friday, closing at an intra-day peak of 885.04, just seven trading sessions after posting a low of 832.74. Thus, to date, at least inso far as the Average is concerned, almost half of the loss since the May 14th peak has been recovered. It is currently possible, on the base formed so far, to read an upside objective of '910 on the Dow. This, however, is probably only of a,cademic interest at the moment. It is much more likely that a new pattern will form around current levels, and the action of individual stocks will be far more important than trying to guess the course of the averages. Meanwhil – – any subStantial wealCri.essensuing Ieve1s woula-provide a further buying oppor– tunity. As readers of this letter are well aware, a good part of its comments and recommen- dations are based on technical analysis or the analysis of price action. Much of this analysis is highly complex, requiring charts, graphs, mathematical formulae and electronic computer A goodly portion of technical analysis, however, is based on simple common sense observa- tion – – much of which observation every investor could and should himself be making. For example, simple inspection of any long term chart of the Dow-Jones Industrial Average would have gone a long way toward preventing undue panic during last month's falling stock market. Such inspection would have shown him that, at no time in history, has a market con- tinued in an uncorrected uptrend for a long period of time, as this one did until mid-May, an then immediately entered into a protracted downswing. ceded by some form of distributional pattern in which the ar are invariably prer \jl reater or lesser period of time moves in a sideways trading area. that, at least in part, led this letter to become incre pects toward the end of June and to suggest tha the buying range. – — t u Ii plicated observation y 0 1 – 1C about short term pros 820 el on the Dow represented a e-recent-H-2-point-decline-is of no , significance whatever. It which contained the market fr tWtt the relatively narrow uptrend channel June 1965 is now complete and that the market has entered Ii . have previously suggested that one of the salient characteristics a 1de swings within a generally sideways trading range- the upperaild lower . t range yet to be determined. More precise forecasts of short term action can ro y be made as the pattern develops further. Another likely c cteristic of the new market phase will undoubtedly be vicious se- lectivity. A horizonta trend in the averages is usually not brought about by all stocks mov- ing sideways, but rather by some stocks moving upward and others downward. In such a market, the level of investment success achieved depends almost exclusively on what stocks are owned. Here again there are a few relatively simple observatims which any investor can mak For example, in the averages, the end of a phase was signalled by the penetration of the De- cember low, the last major bottom made in the Dow. Therefore, penetration by an individual stock of its low for the November-January period may, in many cases, signal the end of a phase for that stock also. Conversely, the ability of an individual stock to hold above the No- vember-January lows is a clue that that stock's uptrend may still be intact. A simple com- parison of the June lows lows is one which Is easy to make for the stocks in any portfolio and may well lead to the elimination of some weak spots. We have recently made a routine check of all major stocks that held above their No- vember-January lows in the recent weakness, and some of the results were interesting. For example, 15 of 23 Aerospace, stocks remained above their prior bottoms, as did 10 out of 13 in the Air Transportation group;-4 out of 5 Aluminums, 14 out of 19 Apparel, 10 of 10 Disti lers and 6 of 6 Soft Drink companies. Other industry groups in which substantial numbers of stocks remained above their previous lows included Air Conditioning, Building Equipment, Ethical Drugs, Electronics, Packaged Foods, Home Furnishings, Office Equipment, Publish- ing, Textiles, Tobacco and Vending Machines. Groups in which very few stocks were able to hold above their old lows includedAutomobiles, Broadcasting, Cement, Savings & Loans, Producing Oils, International Oils, Steels, Utilities and Rails. Dow-Jones Ind. 879.49 Dow-Jones Rails 200. 24 ANTHONY W. TAB ELL WALSTON & CO. INC. ThiS market letter is llubllshed for )'our convenience And mfOTmRtlon and I'! not .\1\ offer to sell or R sohdt.ation to buy Rny l!I('('untie!l dlseussed The In annntton WflS obtained from soure!..'!! we believe to I, r('llItble, l)ut \\c rio not. punrante(' It.. nC', unl('\ \V,\\;ton . Co, lnc lind (Iffi('('IS, .hr('('tors or employees may have fin mter!st in or purchase and sell the s('cuntll'S 1,.1 tn hCIlfl WN301

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Tabell’s Market Letter – July 19, 1965

Tabell’s Market Letter – July 19, 1965

Tabell's Market Letter - July 19, 1965
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Walston &Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange Bnci Other Principal Stock and Commodity Exchanges TABELL'S MARKET LETTER COAST TO COAST AND OVERSEAS July 19,1965 At last week's intra-day high of 889.98, the Dow-Jones Industrial Average had recover- ed 57 points or just about half of the 112-point decline from the May 14th high of 944.82 to the June 29th low of 832.74. Normal technical corrections of broad market movements usual ly result in a one-third to two-thirds retracement of the previous move. A two-thirds retrace ment of the 112-point decline would bring the Industrial Average back to around the 906 level. This about coincides with a base count of 910. The uncertain factor in the present pattern is the sharply oversold condition reached in the recent decline. This could result in an above- average retracement. The extreme selling pressure evident in June markets has at least temporarily subsided and the market has taken recent unfavorable news developments in the international field in its stride; – – – In our opinion the market, as measured by the Averages, is now in a broad trading area that will continue for a considerable period of time. The outer confines of this trading area are not yet clear. It is possible that both the high and the low for 1965 were reached in the first half of the year, give or take a few percentage points. A broad trading area of this nature will necessitate an agile investment policy. It would indicate, from a technical viewpoint, sell ing stocks with unfavorable patterns on general market strength in order to build up reserves to buy favorably situated issues on general market weakness. This letter suggested, for quite some time, a policy of building up some cash reserves during market strength earlier in the year. Part of this reserve was available for purchase in the suggested 850-820 buying area last month. Further strength in coming weeks, if it occurs, should be used to eliminate un- favorable situations in order to build up buying reserves on weakness. As we have mentioned in recent letters, a simple met d 0 ci!ing favorably situated issues would be to concentrate attention on those el 0 eir individual De- cember lows. The Industrial Average reached a low ember as compared with the recent low of 832.74. From a technical oint, upt is still in effect in indivi- dual issues that fall into this category. Issues a ve s elow their individual December lows are in at least a important. Among the Standard & &recently are 0 i n a.broadersense, group action is also ps owing the best relative strength action 0' Aerospace ctronic Leaders Small Loan Companies Aluminum Gold Sugar Beet Refiners Appliances Home Furnishings Telephones Business Equipm t Oil (Domestic) Tobacco (Cigarettes) Containers (Meta lass) Packaged Foods Truckers Coppers Publishing Variety Stores Distillers Radio-TV Mfgrs. Vending Machines Electrical Equipment Retail Stores All of these groups have held above the December lows and, in addition, have shown excellent relative strength action. It is interesting to note that since the June-28th low, 45 common stocks have reached new high territory for the year despite the fact that the Average itself is some sixty points below the top. Among the more important industrial stocks that reached new high territory are American Can Delta Airlines Neptune Meter American-So. African Inv. American Sugar Eastman Kodak Jewel Tea Shell Oil Standard Oil of Indiana Atlantic Refining McKesson & Robbins Texas Instruments Beneficial Finance Merck Union Oil of California Carrier Corp. Motorola Xerox Most of these stocks are in the favorable group categories mentioned above. One important exception to the December low theory must be noted at this point. The Rail Average reached a December low of 202. 45 and penetrated this level late in May before the other averages. The low was 184.63. The downside indication of the broad October-March top was 185-180. In addition, the Rail Average has returned to the 1956 high of 182.54. Most individual rails also about reached their downside objectives. This group has been in a broad basin out period since 1957 and, technically, could support considerably higher levels. The group could react back to the 185-180 level but, at recent lows, has, in our opinion reached a majo support level and should be bought during periods of general market decline. Dow-Jones Ind. 880.43 Dow-lanes Rans 201 79 . . EDMUND W. 'FABELL WALSJON & CO INC This market letter 18 published for your convenience Rnd mformatlon flnd not an offer to or II. !IOIlcltation to buy any M'CurlUes The In. formation WRS obtnlned from sources we believe to be reliable. but we do not gtlRrRntee its n('curn('y Walston & Co Ine anti It.. offi('t'ls. dlredor'! or emJ'ltoyees may have an interest In or purchase and sell the secUritIes referroo to her('ln. WNSOI

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Tabell’s Market Letter – July 26, 1965

Tabell’s Market Letter – July 26, 1965

Tabell's Market Letter - July 26, 1965
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lABELL'S MARKET Walston &Co. —–Inc – – – INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS LETTER July.26, 1965 The market has shown normal technical action since the Dow-Jones Industrial Aver- age reached an intra-day low of 832.74 on June 29th. The rally to the July 15th high of 889.98 was a one-half retracement of the 112-point decline from the May 14th high of 944.82. The decline from the July 15th high to last week's low of 857.71 was a retracement of a little over half of the rally from the June low. Thus it would seem that the market is again in tech nical balance after the wide price swings since mid-May. Total volume of trading on the New York Stock Exchange on a ten-day moving average is now at the lowest point of the year. The emotional extremes that brought about the wide price moves seem to have disappeared at least for the moment. Selling volume, which had been moving.sharply higher sillce .tWril,. nasalsodeclihedsince the June there'has Deer. no great increase in buying – ..- volume. Last week's decline was brought about by a mild increase in selling volume and a sharp decline in buying volume. There is considerable bearishness in the market place – as witness the large increase in the short sales as reported last week. In June, this bearishnese was actively translated into actual sales. Since the June low, the attitude has changed to one of wait-and-see rather than active pessimism. The short term pattern of the market is interesting. With both the 112-point decline and 57 -point advance corrected, the market may be forming, in technical parlance, a head and shoulders bottom. On its first decline from the 944.82 high of May 14th, the Industrial Average dropped to 859. 13 on June 15th. This was followed by a quick recovery to 888.44. This high was followed by a decline to the June 29th low of 832.74. Since that time the mar- ket, at the July high of 889.98, has recovered back to the of 888. 44 and back to the June 15th low of 859. 13. In effect, this gives a patte of range between, .roughly, 890 and 860, with a head, or stick, on the his ing area has a dura- tion of thirty-one trading days with only three days tota w the 890-860 trading range. If this range holds, it would indicate t – selling wave was emotional in nature rather than caused by actual develop e . A' Y to move above the July 15th higt –would-indicate could, of course, easily be event, a testing of the June low fr -lows-This-potential-pattern ' below last week's low. In that There is no change in the downside po- I i I tential. The cated. cy i e have suggested since early June, is still indi- In last week' t we ntioned that, at the June 29th low of 184.63, the Rail Aver- age had reached a majo s rt level. The Average has since recovered back to 204.33. This is a recovery fro e June low of almost 110/0, as compared to 70/0 in the Industrial Average. The Dow-Jones Rail Average closed at 197.12 on Friday. From a technical view- pOint, the downside potential is 185-180. We believe this group has a very promising long term potential with below-average risk and should be bought on minor price weakness. We have included six rails in our recommended list mainly because of the yield factor. These are marked with an asterisk in the list below which includes a number of yield rails. We believe there is now an indication of higher price levels along with substantial yields. Atchison Chesa. & Ohio Denver, Rio G Great Northern Illinois Central Louis. & Nash. Price Yield PiE Ratio 32 5.0/0 11 Norfolk & West. 67 1/4 5.9/0 14 Northern Pacific 191/2 5.00/0 533/4 5. 60/0 12 14 Southern Pacific Southern Rwy. 471/4 4.20/0 12 Union Pacific 71 5. 60/0 8 Price Yield PiE Ratio 1263/4 5. 60/0 14 467/8 5.60/0 357/8 3.80/0 13 11 52 1/2 5. 30/0 38 4.80/0 11 10 In a somewhat different category are the merger rails like Atlantic Coast line, Seaboard Airline, Chicago Northwestern, Chicago Milwaukee St. Paul, New York Central and Pennsylvania. We believe there is a substantial long term potential in these issues also. Dow-Jones Ind. 863. 97 Dow-Jones Rails 197.12 EDMUND W. TABELL WALSTON & CO. INC. ThiS market letter is published for your Cf'nvemence pnd infOrmatIOn a.nd 18 not fl.n offer to sell or II. soIlflu..t,on to buy ftny dlscuued. The tn- formntlOn was obtaIned from sourC'('; we hdu'vl.' to 11.' rl'hable. but we do not KUarRntee Its RC'curncy \\ Alston &. Co. InC'. I\nd lis officels. dlre.'t.ors or (!JI'lpJoyees may hn.ve an mterest m or purchase And sell the referred to hert'ln WN.301

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