Viewing Month: February 1966

Tabell’s Market Letter – February 04, 1966

Tabell’s Market Letter – February 04, 1966

Tabell's Market Letter - February 04, 1966
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TABELL'S MARKET Walston &- Co. —–\nc —– INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVER.SEAS LETTER February 4, 1966 Since reaching-a -new-iiign'Oi C10DD. 55 on Wednesday, January 19th, the Dow-Jones In- dustrial Average has done, essentially, fairly little. It seems, therefore, appropriate at this time to offer a few thoughts about the general stock market climate. Any discussion of the general market background must begin with the fact, reiterated in this letter over the past few months, that, although the recent upswing from a time point of view is the longest in the post-war experience, almost none of the classic signs of long term market deterioration are present. The new highs in the Dow-Jones Industrial Average have been confirmed, albeit belatedly, by new highs in most indices of market breadth. Volume continues at relatively high levels and, mostJmportantly, in which the market advanced) shows no sign of important deterioration. As pointed out here two weeks ago, short interest figures remain favorable, and most of the other indices which have turned down prior to all major stock rna rket peaks are still moving into new high terri- tory. While all this may not indicate a move to new highs substantially above current levels, it does indicate the continuance, for the time being at least, of a continuing favorable market climate, i. e., one in which it will be possible to achieve satisfactory capital gains perform- ance in selected issues. While the outlook for the intermediate term thus remains favorable, it is a little bit more difficult to become wildly optimistic about the immediate prospects for stock prices. The six and one-half months that have elapsed between the lows at the end of June, 1965, and the highs made in the middle of January, constitute a rather generous time span for an inter- m,xiiate rise.IEqually disturbing is the fact that this entire taken place without any important correction. At no time during the past seven 0 t is'! have our shorter term market oscillators reached oversold territOrY'at w r s, advance has now bee continuing for an extended period without once expen g t s of reaction which shakes stocks out of weak hands and puts the market str ec al position for a sharp re- bound. The last time such a correction occur 's at une bottoms., Indeed, the only – retracemen-t that,hastaken place in r 0 as the -l'eiatively which-took the Dow from 969.98 to a December, from which point the tra ditiOnai year-end rally to new – h c er&f' It is, at t f cast the depth of any intermediate term downswlllg which might occur h r u thumb, of course, is that an upswing requires a one- third to one-half ret en . ne-third retracement of the move since June would bring ./Asthe Dow to 944 which, 1 te ment would carry it to mglyenough, is exactly the May high, and a one-half retrace- yet, it must be noted, there is to that anything like these figures The small top formed in the Dow a week ago mdlCated 974, WhICh was reached at last Tuesday's bottom. With Friday's strength to an intra-day high of 991. 53, the Industrial Average has now returned to the trading range in the 1000-980 area in which a top could further broaden. Since there is at the moment no potential base indicating considerably higher levels, immediate investment odds do not seem particularly favorable. The above discussion applies, of course, only to the Industrial Average. The other two Dow-Jones indices show entirely divergent patterns. The Rails, of course, have been outperforming the Industrials all the way along the line and posted a substantial new high a week ago despite the refusal of the Industrials to confirm it. It must be noted that at this point all of the longer term objectives wh,ich can be charted for Rail Average have been reached and a new pattern will probably have to form. Meanwhile, set off against this, has been the abysmal action of the Utility Average which, on Wednesday, posted a new low at 146. 57 which is, astoundingly, below the bottom reached last June. // It is, in summary, a stock market in which the term remains relatively favorable while there is some reason to questlOn the shorter term pIcture. At such a time, prudent investment policy generally calls for having reserves available to take advantage of future buying opportunities.\\ Dow-Jones Ind. – 986.35 Dow-Jones Rails – 259.70 ANTHONY W. TABELL WALSTON & CO. INC. This market letter is publlshed for your nd mfoTnlf'tlon Rnd Is not an offer to ReI! or soIieltation to huy An)' M'CUritlea discussed, The In- formatIon was obtfuned from sourCl' we bdn've to I,, rclmble, but we 110 not gUfirantce lis fI('rurarv Wnlston I. Co, JIIC. nnd offict'rs, dlrC('Wrs or employees mAY hAve an tntereat In or purchase and sell the referred to herem WN301

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Tabell’s Market Letter – February 11, 1966

Tabell’s Market Letter – February 11, 1966

Tabell's Market Letter - February 11, 1966
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TABEll'S MARKET – Walston &- Co. —–Inc —– INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges lETTER OFfiCES COAST TO COAST AND OVERSEAS February 11, 1966 Although the Industrials made a modest new intra-day high on Wednesday (1001. 11 vs. 1000.55 some weeks ago), last week's action essentially constituted a continua- tion of the trading range in which the Average has held for the trading days since January 5th. During this time it has closed on each day within just about 1 on either side of 985. The direction of the ultimate breakout from this trading area will have some significance. Currently, it is not possible to see too much potential on the upside, but a move sharply above 1000 would undoubtedly indicate that the market could remain at present levels for a fairly lengthy period of time. A downside breakout, on the other hand, would indicate a possible return to around the 960 level a logical testing ground since it represents major support existing from the November top and the late December tra.ding range. Meanwhile, regardless of the course of the market, there are many stocks and indus- try groups which look relatively attractive. One industry which appears especially interesting at the present time is the paper industry. For ten years the paper stocks have been one of the least exciting holdings of all major industry groups. In most cases, these issues reached their highs in have not equalled them since. The reason for this unsatisfactory price performance is not difficult to find. Earnings for most of the paper companies reached their peak in and are now just approaching the level of ten years ago despite a rise in earnings on the Dow Jones Industrials from 35 to about 54. Major paper companies have experienced substantially increased earnings in 1965, after like increases in 1964, representing the best for the industry since the period. Paper and paperboard mills in 1 6 ced an overall ating rate of approximately 93 which, in effect, s I cap in many divisions of the industry. Paper and board production in 1965 t t d abo .5 million t-O1lS ,or 5.50/0 more than the 41. 3 million tons reported Ho er lue of shipments probably in- creased 11 at about 19.1 billion vs. 17.2 I . 1 should experience further gains in total production of paper and board t t same rate achieved in 1965. Assuming- higher prices prevail continue to outpace production. i'l value of shipments will most likel This c n n es than in physical production is important! It was caused by the long .I prices for many products which the paper industry experienced in 1965. st oted that two major exceptions to this favorable pricing situation,which continu t gue the industry,are tissue paper and newsprint. Weakness for end product prices du the threat of lower foreign pulp prices, we feel, can be discounted due to the high level of integration in paper industry. Continuation of these favorable tions existing in 1965 (strong demand, high operating rates and firm end product prices) should mean important earnings gains for producers in 1966. We feel at this time, from a technical pOint of view, that the paper industry represent an excellent value. Like the aluminums, papers constitute one of the few groups that has been in a relatively narrow trading area since the highs. During this time period, stantial potential base patterns have formed. Ability to break out of these trading areas will be dependent on a continued increase in the pa'st static earnings record of this group, and, in some cases, this has already occurred. The downside potential appears relatively small if recent pIE ratios are maintained. All of the technical patterns on individual stocks within the paper group are substantially the same. They vary to a minor degree, but the basic patter is one of a long trading range with substantially higher levels indicated, in many cases, 100 above present levels, if the base areas are penetrated on the upside. As most of the paper stocks have held in a wide trading area for the past ten years, relative action the general market has been steadily downward. However, from a nearer term point of view, the downward trend in relative price action has been arrested and a marked improvement has been shown. Attractive investment opportunities in the industry are numerous. Currently, International Paper (34), originally recommended on June 29,1965 at 31 in the Quality & Long Term Growth section of our Recommended List, can still be pur- chased on minor weakness. Other stocks which appear technically attractive at the momen.t include Union (52), West Virginia Pulp & Paper (52), St. Regis Paper (43) and, m the more speculatlVe category, Great Northern Paper (45). AWTRJS ANTHONY W. TABELL amb Dow-Jones Ind. 989.03 WALSTON & CO. INC. 211), 4Q This marketetter Ie; I,,hshed for lour convenIence nd InformatIOn and IS not lin olTer to sell or 1\ tolirltAtlOn to buy any secUrities dls('uued Th, In- formatIOn was obtmned from source, …. c bdwve to I., rf'hnille, but …. e tio not gunrnntee Its arrurr!rv WHiston &. Co. Inr. nnft office,s.hn.cwrs or ctnJlloyees may have nn Illterest III or and -;ell the reflorlcd to hClctn. WN301

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Tabell’s Market Letter – February 18, 1966

Tabell’s Market Letter – February 18, 1966

Tabell's Market Letter - February 18, 1966
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–.————————————————————————————– Walston &- Co. —–Inc —-INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONOS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER February 18, 1966 The Dow-Jories-imlliStria'l-Avera'gelast week broke out on the downside of the long trading range in which it had held since early January. As noted in last week's letter, the dO'Nnside indication at the moment appears to be 962-960. Action at that point will afford an important clue as to the intermediate term direction of the market. Many analysts have drawn attention of late to the depressed state of the bond market and to the high yields available therein, and have drawn rather negative conclusions concern- ing the future of stock prices. It is, of course, silly to assume that the extremely high yield available in senior securities are not drawing SOme funds away from the equity market, es- pecially attempt, however, to find a long term relationship between stock and bond which has some predictive value, we find ourselves on far more difficult ground. To anyone who takes the time to study the long term history of bond prices, the most significant fact is tha t apparently these prices move in long cycles – cycles generally much longer than stock cycles. For example, the entire period from 1905 to 1920 represented a long and almost continuous decline in bond prices. From 1920, the bond market embarked 0 an upswing only briefly interrupted by the depression which brought yields to a low of 2.44 in March of 1946. Since that time, for twenty years, bond prices have been falling and bond yields rising, although there have been a few fairly substantial rallies. The following table shows the prices and yields of the Standard & Poor's High Grade Corporate Bond Index at selected points since 1946,and the series of lower prices and higher yields at each' succeed- ing intermediate high and intermediate low becomes appare Hi gh Date Price Yield D Yield March,1946 124.6 2.44 Nov r,1 4 2.84 January, 1949 122.7 2. 71 53 108.8 3.39 April, 1954 118.1 2.81/0 January, 1958—-105'9- . February, 1963 97. 80 Thus, the relationship Wi d t e , 1957 98.04 4.15 a – y;-1960- -91;'1)7– — iftanuary, 1966- '90 50—… A.-7'4o/o(todate prices since 1946, a period in which bonds have been . e . erent from that which prevailed for the pre.ious . 25 years – a perio c s e generally rising. Furthermore, an inspection of the past 25 years histor s is difficult to establish any important relat,ionship betwee moves in bonds and mo es' tocks. Actually, bond prices have tended to reach their peaks (see above) just about ime when the stock market was major upward move. A study of the dates on which bond price lows were recorded shows' eVen less relationship to the fluctuations of the stock market. There is, as a matter of fact,. only one relationsh.ip that can be drawn between bond and stock prices which seems to have some predictive value. Generally, a move of bond prices to a new low, after a rally, has foreshadowed stock. markel., peaks of some importance. Thus, the bond market rallied from November 1948 to January 1949 at which point it turned down. A new low was finally reached in May of 1951, and this took place four mnths before the September 1951 stock peak. The subsequent instances in which this has occurred are shown in the table below. The most recent instance, of course, is the new low m3.de in December of 1965, after the 1960-1963 bond price swing. To date, it has only been three months ,since.this occurrec!,.whereas in previous instan;es the between the bond price low and stock market peaks has been somewhat longer. Thus, bond prices, despite their current depressed levels, must be regarded as one of the stock market indicators that are at present somewhat inconclusive. Previous Bond Low November, 1948 June, 1953 September, 1957 January, 1960 New Bond Low May, 1951 August, 1956 February, 1959 December, 1965 Dow-Jones Peak September, 1951 July, 1957 August, 1959 Feb. 1966 (to ro.te) Lead 4 months 11 months 6 months 3 mos. to date Dow-Jones Ind. – 975.22 Dow-Jones Rails – 267.73 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb Thlll market letter IS published Cor convcntenl't! nd mformntlOn and . not .\n offer to sell or a soheitfttlon to buy Any securIties dIscussed Tht' In formatIon was obtained from we hd,t'vl' to , rehnble. but we tin not lnIarRntec ,ts lIceUfJle\. ,'alston . Co. Inc Anil It… orne… , … fj,u'(tors 01 emJ'loyet's may have an mterest In or and set the M',-Urltll' t('ft'I(('1 to hert'ln. WN301

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Tabell’s Market Letter – February 25, 1966

Tabell’s Market Letter – February 25, 1966

Tabell's Market Letter - February 25, 1966
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TABELL'S MARKET Walston &Co. —–Inc —-INVESTMENT BANKERS MUTUAl FUNDS MUNICIPAL BONDS Members New 'lork Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS LETTER February 25, 1966 Three weeks age we cencluded this letter with the fellewing statement – It is, in summary, a steck market in which the intermediate term outleok remains relatively faver- able while there is some reason to. question the shorter term picture. At such a time, pru- dent investment pelicy generally calls fer having reserves available to. take advantage ef future buying epportunities. Since that time, the Dew-Jenes Industrial Average has declined ever fifty peints frem an intra-day high ef 1001. 11 earlier this menth, to. an intra-day lew ef 946. 10 this week. Fer eight days in a rew mere stecks have declined than advanced. This censtitutes the first significant cerrectien since the relatively mild decline in early Decem- ber,-which -f-remanJin-traday-high-of.96 9. -98 .te ,an.inba–qay 41. The cerrectien in December penetrated an uptrend line frem the June lews. Coincidently,this most recent cerrectien has also. vielated an uptrend line from the December lows. This dewn ward trend was arrested en Friday as the m3.rket rallied sharply frem oversold territery. This is the first time that our shert term escillaters have reached oversold territery since the May-June decline ef last year. As in mest escillaters, the eversold signals are mere impertant than the overbeught signals. These indicaters reflect fer the first time in ever seven menths a reactien that has tended to. shake stecks eut ef weak hands, a prelude to. put- ting the market in a firmer technical positien. Obviously, this process could take a consider- able ameunt of time. Because ef the constructien ef these escillaters, it will be difficult to. stay in everseld territery unless further weakness continues in the market. Hewever, any rally signalled by these escillaters from present levels ceuld well be temperary. Hew lew can the market go. at this peint The eb962-960, which cein- cided with the streng suppert level in the 960-950 area, wa x number ef pessibilities new exist. If the decline werge5-'P i i a Thursday's lew. A (Hately frem current levels, the lewest dewnside ebjective that ceuld be re8(l1 ,,uld b the 930-928 area, and a decline to. this area weuld represent a ever, if the market remains areund current levels, e!yushes up y 98 00, this have the effect ef breadening the petential tep and we evels at a later c r a t e . – ' A classical rule ef to. ene-half correctien is necessary be-' ; fere an advance can resu e. T 'em'lxttne 1965 through February 1966 carried frem an intra-day lew ef 83 7 carry the Dow to. 9 , a-.dhigh ef 1001. 11. A one-third retracement would 1 a ct'Ybeen just abeut reached, and a one-half retracemen ,1 would call fer 916. in g cerrelatien can be drawn with the Standard & Peer's 500- Steck Index. A shert ter indicated 90.50 which has, in effect, been realized. Hewever, there is a pessible fur r ebjective ef 87.00. Beth the Dew and the Standard & Peer's 500- Steck Index have cerrected themselves en a shert term basis, but beth can be ceunted fur- ther to. lower technical levels. Any miner strength in the Standard & Peer's 500 weuld also. have the effect ef breadening its petential tep fermatien. The abeve cerrelatien ends the moment we begin to. discuss the ether two. Dew-Jenes indices. The Rails centinue to. eutperferm the Industrials, and altheugh dewn frem its recent high, meets suppert in the high 250 area. The refu sal ef the Industrials to cenfirm the re- cent high in the Rails is also. cause fer cencern to. many classical Dew theerists. The Rail average has reached all leng term upside objectives and a new pattern must ferm, we feel, be fore any rise may resume. The Utility Average, on the ether hand, has pes ted a newlow at 141. 60. Judging fro. individual chart patterns which make up this average, it appears very likely that this greup will remain depressed fer some time to. come. It is, in summary, an interesting phase of the nl3.rket. At seme peint in time, the present shert term weakness will provide a buying eppertunity similar to. that afforded by the sharp weakness in M3.Y and June ef last year. If an immediate decline to the 930-928 ar!Oa toek place, such a buying eppertunity weuld prebably be presented. However, the market must be watched closely for a pessible broadening ef the distributienal pattern and an indica- tien that a lewer dewnside ebjective may exist. Dew-Jenes Ind. – 953.00 Dew-Jones Rails – 264.23 ANTHONY W. TABELL WALSTON & CO. INC. AWTRJS amb -, formation WitS obtamed from sources we bcheve to 1., rehable. but we do not guarRntee Its accuracy ernplo)et.'9 rna) have an mterest lh or purchase and sel! the secUrities referrt.d to herein. d;–U'-' ' -' ' 'T' 'h-,-,n- \\'alston & Co, Inc. and Its officers, or WN.SOI

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