Viewing Month: April 1968

Tabell’s Market Letter – April 05, 1968

Tabell’s Market Letter – April 05, 1968

Tabell's Market Letter - April 05, 1968
View Text Version (OCR)

Walston &Co, —-Inc IL Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER April 5, 1968 During the past six days, the march of world events has compressed more drama, surprise, hope and tragedy into a shorter time span than, a week ago, would have been thought possible. Invariably, some of this drama spilled over into the nation's financial mar- ket. On Sunday night, President Johnson announced his dramatic decision not to seek re- election and to press for a cessation of hostilities in Vietnam. The response of the stock market on Monday was instantaneous. Stocks rose on a broad front with the Dow-Jones Indus- trial Average advancing some 20 points. In the process, perhaps the last of the 1929 record went into the ashbin, asJFading,volunle soareq.!.17, 730,0OOshares, eclipsingthe old.hjgh. on black Tuesday almost 39 years before. With openin.g prices almost invariably well above the previous Friday's high, a break away gap was created on the chart of the Dow, and the other popular indices. Normal action following such a formation is for a few days of quiet trading in order t digest the gain. The market began to follow this sort of scenario on Tuesday, but renewed buying pressure took over by afternoon, and the list closed with further plus signs. Then on Wednesday came Hanoi's agreement to talk and the volume record which had taken 39 years to break was sheared again in just two days with a record of 19,290,000 shares changing hands in another advancing session. Thursday's 14,340,000- share volume, which would have been front page news at any other time, appeared almost a respite. Sobered by the lunatic act in Memphis, Friday's volume slowed and the Dow Industrial declined almost 7 points. The intra-day high reached by the Dow on April 3rd was 883. days from the low of 817. 61 on March 22nd. of 8 in nine trading a Insofar as the market is concerned, it is as a,' e y recall the Biblical injunction about rendering unto Caesar, etc. etc. f week will have a pro- found effect on the future of the SOCiety of which the iter all, only one small facet. From the point of view of the market, e 1st of April, 1968, provides just one more example of n.-, the-market seizing upon dramatic outside events to do just iWs chnical position to do in the first place. As has been pOinted 0y letter, the Dow has, since mid-February, been holding in a tradin d ug'flly between 820 and 850. It had been suggested that an upside brea u 0 . a could produce a move to around the 880 level. That was precisely what e u the week within a cycle that, otherwise, might have taken longer to compl e squeezed into four short trading days. As to the future a short-term objective having been reached, a new pattern will now have to form. Of gnificance is the longer trading range in which the Dow has held since last October. Bounded on the upside by the January 1968 peak of 921. 87, the ability to consolidate around current levels followed by a successful assault on that high would be tre- mendously constructive and could well be a precursor of a move into new high territory for most indices. , There are a number of encouraging signs which suggest this pattern as a possibility. Most of them center around the strength of last week's rally, both in terms of percentage advance and, obviously, of volume. It is this thing which differentiates the present advancing phase from, say, the tepid rallies which occurred in the Spring and Summer of 1966. A final word on the volume. In a sense, no real trading record was broken at all this week. Volume is, after all, meaningful only in relation to.the total number of shares listed. The 16,000,000 shares that traded on October 29, 1929 constituted 1;3 of the total list. An equal turnover would produce a volume of 150,000,000 shares. However, an examination of turnover figures for recent years is rather interesting. By and large, turnover had been in a steady downtrend for 30 years following 1929. Recently, however, there have been signs that -this trend ha-s been reversed, 1967 being the fourth consecutive year in which annual turnove increased drastically — the first such occurrence since the 1920' s. It should also be noted that the record breaking volume of the past week took place on the upside — interesting in view of the fact that it is selling climaxes which tend to produce peak volume. Given a continued secular increase in the rate of turnover, and the fact that selling climaxes will continu to be a fact of market life, the next few years will undoubtedly see occasional days which will make Wednesday's trading pace seem relatively pastoral. Dow-Jones Ind. 865.81 ANTHONY W. TABELL Dow-Jones Rails 223.90 WALSTON & CO. INC. AWTamb This mnrket Jetter Is published for your convenience nnd infortnfltlOn Rnd Is not an offer to sell or l\ 8ollcLtatJon to buy Rny 8eCurLtics thscussed The information was obtained trom 80urces we beheve to be rehable. but we do not jfUarH,niee Its accuracy Walston & Co. Inc. and its officers. directors or ernDtoyeeB may have an interest in or pUl'chase and sell the secUritIes referred to hetelT'. WN801

Download PDF

Tabell’s Market Letter – April 11, 1968

Tabell’s Market Letter – April 11, 1968

Tabell's Market Letter - April 11, 1968
View Text Version (OCR)

Walston &CO. —-Inc ;…-…;.– Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER April 11, 1968 Last week's stock market could be described, simply,as more of the same — the same in this case being continuation of the frenetic buying rush that overwhelmed the finan- cial community starting with the President's announcement of two weeks ago. In the process, the Dow-Jones Industrial Average was up 18 points on Monday and Wednesday saw the volum record fall by the wayside once more as an all-hme peak of 20.41 million shares changed hands in a session in which an early rise succumbed to profit-taking, but in which the Dow still scored another 8 points advance. Triggered by aU. N. announcement that peace talks could begin within a few days, the market underwent a surge in buying activity late Friday afternoon, lifting the Dow Industrials to their highest level since early'January; In the short space of 13 trading days, the Industrial index has advanced somewhat more than 100/0, It would be the essence of understatement to say that there has been a good deal of emotion abroad during the past two weeks — both in our national life and III the stock market It is worthwhile at this stage to try to take a somewhat dispassionate view of the market piC- ture and to try to arrive at a few tentative conclusions. To begin with, on the peace'front — and peace has been the operative word insofar as the market is concerned –, progress to date has been as much psychological as real. There has been de-escalation of bombing, and there will be talks, the outcome of which will undoubtedly be decisions to have further talks. Our troops are, however, still in Southeast Asia in massive numbers. There will be, in other words, no immediate transition to the sort of peace economy many were evidently expecting last week. Why th,en the market's response Last gte suspicion that there was very little in the way of a forecast built into the then of stock prices. As the nation's pessimism over the Vietnam d sto uotations receded, es- pecially those prices which had been based as much otion on value. The stage was thus set for a rebound as soon as the much a e end of the tunnel appeared. It was that rebound which we have seen in he wo s. It is, indeed, arguable that t . e a er-reacted. At lhe present time, on a short-term basis, it is, by any ta r !Pio use, sharply overbought. Given the exist- \ evitable. We would no i ,clined to chase stocks at the present time. Yet, it w e e to dismiss the rally of the past two weeks as some sort of flash in the p ich burn itself out and allow prices to slip back into the slough of despondence in whic t were wallowing last month. The meaning — or at least the po- tential of ent market action becomes clear if, at this point, we state a truism. That truism i(!hat intermediate-term upswings are made up of vigorous short-term rallies interrupted by relatively moderate declines, whereas downswings consist of persistent de- clines and rather tepid rallying phases. It is also true that, in general, the initial short-term rally of an intermediate-term upthrust tends to be especially strong and most recent example was the strong upturn of January 1967 which started the important ad- vance of that year. Viewed in this light, the significance of recent action becomes obvious. The rally of the past two weeks is measurably strong enough to constitute the initial stage of a much mor important phase. Confirmation as to whether it is, in fact, such a stage, will be provided in part by what sort of short-term pattern now forms. An orderly consolidation, followed by renewed strength would have to be termed bullish evidence of the most persuasive sort. From a long-term point of view, we think the bullish argument is convincing. The Dow is now in the upper part of a range roughly between 830 and 920 in which it has spent most of the time since the Spring of 1965. Only for short p.eriods has this trading range been violated. It is almost axiomatic that the trading range centered on this area will ulhmately constitute a major base formation of the most powerful sort. It is now, in fact, possible to count an ultimate objective of 1300 for the Dow — actually not a particularly startling figure in percentage terms. It is the intermediate-term outlook that is at the moment in question. In other words, will the ultimate upside penetration come in fairly short order, or will lower prices first have to be seen — a process, incidentally; which will have the ultimate effect of broadening the base still further We confess to no fixed opinion on this question at the moment. We can only watch for evidence of further intermediate-term strength or weakness. In these terms, however, the strong action of the past two weeks is without doubt an encouraging sign. Dow-Jones Ind. 905.69 ANTHONY W. TABELL DOl,BKlIM!i'ltJISaiM,18 19 , Wi\U;TOW CO, JNc0 your conven enee nnd lnformRtion find 18 not an offer to sell or R IIOhei&ta,tlOn to buy Rny seeurJtle t.I sed Th formntlon WB.8 obtained from lIources we believe to be rehable, but we do not guarantee its l.CCUrRcy Walston & Co. lnc and it dl' toe In- en1…J!.fOYeeI!I tpB)' have an mterest in or purchase and sell the sccuritus referred to herein. S 0 eers. ree rs or A WTamO WN.'O'

Download PDF

Tabell’s Market Letter – April 19, 1968

Tabell’s Market Letter – April 19, 1968

Tabell's Market Letter - April 19, 1968
View Text Version (OCR)

. f !, Walston &CO. —-Inc —- I Members New York Stock Exchange i, and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER April 19, 1968 Following the announcement of increased rediscount and prime rates on Friday morn- ing, the amazing rally of March-April 1968 came to at least a temporary end. The Dow-Jones Industrials were off as much as 12 points early in the day, and following a few attempts at recovery, sank back to around their lows at the close. That the advance should be interrupted at this point was, after all, not surprising. Most of our short-term indicators showed the market being more overbought than at any time in the past 15 months, and all possible short-term objectives for the popular averages had been reached. Nonetheless, it is impossible, after a one-day reversal, to project much lower levels obviously, no top has,ye.Lbeen formed. Whether. the.recent short-term advance will be digested with a measurable correction or, simply, a consolidation, is a question that is not yet answered. Meanwhile, the tremendous strength of the move to last week's peaks continues to suggest the possibility of an intermediate-term reversal having occurred at the March lows, as discussed in last week's letter. Under these circumstances, w would utilize weakness for purchase of selected issues, four of which, currently on our Reco mended List, are discussed below. GREAT NORTHERN PAPER (51 5/8) Paper stocks in general have been reflecting the peace optimism of recent weeks and one of our favorites in this industry, GPP, has been sharing in the enthusiasm. Fundamentally, earnings continue in an impressive trend, suggest- ing that the 5.00 a share being estimated for 1968, up from 4.80 last year, will be realized With newsprint prices seemingly headed for another rise before too long and financial bene- fits continuing to accrue from capital improvements the outlook is for another earnings gain in fiscal year ending September 1969 e Great Northern's chart reveals a base of considerable breadth has t' r cent nths indicating a fort coming attack on the old high around 59. Our longer- pric ctive remains at 90. REPUBLIC STEEL (42 3/8) Despite tri 10 rap prices and steadily in- creasing foreign imports, first quarter steel y ea gs revealed a satisfactory trend. Republic' indicating that the previous ea ins .. – a-shar e, fr W.cff. 25 vs. 4.75 in 1967, may prove some- what conservative. ,Iuch, howe, s how long a possible steel strike would last and how large the wag i c e epublic's long-term capital improvement program has started to pay 1t right prospects for the years that lie directly ahead. From the technical shows considerable downside support between 40 and 36. While our initial u al is close to 50, our longer-term price objective remains around the 105 level. NATIONAL DA RY (38 1/2) This prime quality issue is another of our Recommended List stocks that has been doing better than anticipated, earningswise. The new earnings esti- mate for 1968 now puts results close to 2.90 a share, compared with 2.65 last year. This also indicates the strong possibility of another increase in the current 37 1/2t; quarterly divi dend rate, perhaps to the 40t; rate and in line with previous dividend increase policies. Much of ND's improvement stems from the shift in product mix that in future will place less em- phasis on weather as a determinant of profitability. The new product mix emphasizes Kraft processed foods and de-emphasizes ice cream and related items. Technically, ND has strong support in the 36-32 area and our upside price objective remains in the mid-sixties. GIBRALTAR FINANCIAL (3.0) In a field where volatility is not unusual, Gibraltar has put on a superior market performance in recent moriths, reflecting not only the imprOving prospects for the Savings &. Loan industry in general, but also the sharp snap-back being ex- perienced in per share earnings in particular. For the year ending next December 31; GFC is expected to report earnings of 2.40 a share, or better, compared with 1. 70 last year. While the recent increase in interest rates is likely to have a slowing down effect on the hom building industry, Gibraltar's management has learned to live with and operate under the high er rate climate, strongly suggesting little chance of earnings taking an adverse turn despite the hike in interest rates. Technically, GFC has good support from 30 through the 25 level and an initial price objective around 38. Our longer-term price goal remains near 74. Dow-Jones Ind. 897. 65 Dow-Jones Rails 236.31 HARRY W. LAUBSCHER for A.NTHONY W. TABELL WALSTON & CO. INC. This market letter Is published for YOUr convemence and information lind IS not an offer to sell or II. soliCitation to buy any 8(!('Qflties thBCussed Th tonnation was obtained from soureea we beheve to be rehable. but we do not guarantee Its accuraey, Wailiton & Co.. Inc. Rnd Ita officers e In- eml'loyees may have an Interest In or pUFchaae and sell the referred to herem TU or WN.801 -. …– — —

Download PDF

Tabell’s Market Letter – April 26, 1968

Tabell’s Market Letter – April 26, 1968

Tabell's Market Letter - April 26, 1968
View Text Version (OCR)

Walston &Co. —–Inc, —– Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET. LETTER April 26, 1968 There is a great temptation at a time such as the present to use this space simply to restate the obvious. The stock market has spent the last four week i,n a broad and dra- matic advance. The rampant pessimism which infected the financial markets in March has disappeared entirely and, in an almost schizophrenic reversal, has given way to the bound- less optimism of April. At such a time the inclination is always strong simply to chant the obvious litany about the market being overbought and in need of a correction. The fact that this point of view is obvious does not detract from its correctness. The market is, at the moment, overbought and probably in need of a correction or consoli- dation of some nature. Loss of momentum during the past two been obvious and we are in complete agreement with the theory that the advance of April 1968 will require some digestion. The important question, however, is what happens next We concluded our letter of two weeks ago by confessing we had no fixed opinion on the question, and the events of the past two weeks have not clarified the outlook to any great extent. Nonetheless, we also suggested at that time that the Dow had essentially held in a trading range for some three years, ever since the Spring of 1965. We voiced the view that ultimately this trading range would have to be penetrated on the upside and that the ultimate objective in terms of the Dow appeared to be 1300. The unanswered question, of course, from a technical point of view, is whether such a penetration will take place immediately or whether another downswing within the confines of the three-year-old trading range is likely. We think it is worthwhile, at this point, to examine the case for higher prices. We have repeatedly pointed out in this letter the axiom that major factors which bear upon the level of stock prices at any given moment, i dividends, money rates, and, probably most Important, investor conf.nSh. I in current state of each of these factors briefly. 1\ ctive to examine the Money rates, as no one needs to be oment, at record levels. Yet there is nothing new about this fact. t pr re of fixed income yields has been the–equity-market-has-bee . I w 'foe'pa'st-two-y-ears–W-e-thinkit unlikely that the pressure will Earnings, on th othe than it is at the moment. from the mini-recession of 1967 appear, unquestionab a at least on a before-tax basis. It has only been necessary to look results, which have flooded the newspapers of late, to observe the present gs d, and we must confess we see no diminution of this trend in the foreseeable futu e All this take meanwhIle, at a time when stock prices, as a whole, are hardly fully exploited. True, high — and possibly exorbitant — multiples are still being paid for a great many market favorites. On the other hand, a great many of the more blatant cases of overvaluation fell by the wayside in the January-March correction and promise to remain quiescent for some time to come; and, even after the recent advance, the relative cheapness of many inve'stment-grade stocks, by historical standards, still remains. In .short, we think the ingredients Tor a considerably higher level of stock prices are, without a doubt, present in the present set of economic ciroumstances. It is not our intention, by all this, to paint an oVlrly rosy view of the situation. The problems which confront the economy and the country as a whole are real and, actually, not in any way mitigated by the events of the past month. Yet, the dramatic response of the market to the most tentative sort of peace feelers indicates strongly that a great many of these problems had already been faced and discounted by the market. It is quite possible that over the next few weeks or months, signs of technical or fundamental weakness, not now apparent, will appear, and, if this does take place, we would certainly hasten to adopt a relatively cautious attitude. At the present time, however, we think that sensible money management requires at least recognizing the possibility of a sub- stantially,better intermediate-term stock market climate. Dow-Jones Ind. 906. 03 Dow-Jones Rails 234.67 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb This market l('tter is puhhshed for your Rnd Informlllion nnd Is not an offer to sell or II. RotlcllatLon to buy Hny se'Uritles ulscussed. The in- formation was obtRlned from sourcc'J we hellc\e to be r(!hnbl(!, but. we do not ItUnrantee Its nccumcy Walston & Co., Inc, Rnd Its officers, directors or —- -,emDloyees may have an Interest in or IJurchase and sell the sl.!curltJeB referred to helem. WN801

Download PDF