Viewing Month: September 1968

Tabell’s Market Letter – September 06, 1968

Tabell’s Market Letter – September 06, 1968

Tabell's Market Letter - September 06, 1968
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W—d-lsItnocn.&–C-o-. Membe.. New York Stock Exchange and Other Principal Stock and Commodity Exchange. OYER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 6, 1968 Despite smog, airport slowdowns and variable weather, Cupid is still flying. The first five months of this year revealed a rise of,9 in marriages and the total number of couples before the altar by year-end could approximate two million, the highest number since 1946 which benefited from the ending of World War n. This increase in the marriage rate plus the easier financing that is antiCipated for the home mortgage market is expected to result in a sharp increase in new residential construction over the coming year. As a result of the token trim in the discount rate, small cuts in mortgage rates already have ap- peared and by spring, further reductions are expected throughout the country. As an indi- cation of what could be.in starts in July even before the discount rate cut, were running 12 ahead of the starts for July 1967. The value of total private residential construction set a record in the second quarter of this year at an annual rate of 27.5 billion, up about 25 from the year-earlier period. This flow of funds into the construction industry augurs well for suppliers of building materials, which in turn could be further reflected in favorable market prospects in corning months. One such issue currently favored is discussed below. UNITED STATES GYPSUM COMPANY Current Price Current Dividend Current Yield Long Term Debt 87 7/8 3.00 3.4 21,424,000 By 1972 the number of persons in the U. S. between the ages of 20 and 29 will be increased by six million. These are people who will want an apartment of their own or who are in the family 1. 80 Conv. Pfd. Stk. Common Stock Sales-1968-Est. 1,629,075 shs. formation 8,162,000 shs. demand for new 400,000, 000 i n as ' n Sales-1967 372 800 000 cupied by r il Earn. Per Sh. 1968-Est. 3.90 4. 00 e of m substantial e. d'!!'d to this will be the e a dwellings !o be .oc .S..Gypsum.is gomg enefiCiarteS of thlS overall ., –3-. 65- Mkt. Range-1967-1968 89 – 56 or y years, U. Gypsum ranked -a-s1t.I.l-e of the building industry, but the lack- performance of recent years has somewhat tarnished it 1 ull market top of 120 in 1959, USG shares plum- meted to 43 in 196 0 il subsequently have rebounded 1000/0 from its 1966 low. the stock's performance this year is consider- ate for building stocks in general and the likelihood that 1968 is to show a turnaro the former earnings downtrend. Compared wi h per share earnings of 3.65 last year, the low point of the last dec- ade, results this year are expected to rise to around' the 3.90 to 4 a share level, despite the 10 surtax. In view of the improving prospects now being noted for the residential con- struction industry, the outlook for next year also is considered favorable. U. S. Gypsum is the leading producer of gypsum products, including wallboard, roo ing and siding. In addition, its product line includes paints, refractories, high-calcium lime for the steel and chemical industries, mica for industrial purposes, felt items, plastic piping, and decorative plastic panels. Because such a large percentage of its sales depends on new housing, USG has been especially vulnerable in the past to slumps in the housing in- dustry. However, recent.acquisitions and a broadening oJ base have helped off- set this problem. On the other hand, the company also responds more favorably than most 0 its competitors when housing is on the uptrend as is the case at present. From the technical view, U. S. Gypsum has formed a base in the 80-84 area that suggests a price objective at the 102-105 level. There is considerable downside support in the 80-75 region. Because of its attractive fundamental and technical pOSitions, we are add- ing U. S. Gypsum to the Quality and Long Term Growth section of our Recommended List as a buy at prevailing market levels. Dow-Jones Ind. Dow-Jones Rails HWLat 921. 25 255.65 HARRY W. LAUBSCHER for ANTHONY W. TABEL WALSTON & CO. INC. ThIs market letter Is published for your convenIence and mfOTTllRtlon nnd is not an offer to sell or a sOhcltatOn to buy fI.y securities ulscussed. The In- formation was obtained from sources we believe to be reliable. but we do not guarantee Its accurac) Walston & Co.. Inc. and 115 officers, dlrt!Ctors or emDtoyeeB mil) have an Interest In or pUFchase and Bell the referred l(I herein. WN801

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Tabell’s Market Letter – September 13, 1968

Tabell’s Market Letter – September 13, 1968

Tabell's Market Letter - September 13, 1968
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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 September 13, 1968 Over the past year and a half, we are afraid, this letter has risked boring its readership by recurrent references to a shift in leadership in the equity market. Throughout 1967, we referred to the possibilities of such an event, admitting, however, the lack of evidence that it was actually taking place. By the time it was required to issue a 1968 forecast in December and January, the signs that the long-heralded change was indeed occurring were manifest to a close follower of technical action. As 1968 wore on, they became even more obvieus and were duly noted. 15y are parade c ef 1965-67 in the Electrenics, Office Equipment, and high-science areas. One by ene,the fermer faverites, have drepped frem the ranks ef market leaders ,and hitherte-quiescent greups have emerged to. take their place. A netable example ef the sert ef new leadership that has emerged is, ef ceurse, these stecks asseciated with residential building. As recently as early 1968, the average building steck was a candidate fer nething except, pessibly, a dullness prize. Earnings had been flat and mest issues had been helding in trading ranges fer upward ef ten years. This picture has changed to. the extent that a recent cempilatien ef the fifty best-perferming stecks en the New Yerk and American Steck Exchanges includes nineteen issues asseciated in ene way er anether with residential building; seven general Building stecks, feur Cements, six Savings & Leans and two. Real i\\Estate cempanies. All this, we suspect, is semething mere thm a p s in rem a technical peint ef view, all the greups mentiened abeve e eve current levels. In additien, the building cycle, as is wen knewn, or less independently of the overall economy, and there is as turned rather sharply up- . at' s i n c e the first of the year — a growth wh ce at a rate financial history. importance of this statistic, but we, for ene, feel that it has i or n' . at' n not only for building activity, but for the over- all level ef the ec n e sibly, the stock market as well. The leaders ift' ot confined to the building field, and the signs of awakening in a number of hither mant industry groups are quite apparent. Prominent among these would be the R ers, Chemicals and International Oils. The renaissance of the blue-chip,! in short, may be upon us, and it is well to ask how far it can go. It is worth noting in this context that the price! earnings ratio. on the Dow-Jones Industrial Average — as a measure as any of investor confidence in high- grade companies — is still at relativelylow levels historically. At present prices, the Dow is around 16 times earnings fer the twelve months of 55. 80, and a lower mul- tiple of this year's estimate of 57 – 58.\ It is worth noting that in 1961 the Dow sold 'for 24 times earnings. A return to such a vcUuation could cause a 50 rise over current j prices, without any improvement in earnings at all. Actually, the latter part of the premis is an unlikely onll' We think tilat the supply (igures a,bo,e the likelihood of a reasonable earnings expanSien into 1969-1970. They also indicate the ,. possible presence of the kind of demand needed to fuel a protracted rise in high capitaliza- tion stecks. . \ All of the above, of course, makes; no judgment as to the near-term course of the steck market, and in this area a number questions need yet to be resolved. It dees, however, suggest that, over a period of ti!pe, the patient holder of quality stocks — long the forgotten man in the equity market — inay finally receive his long-awaited reward. 1 \ ANTHONY W. TABELL Dow-Jones Ind. 917.21 WALSTON & CO. INC. Dow-Jones Rails 256.08 AWTamb Thill mtt.rket letter Ie published ('Of Your convenience and information ftnd is not an ofter to sell or a solit'!ltation to buy any securities duscussed Tbe in formation was obtained from sources we beheve to be reliable, but we do not guarantee its .accuracy Wwston & Co.. Inc. and Its officers. dIrectors or employees mil)' have an interest in or pUFcbase and &ell the SeCUl'itles referred to herein. WN801

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Tabell’s Market Letter – September 20, 1968

Tabell’s Market Letter – September 20, 1968

Tabell's Market Letter - September 20, 1968
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Walston &Co. —–Inc. …,.—- Members New York Stock Exchenge and Other Principal Stock and Commodity Exchange. O …. ER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 20, 1968 The market continued its surprising show of strength last week. Although Thursday and Friday saw a sideways trend in the averages, on both days the Dow-Jones Industrials were pennies away from both a closing and intra-day high for the year. The S&P 500, un- characteristically lagging behind the Dow, was a point away from a newall-time high. The word surprising here is used advisedly, for the rally which has characterized the latter part of August and early September could hardly be called usual action from either a technical or fundamental point of view. This is not to play the futile game of fighting the tape. It is simply meant to put the advance in perspective since an understanding of the reasons behind it will be critical for the future of the market from here on out. — From a technical point of view;-first of ail, most of the popular averages had, at– their lows of early August, reached the upper part of the downside ranges suggested by the distributional top formed in June-July. For example, the most conservative downside target on the Dow was 870, and an intra-day low of 863.33 was reached. What was sur!,rising was the rapidity of the ensuing rise. Within 17 days after reaching its low, the Dow had pushed through the heavy overhead supply at 890-920 and found itself close to new high territory. All this took pl.t.e without, in technical parlance, a base having been formed for the advance. Similar moves were recorded on the New York Stock Exchange and Standard & Poor's indices Of course, there are various interpretations of the market's strEngth. The pessimis tic one would be that a distributional top formation is simply being broadened and that the ultimate implication of this move back back into the supply area is simply lower prices at a later date. This may well turn out to be the case, but normally be the first clues to this sort of potential weakne studies, which woul it as yet. Mean- while, it should be recalled that all of this is taking long-term potential is for considerably higher . i an 'ronment where the rthe ined strength at this point would strongly indicate the possibility m0 High ground was to take place -, .us rather than later. 0 rre ,what will the market be telling – e – r MIl gtlie economy stock market , it is t market tends to.lead the economy rather than the other way Standard & Poor' The market s' e a . n Bureau of Economic Research utilizes the indicator to forecast industrial production and GNP. rds, a barometer rather than a thermometer and this, indeed, is a fact wor ke R' n mind in.light of the current conventional wisdom regard- ing the economic outloo The great m rity of economic forecasts issued up until recently have spent a good deal of time worrying about the effects of the tax increase. This increase, we are told, was, indeed, the proper medicine prescribed by the new economics, but, due to the political delay in its enactment, came too.late to perform its intended task of halting inflation and may even accelerate a business slowdown which, as of mid-1968, was already occurring. For this and other reasons, it is assumed, corporate prOfits in the second half of 1968 and early 1969 ma, well be disappointing when compared with levels of a year ago. The stock market, however, seems to be telling a different story and, as noted above the market's record as a forecaster is a fairly good one. With admirable precision, major stock market bottoms have led turns in the economy in post-war years. There have, since InWorld War II, been four periods which the National Bureau has defined as receSSion — f948-49,' i953-54;- 1957-58 and 1960-61. the first of these cases, the stock market bottom- ed out five months before the FRB Index of industrial production, in the second, eight months before, and in the last two, six months before. In the mini-recession of 1967, the stock market bottom was reached in October 1966, while the industrial production index did not tur up until May of the following year. Thus, continued strength in the stock market from these ,. levels would belie the standard forecast of a weaker economy over the next six months or, at the very least, indicate that the market was looking ahead toward an upturn in the early par of 1969. As we noted in this letter last week, if one concentrates one's attention on recent monetary policy rather than on fiscal policy, it is possible to argue that monetary expansion will override the effects of the tax increase over the next two to three quarters. This, at least; seems to be the message of the stock market at the present time, and we would prefer not to ignore it. ANTHONY W. TABELL Dow-Jones Ind. 924.42 Dow-Jones Rails 261. 13 WALSTON & CO INC .. Thill market letter ill published tor your convenience and Informfltlon Rnd Is not an oft'.,.r to sell or a sollt'!ltation to buy any secUrities lhscusaed. The In. formation was obtained from sources we believe to be reliable. hut we do not guarantee Its accuracy. Walston & Co., Inc. and its officen. directors or m.!Itoyeee may have an Interest In or pUFcbase Bnd sell the referred to hereln. AW'l amb WN.801 i

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Tabell’s Market Letter – September 27, 1968

Tabell’s Market Letter – September 27, 1968

Tabell's Market Letter - September 27, 1968
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'–' ———————————–..c———————————————————– 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 September 27, 1968 Market strength continued this week with the Dow-Jones Industrials posting a new 1968 high, and the Standard & Poor's 425-Stock index an all-time high. Both the Standard & Poor's 500, and the New York Stock Exchange indices were a few cents away from all-timE peaks. The phrase bull market appears more and more appropriate to describe the action since April 1st. If a bull market is, indeed, what we are looking at, the Job of the technician then is to inspect the .itality of the market as it moves ahead. So far, the verdict must be a rela- tively clean bill of health. ,- — volume, and it is worthwhile at this point to examine these both in detail. Market breadth, of course, refers to the number of stocks advancing and declming and these figures can be manipulated in any number of ways. The most common form of manipulation is to construct a breadth index and to observe its action vis-a-vis that of the popular averages. There are various ways of constructing such an index and either daily figures or weekly figures can be used. These niceties of construction often lend themselves to differences in interpretation. For example, most indices based on weekly breadth have continued to confirm new highs in the averages throughout 1968. It is, furthermore, a strong probability (figures are not yet available) that the new high in the Dow of this week will be confirmed by the week's advance/ decline figures. Weekly breadth figures, in other words, are perfectly consistent with an ongoing bull market. Daily figures, on the other hand, have, generally failed to confirm the new highs in the Dow, thus allowing some tec n' ci arjlle that underlying deterioration has been exhibited. Were this s, indeed, be dis- turbing. However, anyone who has worked closely w aily decline figures over a period of years, realizes that a downward the exists and that a confirma- tion of any upmove by daiy breadth often the fact. The cent example was the Sprmg of 1964 hl.WYlll the Dow was fOlloweooy a newnlgn- in breadth, but with a delay e An unbiased reading, it seems to us, therefore, would have to consi r picture as, at worst, neutral, and at best, favorable. Volume fi tation. Generally, t nt 0 t, also lend themselves to some ambiguity of interprep i here is, of course, the four-day weeks which have pre- vailed throughout the Average daily volume is close to record levels, basically, a constructive factor, has recently been a tendency for weekly volume to tail off as trading has been restricted. However, even this deterioration cannot, it seems to us, be considered serious enough to warrant a pessimistic interpretation at this stage. In summary therefore, we think the present advance is exhibiting the normal vitality consistent with a continued upswing. All this is borne out, it seems to us, by an inspection of the technical patterns of some 2000 listed common stocks. By and large, these patterns are highly constructive. In only a tiny minority of issues is there at the moment any evidence of major distribution. A significant number of technical patterns at the moment, in fact, have a clearly bullish confi- guration, and the great majority are, at worst, neutral with, at least, potentials for ulti- mately higher priceB. c – – Translating this into terms of the Dow-Jones Industrials, it seems, therefore, reasonably likely that new high territory should be seen before too long — perhaps by a significant margin. One possible upside objective for the Dow is 1300, and this figure should hardly be startling. Indeed, based on the mathematics of the Dow's construction, it could be achieved by an average move of only 23 points in the 30 Dow stocks. — hardly an earth- shaking possibility. It is, however, unnecessary to think in this stage of upside targets. If market deterio- ration occurs at some later stage, we can only attempt to recognize it and act accordingly. Until such deterioration does, in fact, occur, we prefer to continue to think in terms of a fully invested position with concentration on high-grade issues of the type emphasized by thi, letter over the past year. Dow-Jones Ind. – 933.80 Dow-Jones Rails – 266,08 ANTHONY W. TABELL WALSTON & CO. INC. This DUl.rket letter i.e published for your convenience and mformation and IS not an oller to sell or 1\ soliCItation to buy any securitIes Jllicussed The in- formation WA.8 obtamed. from sources We believe to be rehable,. but we do not IUfLrantee Its accuracy Walston & Co,. Inc. and lte officers. dlrector or em.4'.!oyees may bave an mtereet in or purchase and sell the 8ec!Untles referred to helem, AWTamb WN'.'

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