Tabell’s Market Letter – November 19, 1971

– – ,–….- —– . . , ,I , TABELL'S , MARKET LETTER I , I , 1-.-.- . ………-.-. -, -' – ,, .J l) ,Y'&'J'Ily,. !TakII 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF , fo,ney o./l'imeI'Y Y/.,a Y1!C. MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE November 19, 1971 Stock prices attempted to firm in the early part of last week but that strength was aborted with weak- – e nes s-T'hursdayand'ear-IyFriday'–The -rally ,attemptswere unimpres sive.and certainly' insufficient to ,signal, any sort of major reversal. The immediate course of least resistance is apparently downward but, we think, at current levels, the amount of risk is limited — perhaps 5-8 in terms of the popular averages and less for a great many individual stocks. Since periods such as the present generally produce visits in market leadership, stock selection will be important and we are, therefore, continuing in this letter our review of the technical position of maj or industrial groups. OILS – Both the international and domestic segments of the industry have been showing inferior action relative to the market since the end of 1970. This unfavorable action has been particularly marked in the case of the international issues. Although SOme internationals are available at substantial discounts from their early 1971 prices. and appear fairly valued fundamentally, further downside risk appears possible and we would be inclined to defer new investments at this time. Domestic oils such as Phillips Petroleum(28) and Cities Service (41) have returned to long-term base areas and, although near-term action may be slow, they could be candidates for accumulation. Amerada Hess (37), down from a high of 71, appears cheap although rebasing will be required. PAPER – As a group, action has been average but patterns are mixed. Union Camp (33) has returned to the support in the low 30's and, although short-range softness is possible, the long-term base pattern re- mains intact suggesting higher levels. The same is true of International Paper (29) now selling near the low end of its trading range for the past three years. PUBLISHING This group has shown above-average action and has remained, to date at least, highly re- sistant to the bear market. However, most stocks in the industry have returned to the heavy overhead supply area around their 1968 and 1969 highs. Ability to penetrate this supply would be encouraging, but the issue remains' lnaOtrllt-anhmnorrrent. RADIO-TV BROADCASTERS – Recent action has cast some doubt on at least the near-term outlook for these issues. After moving upward sharply in early 1971, the stocks have been moving laterally since that time and potential tops exist. We would be disturbed at downside breakouts below 40 in the case of American Broadcasting (46), 39 in the case of Capital Cities Broadcasting (41), and 32 in the case of Taft Broad- casting (36). RADIO-TV MANUFACTURING – Most issues at recent highs were running into overhead supply. However, they appear to have corrected sufficiently and risk appears limited at the present time. RAILROADS – By and large, group relative action has been good. The Dow-Jones Transportation Average ,has reached its most plausible downside objective at 221 and the most likely eventuality is that it will rebase in the broad 220-230 area. Southern Pacific (42) presents one of the more interesting indiVidual patterns in the group. RAIL EQUIPMENT- Most issues in this group continue to show above-average action. General American Transportation (47) appears attractive, and Pullman Inc. (45) has returned to a strong support area in the mid 40's. RETAILING – Relative action of this group during 1971 has featured above-average action on the part of department and variety stores, action more or less, in line with the market from disounters and mail- order issues and sub-par action on the part of food retailers which are down sharply from their April highs. By and large, most issues in this latter group appear to have reached support levels and are attractive on a long-term basis. In the department-store field, such issues as Federated Department Stores (46) and May' s (42) have so far continued their good relative action and resisted the general market decline. Continued abilityof the foriner io hold 'aDoe4 2 'and'the'latier- to' nold'above 39 would' be-constructive–' ' , Gimbel Brothers, Inc. (26), down from a high of 45 earlier this year, has returned to a strong area of potential support. In the mail-order area, Sears, Roebuck&Co. (92),thequalityissueinthegroup, is selling close to its all-time high and distribution so far appears minor. We suspect it may be high for new purchases, however. Further downside risk in Marcor, Inc. (29) appears probable. In the discount field, Vornado, Inc. (23) would appear interesting, especially were it able to break above 30 under im- proved market conditions. Among variety chains, Kresge (S.S.) (88), one of the leaders of the 1970-1971 bull market, appears to be forming a potential top and is probably best avoided for the moment. Wool- worth F. w. (46), on a short-term basis, might return to the support in the low 40's where the stock would appear attractively priced. Dow-Jones Industrial (Noon) 809.94 S&P (Noon) 91. 55 ANTHONY W. TABELL AWTmn DELAFIELD, HARVEY. TABELL NQ statement or elpreS510n of opInion or any other mOiler herein ContOined 1, or IS 10 be deemed 10 be, d,reClly or ,dlreClly, an offer or the soliCitation of on offer to buy or sell any security referred to or mentioned The moiler 1 presented merely for the converlencE of the subSCriber Whde we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the stotemenlS mude herein Any ocllon to be loen by the subSCriber should be based on hiS own m ….est'gollon and information Janney Montgomefy Scolt, Inc, 0 0 corporal,on, and lIS offIcers or employees, may now have, or may laler Toke, poSitions or trades In re1pect To any securities mentioned In thiS or any future Issue, and suen poslhon may be different from any views now or hereofter expressed In thiS or any other Issue Janney Montgomery Scali, Inc, whICh IS registered With the SEC as on Investment adVisor, may give adVICe to Its Investment adVISOry and other customers mdependently of any Slolements mode ,n thiS or In any oler Issue Further information on any security mentioned he-rem IS available on request