Tabell’s Market Letter – March 08, 1974

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YOAK STOCK EXCHANQE, tNC MEMBER AMERICAN STOCK EXCHANGE March 8, 1974 Market a etion continues to improve. The Dow jones Industrial Average since the December low of 788,31 rallied 11.72 to a high of 880,69 in early january. Since then a successful test of the December low was made m February, albeit the broader based averages such as the S & P Composite and the New York Stock Exchange Composite penetrated their respective lows. The Dow is now making an attempt to breach the january high, It is interesting to note at the same time daily market breadth as measured by our Cumulative Index penetrated its january high and continues to act most impressively, The pieces continue to fall into place. The 200-day moving average was broken intraday, new daily lows continue at low levels and the 11. 72 year-end rally has carried in length of time into March. As noted in an earlier market letter this year, in the 19 years railles of the magnitude of 10 or more have continued into March or later, 17 of these years the eventual trend was upward. Past issues of this letter have focused on the now obvious shift in leadership which has been takmg place in the market between the deteriorating growth issues selling at high multiples and imprOVing actlOn on the part of the low multiple,commodity-oriented,cyclical sector. Because of this coupled with the improving picture of the general market, we are therefore starting this week and will continue in future letters to review the technical position of major industry groups. The comments which follow are based on technical factors only and further information on all issues is available on request. AEROSPACE – Group relative strength continues to be below average, Most stocks in this group continue to sell around their 1970 lows, Although this area should eventually constitute potential bases, time will be needed, Overhead supply should prevent any immediate move from current levels. hown– A1R'rRASPbRr- Having reacnea-1ileriaownslde bJ5jj;Cflvaroufia'il1e1t-191nows tfilsgrouplias's increased relative strength over the past few months. At these levels National Alrllnes (19), Northwest Alrlines (24) and UAL Corp. (27) break out on the upside slightly above current levels. Feel stocks can be purchased in support areas on minor weakness. ALUMINUM – This group is typical of those cyclical industries mentioned above and for the past year has shown above average relative strength, Alcan (35), Alcoa (46) and Reynolds Metals (21), indicate longer term upside objectives and continue to feel stocks should be purchased, AUTOMOBILES – Although relative group average has deteriorated recently, Chrysler (18), Ford (49) arid General Motors (51), have met downside support and appea.r to be forming short-term bases indicating moves into overhead supply, Ford has, in fact, recently broken out on the upside indicating a move into the high 50 area, Time will be needed to improve group. Purchases on weakness in American Motors .l.!Q.l in the 10-9 area is, however, recommended for the more aggressive portfolios, AUTOMOBILE PARTS – Relative prices action of this group continue to put in below average performance, Although downside objectives have been realized, we feel considerable time will be needed for patterns to broaden. Eaton Corp. (28) and Gould, Inc. (23) have already started this process ,looking attractive short-term,and should be watched. BUILDING MATERIAL – BUllding related groups continue to deteriorate relative to the market and although downslde risk appear minimal,generally the attraction of this group is below average at th,s time. CHEMICALS – This is another cyclical group which has continued to show lmproving action. Air Products li1l, Hercules (32) and Monsanto (59) continue in uptrends wlth higher levels indicated, Allied Chemical 1i1l., Dow Chemical (60) and Union Carbide (36), also have constructive potential base formations and appear interesting as a purchase candidate. Representation in group is strongly recommended. COlirTAINER1r7METAt-& GLASSMajOr issues 'in-thls groupcontinue'to show -poorrelaflveacfion'and heavy overhead supply appears to limit any upside potential for the time being, Supply exists in the 3035 area for American Can (29) and the h,gh 20-10w 30 area for Continental Can (25), CONTAINERS – PAPER – Most issues in this group appear to be In neutral to moderate downtrend and would avoid purchase as time will be needed to improve technical positlOn of the group, Dow-jones Industrials (1200 p.m.) 869.06 S & P Compo (1200 p.m.) 96.85 Cumulative Index (3/7/74) 625.79 RjS/jb ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or exprCSlon of opInion or any other matter herein contolned IS, or IS to be deemed to be, dlrettly or indirectly, an offer or the solitltatlon of on offer to buy or sell any sewflty referred to or mentioned The moiler IS presented merely for the convenience of the substflber While we believe the sources of our Informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the !tatements mude herein Any octlon to be token by the substflber should be based on hiS own westlgatlon and Informatlo Janney Montgomery Scoll, Inc, as a torporOI,on, and Its officers or employees, may now hove, or moy later toke, POSitions or trades In respect to ony setUrihes mentioned In thiS or any future Issue, and such POSition l'1'\(ly be different fro'll any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on mvestnenl adVisor, may gIVe odvlce to Its Investment adVisory and other customers Independently of any statements mode In thiS or In any other Issue Further mformatlon on any security mentioned herein IS avaolahle on request