Tabell’s Market Letter – March 19, 1976

Tabell’s Market Letter – March 19, 1976

Tabell's Market Letter - March 19, 1976
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———————————————————————————————————————–, TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE March 19, 1976 For tbeth-i-r.d..-ti-I11i-l1-,r!-'c–H-nt-wee k s ,.t h – D- O Y…'–Jo–n es) n dust ria i Average rallied – —o–'– at mid-week from .. around the low 970's. This area is now sufficiently tested so that downsidepen-etratiofi;- if it were to – —- occur, would have some significance and would probably portend an extended pertod of attempted rebasing in the 950-970 range. In turn, were 950 ultimately to be penetrated on the downside, significantly lower levels could be foreseen. It should, however, be pointed out that the occurrence of such a correction, which would have to be placed in the intermediate-term category, this early in the cycle would be an un- usual one, and we would regard the eventual upside penetration of the 970-1000 range which has con- tained the Dow for the past few weeks as the more likely eventuality. We are continuing this week our review of industrial groups and stocks. All comments are based solely on technical factors and further information on individual issues is available upon request. CONTAINERS-METAL AND GLASS. Both American Can (34) and Continental Can (28) have impressive base patterns, although major trend upside breakouts have not yet been achieved. The stocks could be considered for purchase on weakness. COPPERS. Action in this group has been subpar throughout most of 1975 but, on a short-term baSiS, relative strength has picked up. Newmont Mining (29) has just moved into a major uptrend with an initial objective of 40 and Phelps Dodge (44), although faced with heavy overhead supply, could move higher. DISTILLERS. Action within the group has varied. Both Heublein (52) and National Distillers (25) have moved up sharply in recent months. The former, however, is approaching most readable upside objectives, while the latter suggests higher upside targets with a long-term objective of 40. Seagrams (30), by con- trast, has lagged and a period of protracted rebasing in the low 30's appears to be a probability. DRUGS. As a group these issues have underperformed the market since the beginning of 1975 suggest- ing, perhaps, that price/earnings ratios are still more than adequate. Most issues are currently priced .just below.mils.silLe-'Lyad-2!lPRly from theis 1972-74 tops,and,although some rebasing has taken place, we would regard an uPsidebrea-kotthissU;g;;s';;niikeindeedwm-e-issues-, despite genera-l – market strength, appear to possess a fairly high degree of downside vulnerability. With a few exceptions we would be inclined to avoid the group. ELECTRICAL EQUIPMENT. Patterns within the group vary. General Electric (52), in a short-term trad- ing range, has noved back to just above strong support at the 50-45 area. Heavy overhead supply at 60- 70 may slow any upside action, however. Westinghouse (16), a severe victim of the 1973-74 bear market, has begun its long-term rebasing process,and probably more work will be needed in the broad 10-20 range. Switchgear companies generally have impressive base formations but in most cases are just under overhead supply from their previous tops,and upside action may be slowed somewhat. Appliance companies have generally attractive technical patterns with above-average relative strength. Maytag (36), Sunbeam (26) and Whirlpool (31) all have higher readable upside objectives. ELECTRONICS. This is another group with mixed patterns, but with a few exceptions most issues are close to overhead supply soing back to the late 1960's. Ability to reach 30 would suggest considerably higher levels for Beckman Instruments (25). Recent ability of Texas Instruments (118) to reach the 120 level was impressive, and conslderably higher upside objectives appear to be readable for the stock despite its generous price relative to the general market. FINANCE COMPANIES. Substantial potential bases exist but there is no evidence, from a relative- strength point of view, that an immediate upside breakout will be attempted. Breakout pOints would be 38 for C.LT. Financial (33) and 33 for Walter E. Heller International (26). FOODS. Despite the relatively low volatility of this group, many issues have managed to outperform the market on both a short and long range basis. Action of meat packers has been particularly outstanding, , and Esmark (39), wh-ile approaching short-range objectives, still has.muchhigher long-termtargets. I I Borden's (29), although close to overhead supply, has impressive long-range portential as does CPC – – International (44), despite its recent backing and filling in the 40-50 range. Some issues have major up- side breakouts just above current levels such as 38 for Campbell Soup (32), 30 for Del Monte (24), 32 for General Foods (29) and 48 for Kraftco (43). FOREST PRODUCTS. Most issues in this group appear attractive technically. Boise Cascade (28) has an upside objective of 52, Georgia Pacific (54) one of 60-80 and Weyerhauser (45) one of 63. In most cases there is support just under current levels. GOLD. A few issues in this group have moved into short-term uptrends which would carry them into heavy overhead supply from past peaks. They would be appropriately consldered as sales on strength. Dow-Jones Industrials (1200 p.m.) 980.79 ANTHONYW. TABELL S & P Compo (1200 p.m.) 100.71 DELAFIELD, HARVEY, TAB ELL Cumulative Index (3/18/76) 610.63 AWT/jb No statement or epresslon of OpinIOn or any other matter herein contained IS, or IS to be deemed to be, drrectly or Indirectly. an offer or the soliCItatIon of an offef to bl,lY or sell any seevrlty referred 10 or mentIOned The matter IS presented merely for the convef'lenc of the l,Ibscrrber While .ve bel,eve the 50l,lrces of oor Informa tlon to be relIable, we In no way represent or gl,larontee the OCCl,lrocy thereof nor of the statements mode herem. Any octlon to be taken by the l,Ibscrtber shol,lld be bo,ed on hiS own Inveshgat,on and InformatlO'l Janney Montgomery Scoll, Inc, os 0 corporation ond its officers or employees moy now hove, or may later loke, polhon or trades In respect 10 any SeCl,Ifltres mentioned In Ihls or any fl,ltore ISSl,le, and sl,Ich pOSitron may be different from ony views now or hereafter expressed In Ihu or any other ISSl,le Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, moy give adVice to Its Investment adVISOry and othel customers Independently of any statements mode In Ih.s or In any other ISSl,Ie Fl,Irther Informotlon on any seC\Jrlty mentioned herem IS avaIlable on reql,lest

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