Tabell’s Market Letter – April 02, 1976

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 081540 DIVISION OF MEMBER NEW YORI( STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE April 2, 1976 This week concludes our review of il1dustrial groups and stocks. All comments are based solely on technical factors and further information on individual issues is available on request. RAILROAD EQUIPMENT Shortterm patterns in-this groupCrmaln constructlve,–Long-termpatterns 'in — ACF (51) and Pullman Corporation (36) are neutral. he ability of ACF to penetrate 62 and Pullman to penetrate 42 on the upside would indicate substantially higher levels. Strong support is present under current levels and feel purchases can be justified on weakness. RAILROADS. The railroad group, we feel, presents an Interesting long-term buymg opportunity for the investor. As a generalization, for the last four years these patterns have been in the process of consolidation. Strong support areas now exist for stocks such as Burlington Northern (37), Norfolk and Western (77), Santa Fe Industries (40) and Union Pacific (85). The ability to break out on the upSide would mdlcate higher levels. Chessle Systems (36) and Southern Railway (55) are In major uptrends indicating higher levels. RETAIL-DEPARTMENT STORES. Allied Stores (53) and Federated Department Stores (57) having broken out of long-term base patterns are approaching initial long-term objectives and we would continue to hold. Stocks which have also recently broken out indicating higher levels mclude r. C. Penney (59), Marcor (35) and Sears (76). We feel purchases on minor weakness in these securities can be JustIfled as minimum down- side risk appears present. SAVINGS AND LOANS. Although short-term action of this group has been favorable, heavy overhead sup- ply is present preventing stocks from breaking out of their long-term potential base patterns. Ability of Ahmanson & Co. (13) to reach 14, Financial Federation (14) to reach 17, First Charter (16) to reach 17, and Great Western (J8) to reach 24 would penetrate this area. Interestingly, although some overhead supply Is still present, Imperial CorporatlOn of America (J3) has broken out on the upside mdicatlng inll1al upside objective of 22. SOAPS. Colgate-Palmohve Co. (27) and Procter & Gamble (91) are both in long-term neutral patterns. However, at current levels, we feel Colqate-Palmohve With limited downside risk gives the investor a .-12.!trb'l1y-1ngQRP-.9rtunity than Procter & Gamble where considerable risk is indIcated if current trading range–ls-v-iolaiedonthe-dDWnSlde. -..; – .—– -, – STEEL. Although possible short-term tops appear to be developing, we continue to feel steel group af- fords Investor further upside potential. Stocks such as Armco (32), Bethlehem Steel (42), Carpenter Tech- nology (33) and Inland Steel (50) can still be purchased on mmor weakness. We would continue to hold commitments In Republic Steel (35) and U. S. Steel (80) at current levels. TEXTILES-WEAVING. The diverse actlOn of this group can best be shown through the technical patterns of the following three stocks. Improved short-term relative strength in Burlington Industries (29) has broad- ened Its potenUallong-term base pattern. However, it must be noted that heavy overhead supply is present m the high 30's-low 40's area and we feel more time is needed. Cone Mills (52) has already broken out of a substantial base formation and has, 10 fact, reached long-term upside objectives In the mId-SO area. j. P. Stevens (24), on the other hand, has recently broken out of a base formatlOn mdicatlng a potential upside objective of 44 and we feel on minor weakness stock should be purchased. TEXTILES-APPAREL. A number of stocks such as Blue Bell (44), LeVI Strauss (49) and Oxford Industnes (24) have performed very well techmcally stlll indicating higher levels. Farah Manufacturing (JO), Hanes Corporation (23), and jonathan Logan (J8) have neutral long-term technical patterns and would watch for improvement in relative strength to justIfy purchase. TIRE-RUBBER. Firestone (23), Goodrich (27) and Goodyear (22) are in short-term uptrends but are encoun- tering overhead supply above current levels. Would hold commitments in stock but defer purchases until long-term patterns clarify. TOBACCO. Reynolds Industnes (62) continues to be the best-acting security In this group with an up- side objective indicating 80-94. We feel purchase can be justified on weakness. Both Amencan Brands (41) and Philip MorrIS (56), In long-term neutral patterns, reflect minimum downsIde risk and on any Im- – , provedrelative strengthshould be consIdered forpurchase. 'i.. -.. ……., .-,;; – . UTILITIES-ELECTRIC. The common denomInator for stocks in thIS group are short-term uptrends WhICh indicate sllghtly higher levels into eXlsting heavy overhead supply. Do not feel stocks warrant purchase at these levels. UTILITIES -GAS. Relative strength action In this group remains neutral. Amencan Natural Gas (37) and Peoples Gas (36) show mInImum downside risk. With Improvement 10 relative strength, we feel purchases ca n be initiated. UTILITIES-TELEPHONE. A logical way to participate m this group is American Telephone and Telegraph (56). The long-term technIcal pattern has for the past ten years been In the process of consolIdatIon. Recently the stock broke out In the mid SO's from a short-term base indIcating hIgher levels. AbIlIty to reach 60 would Indicate a long-term upside objecl1ve of 88-120. Dow-jones Industrials (1200 p. m.) 987.88 S & P Compo (200 p.m.) 101.85 Cumuiatlve Index \4/ J/rb) bO. 53 ROBERT j. SIMPKINS, jR. DELAFIELD, HARVEY, TAB ELL RjS/jb No stotement or expreulon of op'nion or any other matter herem contolned 15, or IS to be deemed to be, directly or mdlrectly, on offer or the sollcltollon of on offer 10 buy or sell any security referred 10 or mentioned The moiler IS presented merely for the onverlence of the subscriber. 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