Tabell’s Market Letter – March 16, 1951

– – – I \ —;–' -!—-j '-'-\-'';',,' Wal s tOD. HoffDlan t;.. Goodwin ,''iJ',,;'''i-';''sX';Fi ',' ;UJ.d ako NW YORK 5, N. Y PHILADELPHIA 2, PA. LOS ANGELES 13, CALIF ', 3S WU Street \ DIGBY 44141 1420 Walnut Street PENNYPACKER 55m 550 South Spring Street MADISON '.1232 ( T-ABEL-L–'SM'-A-R–KET–L-En-E-R— SAN FRANCISCO 4, CALIF, 265 Montgomery Street SUTTER 1.2700 , '–.,. -I ;,') During the past week, the month-old trading range of between Jt'oughly 257 and 249 on the Dow Jones industrials has been decisivly pene- 1–' ;'!trated on the downside. A low of 242.06 was reached on Thursday. The ,– ;rail'average, which has been in a definite downtrend since the 90.82 high (; ri;of early February, declined to a new low at 80.12. Volume increased as ;, the market weakened. A sharp rally on Friday brought the averages back to 'f ,1'249.33 and 82.94 . to ' ! The downside breakout places the market in an extremely defen- ' ,';sive position as far as the major trend is concerned. The distributional,,, ,, tops formed on both the various averages and on individual issues are rel- – ,-atively minor. They indicate, at the moment, no more than a decline to , ;,240-236 in terms of the Dow Jones industrials. A rally from Thursdays low — ''; of 242.06 or from a subsequent low in the 240-236 area, is the normal hi- ttechnical expectation at the moment. This rally will meet heavy upside ;—- ;, resistance first at 248-249 and then all the way up to the February high ; ;of 257.06. If, after a month or so, the advance fails to carry above the , ,February highs and subsequently falls below the low reached on the present ; i ;',ldecline, a major downtrend is indicated. The ultimate downSide objective ,(' '-, of such a possible pattern is not evident at the moment. It depends on f ;,ihow much of a distributional pattern is formed between 257.06 and what- , ,.( ;,, ever ipatt low ern. is reached on the present declining phase, if such is to be the 1'- i,,.'–o' ,,i This letter has been suggesting caution since late 1950. It j ,;has advised a gradual lightening of positions as each individual issue on ';1 our recommended list has reached its individual upside objective. As f'ii ;, these issues were originally recommended at considerably lower levels ,' (in early 1949 in the 160-180 area and again in July 1950 in the 195-205 , ,', area) this policy has resulted in substantial long term profits. Of 1' '\ course some of these issues have moved moderately higher but this letter does not concern itself with the minor trend. I continue to advise a 60 liquid position in accounts where 'l primary conSideration is long' term capital gains. It is my opinion that ,',' the market is in a consolidatil; )hase that may last from six months to a , , year. The outer limits of this consolidating phase are not clear at the ; ,, moment but the present pattern suggests something like 260 to 200 – ad- ;mittedly a wide area. During this phase, individual issues will offer i excellent buying opportunities. After the consolidating phase is com- ' pleted, much higher prices are indicated. , At the moment, the 40 of total funds invested should be con- ,',; centrated in groups with not only favorable long term implication – – '-; , , also good defensive qualities. Such groups include Airlines, Building '.Y Supplies, Department Stores, Finance Companies, Motion Pictures, Natural ) Gas, Office EqUipment, Printing and Publishing, Tobacco, Soft Drinks, 1 ', Utili ties and Variety Chains. . , ,, March 16, 1951 , CloSing Averages ,','I'i;' Dow-Jones Industrials Dow-Jones Rails ,' 248.62 82.69 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN , . ,l I ,- This m.morandlJ ' not to b. construfld as .lJp offer r soliclffon of offln t' bu or !eU any securities. From time to tim. Walston. Hoffman & Goodwin may haYI iI.1I Interest II) some or all. of the I.-CU mlntl.lmld h.rl/tl Th. fore;cllnq mafldl ho!I b.en prep.,..d by ut 015 a matter of .nformation only It is baled upon Information b.1JlIved r,lIbl. but not nflunar.i., compl.t., Is not ;ullranteed as accurat. or final, and is not .nfended to foreclon inde'Pendent inquiry ','-'I'LL..! L,,' ,,LL-!V-'LLII, ILL- IIL,'.,',I…' , -', ,;. L )' L L'L' L ',;','..',-,, -L'-LL'Lt,, ', ,.,.. .. . IX