Tabell’s Market Letter – August 17, 1951
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Walston.Hofftnan & Goodwin.- – , -',',,c';,\j un,e.n& c/eo., '-l 3S WallStreet -PHILADELPHIA 2, PA. 1420 Walnt Stroet .. LOS, ANGELES 13, CALIF, SAN FRANCISCO 4, CALIF, 5sq South Spring St,eet 265 Montgomery Street ll;; J DIGBY 44141 PENNYPACKER 55971- MADISON 93232 SUTTER 1'2700 f;',-', TABELL'S MARKET. LETTER ,''-,;;, 1- 'I- \'r .t, 7,' .. ;1/1, , ,'; i' 1', ,,', , a ) ''', r The Dow-Jones industrial average reached a new high this weelc at li; ,,207.44. This compares with last week's high of 266.51 and the May high of i,;' L264.44. By comparison, the rail average continues to lag. This week's high b,; ti'ii'was 81. 25 as against last week I s high of 83.38, and the February high of )90 .82 . c' In addition tOJthe divergent action of the , two , averages, there are ' ,inany ther technical sighs that continue to indicate extreme caution. The ;(j f,'breadch-of-the-market graphs are very unfavorable. Each successive rally in t Utheavrll-gesb.,,, .been carriedforwaI'd,)y; ,q.D,inc,r,eas,ingly s!1la,ller number of !( stocks. This is shown by graphs of volume new highs anq lows, advances and ;;1, i 'declineF,,'moving average action, .etc. These signs of weakening internal ac-l,';! ,tion hae occurred while the average is making neY highs. Such a pattern i;;i ;' has been present 'at every important' top in the past twenty-five years. When ili! i ;the stocks that-are leading the, advance reach levels that over-discount 'the t.' i ,future and buying' cea'ses, the u'Pward momentum of the marKet 'stops llllless ii,, f.'new leadership' takes over. , ,., 7,, L The leaders of the present;advance hav'e, in the great majority of (k ,.;cases, reached their upside objectives. They should be sold on strength'. \,Iovlever, there are a, number of. secondary issues that have favorable long ;'t;erm patterns and have, as yet, shown little market advance. These issues 'ocould e,dvance while the erstwhile leaders are building up wider distribu- IG r !tional tops. If the market declines, these issues should act better defen- r ;;;sively than,'the, general market. ' ' , 'Earlie'r ,in the year, I advised a 25 invested position in long term f;, I ,capital appreciation accounts. This was increased to 50 in June. Would now (,; ',;,advise 'a reduction,back to 25 after the twenty-five point advance from the ;';/' ,'June 10l'/s. ThiS;ad,;Lce ,is substantiated by a sell signal on my intermediate ,.' ).'term gauge ,given taii! week. . I,; i;, , The 25 invested position should be only in the secondary type of p;- tiissue'mentioned-'above'. I am listing below suitable issues of this type. ;,,; ',',The list below should now be considered my recommended list. Some issues ;',1 ;formerly in my . !ist a!,e eliinated- I consider the issues beloVT more su1t-; able under. pesent conditions. ; j- BETTER GRAIJE . ' i;EDJ— GRADE AmericancNews -(33) . ' -1-A/soc .Dry Goods (21) ;.JiL!;, Armstrong cor- (59) , Bucyrus Erie ('22) Endico,tt Johnson (2)'. -Burroughs (17)' 1,,/ Fairbanks 'Iorse' (50). -Carrier (24) t; SPECULi\'l'rITE ri,' ,American Airlines l5P 'Central Foundry(9) I'; Columbia Pictures Eastern Airlines ('(2153) )..,., i-.. rasonite',C31), ' . 'City'Stores (19) Gray Mfg. (15) 'i l ,,' Montgomery tard (69) Columbia Gas (14) Gulf ,Mobile & Ohio (21-). i' Western Auto (49) Elliott (26) Inter'. Tel & Tel (17) j. 'i Freuhauf Trailer. (26) Radio Corp. (23) (' ;' ; l ,' , Hall Printing (18) Hewitt-Robins (26) Lowenstein (30) Raytheon -( 10) . ;.'/ Piegel (11') ,''', United Airlines (28) k,; ' J ; ;' !'; i ' , '.. ' , ' '- National Supply (27) Universal Pictures (lO'r ,'Pacific Mills (38) Western Airlines (13) b Paramount (25) Shamrock Oil (34) '1- i,-'i Smith, A.O. (35) Sylvania (33) Twentieth-Cent.Foy. (20) \,- ,- , ..,7,-'',' ',