Tabell’s Market Letter – August 01, 1952

… . '..; .c …..''- .-….. .' .. , '- 7-, –,- — PHILADELPHIA 2. PA. LOS ANGELES D. CALIF. SAN FRANCISCO 4. CALIF 't,– …,',; 35 Wall Street 1420 Wo!Ilnut Street II' DIGBY 44141 PENNYPACKER 55977 ;(/' I 'I 1'.; TABELL'S MARKET LETTER 550 South Spring Street MADISON Ii 3232 265 Montgomery Street sunER 12700 ,,, .' .. I' I '.11..'. I\- it;ff,;1 All of the Dow-Jones averages reached new high territory during the t',A';' i'. t.past week. The industrials bettered the previous week's high of 280.05 at –) i'friday's top of 280.49 and the rails moved sharply above the early J u l y ; '.,;' ';'-'peak of 103.42 to attain a new high at 104.38. The utilities passed the ;.. !.,'arch high of 50.47 to reach 50.65. The combined 65-Stock Average, of ', Hourse, also entered new high territory at 108.21. . '.' . The upside penetrations indicate that the possible upside objectives . ; are the 285-295 area on the industrials, 105-110 on the rails and 52-54 on '.' !;he utilities. The fact that the upside objective on the 65-Stock Average )cis 110 apparently indicates that the lower part of the areas are more J.ikely to be reached than the upper zone. r.ie,, i;.; It is strange that the advance has not resulted in more speculative . ;'nthusiasmo Volume has been small with no seSSion totalling above 1,300,000 .' i\Shares and the new highs in the averages have been caused by strength in a '. ,relatively small number of stocks. At the sa!!le time that a few stocks are ;eaching new high territory, there are others hat are selling near their ,',,,' ;respective lows. This implies a lack of breadth and indicates caution des- '.' lpite the seemingly strong action of the averages. ,' LONG TERM INVESTMENT I continue to advise a 100 invested position, '. ;'j1.n accounts concerned mainly with income and longer term appreciation re- i. ,gardless of intermediate term fluctuations. However, at this stage of the ;', (lj1arket pattern, would concentrate holdings in undervalued issues with de- ' , f'ensive characteristics. Twenty issues of this type were' listed in the i.itetter of July 11th and American Telephone & TelegrapQ () was mentioned i' ,. /In last week's letter. ., r';',' All of these issues appear to be interesting long term holdings if iavailable around originally recommended levels. ,,) CAPITAL APPRECIATION In risk accounts concerned mainly with capital ….,. ;ppreciation over a six months period, I continue to advise a 50 to 75 i', ).\liquid position. While the market may move somewhat higher over the nearer . '. ,'term, it would appear that lower levels will be reached before the expira- ,., 'tion of the six months long term t;ain tax period. Therefore, it appears ' ,prudent to have a cash reserve in capital appreciation accounts to take ad- '.c wantage of possible buying opportunities. Such an opportunity was presented l;;1n June, for example, when Celanese reached 36 3/4, a 37 dec line from the (.' 71951 high of 58 1/4. The distributional pattern formed at the top indicated ;'.) ;!to-35. The stock has since rallied almost ten pOints since its recommenda- ;. ;,tion. Another group to be watched closely is the wonder drug group. This . !.1etter has long mentioned this group as being in a vulnerable technical ' ,position. Howev.er, they now have declined sharply and are approaching their ',' i;downside objectives, as noted in the three issues listed below ; ,. 1951-52 High Recent Low Downside Object. , c' Abbott Laboratories '.. Parke Davis & Co. ;,; Pfizer (Chas.& Co.) t!' 64 1/2 49 1/2 63 1/8 42 1/8 465/8 333/8 . 45 40 32-27 ;.. r. ; – ;' In the event 'of a moderate further decline, these issues would appear).; i.to be in a buying zone. There are many other groups that have built up po- ;' ;'!tentially vulnerable patterns and will eventually reach downside objectives . .i'. irhere is usually less risk involved in purchasing issues on weakness after i' h steep decline than in buying them after a sharp advance. Obviously, how- ;, ;ver, some funds must be kept liquid in order to take advantage of buying ,i 'bpportunities. Potential bargains cannot be acquired if funds are already ;\–. c''.;.j;ied up in other issues bought at higher levels. This is why this letter (,has advocated a partially liquid position in capital appreciation accounts (.,; i'itor long term holding. This may involve missing the last. 5 or 10 of a ; , ' \lnove in some issues, but may also allow the purchase of individual issues -With good basic patterns at 25 to 40; below their 1951-1952 highs. This r;a.dvice, of course, applies to those who,because of tax reasons, are inte- i. .i,' '. i-ested in six months gains. For the near term outlook, consult the Daily;' tWalston Letter and my daily wires. f Offered by prospectus only, ;';- which is available on request. WEDAMUNDLOSNWHTOABEF & GOODW,,T T , ………. ,u. p; ,. (,AutaU-i or m b. construed as an offer or solicitation of offers to buy or HIli ,any securities From time to time Wahlon, HoHman & Goodwin may ,,f'If have an interest in some or all of the securities mentioned herein. The foregOing material has been prepared by UI ,U a matter of lnformatin only It IS baled lipan information belloved reHllble but not necessarily complete, Is not ;uaranteed ,51 accurate or final, and is not intended to foredole Independent lnqulfy. W/;,;//li'/f;.!,!,,-,,–, '.'\'I,,''- — – ', , ' , ',, ,' – ,,,, – ' '' ,I', 1'1 1- I .\