Tabell’s Market Letter – March 27, 1975

,.- .. ….-r- . , I ITABELL'S I I MARKET I ) LETTER I –oil 909 STATE ROAD, PRINCETON. NEW .JERSEY 08540 DIVISION OF MEM8ER NEW YORK STOCK EXCHA.NGE, INC. MEMBER AMERICAN STOCK EXCHANGE March 27, 1975 ……..—/Last w8ek we presented twoalter-nativ,-esAacing thestock..markeLas-ltapproached….the80-Osu-pply-,,-ar-ea ,,- in the Dow-Jones Industrial Average. Earlier th1S week, aided by the dramatic news events from the Middle East, the market resolved these alternatives. In flve trading days the lliw-Jones Industrial Average cor- rected 1tself from 776.12 to 743.43 or 5.48. The short-term tops formed on our two-point unit and five- point umt charts mdicated a downs1de potential of 728-720; and on an intraday basis these objectives were approached. Subsequently the market reestablished its uptrend. The short time span (68 trading days) of the init1al phase of the bull market ( 36.17) coupled with the volatility of the general market provides us w1th a rationale for the continued sustamability of this move. We complete this week our review of the technical pos1tlOn of the major industry groups. Comments on individual stocks are based solely on technical factors and further information 1S available on request. OILS. The domestlC oils as a group have moved sideways smce advancing from their 1974 lows with no apparent improvement In relatIve strength indicated. The internationals also continue to show poor relative strength action and we would avoid purchases for capital appreciation at current levels. PAPERS. Although group actlOn of the paper stocks has been neutral, lOdividual issues have made sub- stantial percentage gains. These stocks would mclude Crown Zellerbach (32), International Paper (41) and Union Camp (53). The moves appear to be part of a long-term consolldation phase and time w1ll be needed to work through heavy overhead supply. An interesting buy candidate is Weyerhauser (33). Ab1lity to reach 36 would indicate long-term ups1de objective of 62. Support is present under current levels. RAILROADS. In spite of disappointlOg relat1ve strength action of this group, we continue to feel Burlmgton Northern (36), Norfolk & Western (64), which have minor short-term tops, can be purchased on weakness as downside objectives are reached. Also, Seaboard Coasthne (29) continues to trade in strong support area lOdicating higher levels for the longer term . .- – RML-ROAB-EQUWMEN'l'. .One of4hemost-attracHvepatterns1OHtlS-group-is cAmtedIndustne-5e),- -.-.-1–11 whlch recently broke out of base formation mdicating an upside object1ve of 76. Strong support is present in m1d-40 area. Pullman (45) continues to trade in long-term neutral pattern. The ab1lity to reach 51 would break out of 1tS trading area with an upside potential 10 the mid-70's. RETAILING. The long-term relat1ve strength of the retailing department stores remams positive and we would cons1der purchases on weakness. Federated Department Stores (40), Kresge (25), May Department Stores (33) and J. C. Penney (56) are all in the process of broadening potentially constructive base forma- tions; however, time will be needed to develop these patterns in order to penetrate heavy overhead supply. Strongest area 10 retailing group continues to be the fooo stores and we recommend purchase of American Stores (35) which mdicates an upside objective of 46-64 and Safeway Stores (44) wh1ch has an upside objec- tive of 60. Strong support is present under current levels. RUBBERS. Although stocks in this group appear to have reached downSide object1ves, substant1al llme will be needed to improve technical patterns. The exception in this group is Bandag (33). The ability of this constructive pattern to reach 37 would mdicate long-term ups1de objective of 70. SAVINGS AND LOAN. Recent short-term relative strength of these stocks has been impress1ve, most stocks appreciating 100 from their 1974 lows. However, from these levels stocks appear to be encounter- ing heavy overhead supply and we feel time w1ll be needed for further advances. SOAPS. W1th strong support under current levels, Colgate-Palmolive's (29) ab111ty to reach 31 would break stock out of major long-term base indicatmg higher levels. Purchase is Justified. Proctor & Gamble's (94) techmcal pattern 1S neutral. Ab1lity to reach long-term ups1de breakout of 108 mdlCates mitial upside objective of 150. SOFT DRINKS. Coca-Cola (79) has broken out of a long-term base formatlOn wh1ch mdicates a poten- tia1120. Pepsico (60) also-has'broken'out'of'a'base formation which-indlcates ups1de objeCt1ve oe75.- We' would continue to hold both securities but look for short-term relat1ve strength deteriOratlOn. STEEL. Long-terrn pattern of major steel companIes continues to be most constructive. Bethlehem Steel (34), Republic Steel (32) and U.S. Steel (57) have broken out of maJor base formations lndlCatlOg higher levels and we feel purcha se j ustifled. Also ,Armco (30), Inland (40), Wheeling Pittsburgh (25) have strong technical patterns and we would consider purchase on weakness for the long term. UTILITIES. Electric utihtles continue to show below average relative strength and lMe would aVOid pur- chases at current levels. The natural gaS-OIl pipelInes, however, we feel present an interesting buymg opportunity and we would suggest Houston Natural (33) and Northern Natural (58) as buy cand1dates. Also, Kaneb SerV1ces (20) on the American Stock Exchange appears attracllve at current levels. Dow-Jones Industrials (1200 p.m.) 771.59 ANTHONY W. TABELL S & P Compo (1200 p.m.) 83.96 DELAFIELD, HARVEY, TABELL Cumulative Index (3/26/75) 474.18 RJS/jb No statement or expression of opinion or any other matter herein contained IS, ar IS to be deemed to be, directly or md,rectly, an offer or the SOliCitation of on offer to buy or sell any security referred to or menlioned The matter IS presented mllrely for the converlence of the wbscflber While He believe the sources of our Information to be rellCble, we In no way represent or guarantee the accuracy Thereof nor of the Iatements mude he'em Any action to be token by the subSCriber should be based on hiS own mveshgahon and Information Janney Montgomery SColt, Inc, as a corporation, and lIS officers or employees, may now have, or may later Toke, POSitions or trades In respect to any securltle mentioned In thiS or any future ISSue, and such pOSition rn.oy be ddferent from any views now or hereafter expressed In th.s or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment adVISory and other customers mdependently of any statements mode ,n thiS or In any other laue further information on any secl.mty mentioned herem IS available On request