Time Clock: Best Bird Dog on the Street

EDMUND TABELL

TO predict the course of the stock market, Wall Streeters have tried everything from the height of tides to the frequency of sunspots. The most practical tools are charts that show the price changes of individual stocks as well as the action of the market as a whole. Chartists are powers in the Street; on what their charts show, institutions, mutual funds and thousands of individual investors buy and sell. In this select group of experts, who can often send a stock zipping up—or down —the leading chartist is generally recognized to be Edmund W. Tabell, 55, the tall (6 ft. 2½ in.), mustached vice president and research director of Walston & Co. Tabell keeps 2,500 charts, biggest number on Wall Street, has used them to score a topflight record in predicting market swings. Says Samuel L. Stedman, partner of Carl M. Loeb, Rhoades & Co.: "Ed Tabell is the best bird dog on the Street. When he points, you better look."

For the past decade Tabell has been pointing up. In 1948, when the Dow-Jones industrials were around 180 and Wall Street was expecting a drop, Tabell predicted an intermediate rise to 250, a rise to 450 by the mid-1950s. In the 1953 recession downturn, Tabell wrote that "this is the last buying opportunity" before a market rise that would "break through the 1929 top of 386 and carry to the 500-600 level by the late 1950s." In 1957 he predicted the market, then around 500, could work down to 430 (it hit 419.79). Later he noted, "The bull market is good for another two years."

WHAT Tabell uses chiefly in judging the market is his 1,400 "point and figure" charts of individual stocks. For the complete technical picture he also charts daily market volume, number of issues traded, new highs and lows, and odd-lot trading. For point-and-figure charts (also used by other chartists) he notes each change of a point or more in a stock (½ point if the stock is under 20). By the pattern thus established, he determines whether a stock is going to move straight up or down or merely back and fill. In an upward move, he forecasts the "objective," i.e., the price at which the stock should be sold. In a move down, he forecasts the level where it should be bought.

The reason why charts can predict a rise, says he, is a simple one. "When the top officers know that a company has taken a turn for the better, they start buying the stock themselves, or tell their friends. This buying shows up on the chart. As a new pattern forms, it is not hard to project what the stock should do."

A year ago, when American Motors was seesawing between 11 and 14, Tabell noticed what he calls a "strong technical pattern," predicted an "upside potential" of 34 if the stock got above 14. When it did rise, leveling off around 34, Tabell's chart showed a new potential of 44. American Motors sold as high as 43⅜ by January, then slid back to 25½ before climbing back to 38¼ last week. Tabell admits that charts are far from infallible; often two chartists will arrive at opposite conclusions. Therefore, when a stock attracts Tabell's attention by its price movements, he sends aides to see the company and check on the "fundamentals" of earnings, sales and dividends. He will not recommend a stock unless the fundamentals support the pattern on his charts.