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Technical Market Action In the sharpest break since 1917, the market sold dOlm into new Imv territory for the ynur on hevy volume. The industrial average was down at 178.68, the raila closed 4.68 lower at 52.61. VolUille totalled 2,900,000 shares. fly penetrating the Febrt;.ary lows, the market,under the Dow theory, l'i,,;.aUed 8. bear market. Although this sounds extremely de- marketwise, it is not quite us bad as it sounds. It simply means that the top of the four year bpll m&rket v;as reached in lte MIlr 'hen the industrial average reached approximately 212 Blld that for the la8t thrp.e months we have been in a bear IDQrket. Under the Dow t.'1eory, Ullere is no certainty how much furthr,r the decline could cary.'Y or how lon!; the bear m8rlet will last. As thls 18tter stated in late July, the first warning sif,TIul vms given when the 199 level was oroK8n and tIle iptermediate trend Lurned downward. At that time Vie stated three p(lssiblc downsi d8 objecti.ves. 1'h8 first two have alro!l.dr been reached. The third alternative suggeGtC'd a maximum of around 174 Gn tho indus- trial averRge and 54 on the rails. .4t Monday's lows (If 177.49 and 52.22, the i.ndustriols were \ithin 3 1/2 pojnts 01' thE-Sfl Egures and the railn \V8re alnost t'70 points belor. for the thinness of th2 present market, \lould allow a fell poin ts lcevtay. Believe a gODd technical rally could occur from around the J 75-170 level 1..'1 t'1G industrials and 5250 level i!1 the rail average. /r;oli.eve tha t, although we a.re technically in a' bear marlwt, the decline e nre \\'Ltnessing is, onl.v, a cQrrectiv8 ;.hase in a brc'ad up m(lVe that will eVGntua1.y carr'J above the 1946 highs . So far, the decline has been modernt. unO\ll1 to only 16 of tJo s hiehs in the CXP8C L the l75170 l.evel to bH' at least a first stopping point., with the most pessj.- m.Lstic probabjl i ty being a dcline t.o the top ,)f tile broad 1937..194; Dccumulati on n.Jce. wou.Ld be .!round t.he 160-157 lvE'l in the industrial avernr,t'. Incicbntally, the base COllnts in th 1937-19/,2 accumulat.ion haVE been wor1;ed out in only a ery fe'l 1l0tabLy the consu'.ler (.)ods field. The heavy industrr shares indic&te '1'\uch hie;her long term levels'/ 3;September 1946 EDi,1ND VI. TAEELI. SHIELDS & COMPANY CT.OSHG Dov/-J ones Industrials DOI/-JonG S Ro.ils ;)ow-Jones ()5-Stoek 178.68 52.61 65.26 The opinions e.pressed in this letter are the personal interpretation of chrs by Mr. Edmund W. Teb.n and ere not presented al the opinronl of ShIeld. & Company.