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Technical Market Action Weakness in commodittes, with both cotton and hec.t off the allon' able limits for th6 dcy, cunsed wealmes's in t,l1(' market on Thursduy. Prices rallied from the mid-day lows ,end at the the industrial aver'age lost 2.59 e.nd the rails Viere down ),1.05 at pl.76 and 47.59, respectively. Volume f't 1,JIO,000 shares ms 1dow the of week. V/hil8 the decline came someuhat mor'e rapidly than expected it hs still held wi thin normal corl'ecti VEo bounds. From the low of 161. 61 rcuhed last Thul'sda, the industrial c.yerage rebolmded to a high of 177.05 on I!edn.esday of this This is c. rully of 15.L.1. in five tl'uding da;rs. This is an extremely rl'.pid advance which, as mentioned in s lettor, left the market somewhat vulnerable from a technical vleVipoint. At s loVi of 170.47, the industrial avera go had reacted iro;', the high 'cI' 'h rotrttCeulent of F.DDr,ox'L- mately 42 of the advance. \ Another technical element that might be menti.oned this time is the theory of gap openings. 'i'his subject is extrcmely technical and the int&r- , pretations of it vary widely according to the different methods used. However, ohIO Dverages opened IIi th a gap on 'lUesda;) ce.uscd by th.' fact thut the high of the previous day Vias 170.60 ,hile the 10\, of TuesuEcy was 173.08 – thuf' leaving a gap of betwcc'1 the runges of the tHO days. Thursday's ref.ction to tt lOll of 170.47 closed thio gap. In SODe ci.rcles, the theory is that these gaps must he even tuslly cloSed. From this viewpoint, the rapid clolling of the gap is constructive. However, it mi.ght 8.1so lle arued that a differGnt of , thought may be dlsapPinted by the fact that the gap was not of thD breakaway type that uEually dEno teo an extremely shttrp raJ ly before. the gap is closed at some remote future time. ThE' si tl.!ation is further cornplicat8d by the fact thc.t the average also 0pEmed with a do\'msidc gap on Thursday ,vhen the high of the day was 173.61 agdnst a 101 of 174.03 on V;ad.'18sday – thU8 leav1.ng a s,naller gcp of 43 cents. This fact is also subject -L,' diffGrcnt iuLerprctcLi'Jlls. It. could be argued th.t this gap should bG filled Shortly 01' thnt PQSGibly th,a !s.p, wi th 1,h3.t of, Tuflsday' s, denotes an island revrsal, ler.vi.ng the of TuesdllJ' and Wednesday detached from tho main formation. This Hould be inter- preted bearishly. As I said be-fore, the sub,i ect ,xtrmnely complicr, ted and of doubtful tecp.nicul vuiue and, at the moment, I nm sorr;y I brought it up. Of groatcr value, may be the fact th1tt individual situations are able to move hif,lHr agaipst the treml as ,laS evidenced by Pepl,i-Coln on ThursdlY. ThE. stock rnoved up two Joints in a reactionary general l!lDxket. Thin is quit& tho reverse of the action of the past few months whon ilfdividunl issues were selling off in days .,hen tho gcntlral market Vias advunci.ng. This latter warJ one warning indication of tho decline. Ponsibly, the action of. Pepsi-Cola may be a harbinger of better thing3 to come. Still believe the market can bo bought on noft spots. Particularly like Rolling li!ills, Bethlehem Certain-t.eed, Doehler-J.J.rvis, International Minorals, Penn-Dixie Cemont, Revere Copper, Reynolds If.etds, Union Bag and I'/heeling Steel. october 17, 1946 EDMUND VI. TABELL SHIELDS & COMPANY Closing DOH-Jones Industri.als \ Dow-Jones Rails DO;I-J ones 65-Stock 171.76 47.59 61.72 Th. opinions alp,…ed in this letter are the penonal interpretation of cll.rh. by Edmund W. labell and ara not presented as the opinions of Shield. & Comp.y.