Viewing Month: May 1947

Tabell’s Market Letter – May 05, 1947

Tabell’s Market Letter – May 05, 1947

Tabell's Market Letter - May 05, 1947
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Technical Market Action At Monday's hiGh of 175.08, the averages had just reached their first rally objective of 175. Normal technical action would now call for a consolidating phase between, roughly, 175 and 172, with strength in special situations. Continuation of the rise immediately, without a slight intervening dip or hesitation, would show an exceptionally strong technical pattern. Last week I s market was definitely ,encouragi;ng on two counts. Favorable neVis developments recently have met vIith a rather lukewarm response. However, last Vleek, nevIs of increased dividends and splito-ups brou;ht about decided rallies in the issues concerned. Volume also increased sharply in these shares and showed a definite renewal of buying interest. This is importo.nt in a market which, for six months, has been sluggish not because of selling pressure but rather from lack of buying interest due to pessimistic forecasts from sources both high and low. The second point of encouragement was the ability of the averages to rally back above the 170-172 level, the former downside support paints. Ability to penetrate into what hitherto was indicated as upside resi;tance appears to indicate the possi- bi1ity that the dip below the 170-172 level was a temporary penetration caused by undue) pessimism over the labor situation rather than a definite signal of a further decline. Certainly stocks are selling at a ridiculously low price to earninGS ratio if present earnings are to continue. Listed below are the first quarter earnings of a number of issues thllt I hlve suggested for purchase on price weakness over the past seven months. I have also projected the earnings to an annual rate by the simple r.lethod 01 multiplying first quarter results by four. Admittedly, this is a rather unfair and unscientific approach due to seasonal and other factors – but even so, the figures are interesting American Rolline; Mills Baltimore &Ohio, pfd. Bliss (E.W. Certain-Teed Crown Cork Doehler Jarvis Eagle Picher Lead Evans Products General Cable Illinois Central Jones &Laughlin Mead Corporation National Supply Rayonier Republic Steel Reynolds Metals Union Bag rlbeeling Steel 1st Quarter 1.76 3.17 2.01 .86 1.60 2.07 1.40 2.58 .74 3.13 2.40 1.61 1.25 1.49 1.96 2.00 2.10 4.38 Annual Rate 7.04 12.68 8.04 3.44 6.40 8.28 5.60 lC.32 2.96 12.52 9.60 6.44 5.00 5.96 7.84 8.00 8.40 17.52 Approx. Price 30 1/4 15 1/2 22 14 3/4 37 1/2 54 22 1/4 22 5/8 101/2 22 3/8 32 3/8 21 1/8 14 1/8 211/2 25 1/2 28 1/2 30 38 \,ith most of these issues selling at only three to five til'les the amount of their possible annual rate of earnings and, in some cases, yielding 6 to 10 on their present or indicated dividends, it seems self evident that the market believes that this rate of earnings will not continue. This leads to two further possibilities (1) At present prices, the market has already discounted a sharp drop in earnings. Even if present earnin5s decreased from 50 to 75 during the balance of the year, present pricer would still appear to be rather reasonable when we consider the possibility of a turning of the tide after the possible ad- justment or recession period has passed. (2) If the forecasters of a further re- cession in business are wrong and earnings continue at only a slightly reduced rate, stocks are absurdly cheap in relation to every known standard. , In either event, nothing has yet appeared to change our advice of the last seven months that the market is in a long term accumulation area and should be bought on weakness. May 5, 1947 EDMUND i1. TABELL SHIELDS & COMPANY n.. opinions ezpressed in thil .tter ere the p.rwnal intarprettioft of cha…. by …,. Edmund W. T.,.II and .r. not presented al the opinions of Shi.ld Comp.,.

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Tabell’s Market Letter – May 08, 1947

Tabell’s Market Letter – May 08, 1947

Tabell's Market Letter - May 08, 1947
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Technical Market Action The market drifted lower on Thursday. The industrial average was down 95 cents at 171.56 while the rails lost 58 cents. Thursday's down market was the third successive day of decline. The decline was preceded by five days of rally during whichi,tirne the industrial average gained 7.66. At Thursday's low of 171.20, the average had lost ,,3.88 of the advance. Volume indications, so far, are favorable with volume averaging only about 700,000 shares on the three day decline against well over 800,000 shares on the previous a.dvance. So far, the market has followed a normal technical pattern. As expected, the rally met resistance at 175 and has reacted back to the 172-170 support level. The minor uptrend remains intact Vlith lows of 165.59 on April 15th, 167.42 on April 29th and 171.20 on Thursday. At the lovi of 171.20, the averages were still more than a point above the minor uptrend line which now is at about the 170 level. On the other hand, at Monday's high of 175.08, the averages just about touched the intermedillta-downtrend line connecting the February lOth high of 184.96 and the March 28th high of 179.68. Thus, the intermediate downtrend line and the minor uptrend are coming close to a convergence. The dirction of the next important market move should be signalled by a penetration of the triangle pattern. An upside breakout would indicate a rally to the 179-180 area and an eventual testing of the February high. A downside penetration v/Ould indicate a testing of the April low. At the moment, would consider an upside breakout of greater significance. Two stocks that, from their technical pattern, would appear to be interesting purchases on current .,eakness, are Sharon Steel and Rayonier. Sharon Steel reached a high of 40 5/8 in 1946. Its distributional area around the top indicated a decline to the 25-25 area, A low of 25 1/4 was reached in the October decline. Since that time, the issue has been shovling a gradual uptrend and reached a high 9f 56 in February of this year. A small distributional top was formed around the 36-54 area indic'ting a decline to 29-28. The lov, in the April decline Vias 28 5/8. A substantial intermediate line pattern has non been built up and the important resistance points are 55 on the upside and 28 on the downside. The formation sugge5ts an upside pene- tration in which event a further rally to 40-42 zone would be indicated. 'I'hursday's close was 51. Rayonier, after reaching a high of 55 in 1946, reacted to 17 1/4 in the September decline. The stock then built up a substantial base pattern between, roughly, 18 and 20, and rallied out the accwDulation area to reach a high of 25 1/4 this year. The minor distributional top around 25 suggested a decline back to the 20 area. The April lov; was 19 1/2. At Thursday's close of 21, the stock is close to a strong support level. The pattern suggests an eventual intermediate rally close to the 1946 high. First quarter ear,ings vlere 5.06 for Sharon and 1.49 for Rayonier. May 8, 1947 Closings Dow-Jones Industrials Dow-Jones R'l.i1s Dow-Jones 65-Stock EDMUND Ii. TABELL SHIELDS & COliIPANY 171.56 44.75 60.54 Th. opinions .Ipressed in this letter are th, p.rson interpretation of dt….. by Mre Edmund W. T.b.n end ere not pr.sented as the opinions of Sht.ldl I eompeny. —.,

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Tabell’s Market Letter – May 10, 1947

Tabell’s Market Letter – May 10, 1947

Tabell's Market Letter - May 10, 1947
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Technical Market Action The market resumed its downtrend on Friday ano. closed 2.92 lower at 164.96. The close v;as near the day's low of 164.46. The rail average was also off sharply at 42.18 down 1.06. Volume totalled 1,430,000 shares for the day. The volume in the last hour ..as 750,000 shares or more than half the total'volume. Some support c&e into the market during the late tape and the leaders particularly held around the day's lows on heavy trading. It will be interesting to note if that support continues. The industrial average at the closing level of 164.96 was only 1.84 above the October lo\'/ of 165.12. Based on intra-day lows, however, Friday' 5 intra-day lovi of'164.46 compares with the October low of 160.49, almost four points away. Some Dow theorists use the closing figure while others use the intra-day high or low computation. The rails, ,hich penetrated into new low territory in April, reached a new low. There bas been so much discussion about the October lows and whether they would hold or not, that possibly the significance is some- what exaggerated. Under the Dow theory, a penetration of a previous high or low indicates a continuation of the bull or bear market. It gives no indication of the extent of the decline. For example, in February 1946 the industrial average reached 207 and reacted to 185. In May 1946 it penetrated the previous high and confirmed the bull marke,t. The bull market high was made shortly after at 215, only 6 points higher. How Significant ,could be a penetration of October lows A glance at the technical patterns of the various averages might give us a clue. The industrial average built up a top distributional area in the early part of 1946 that indicated a reaction to 169-167 if 185 were penetrated. The averages went slightly lO'i.,er to 160.49. After that, the market fluctuated in the 165-175 range until late December ano. then ran up to 185. Another distributional area was built up in the early part of 1947 that indicates a reaction to 164-161. If this holds true, the October low \'iould hold. Some doubt could be cast on this thought, as the averages actually went 9 to 7 points belOW their October indication. A similar pattern in the rail average in6.icated a reaction to 46. Here again the count was a bit short as the actual low ..as 44. The early 1947 top indicates 42-41 which is fairly close to present levels. The New York Times average presents a slightly different pattern. The early 1946 top was rather difficult to interpret and indicated a wider reaction range of 107-95. The actual 10Vl Vias 106.95. The figures on this average for Friday are not available at the r.loment but is very close to the 106.95 low. The early 1947 top indicates 100 if 106.93 is decisively penetrated. The Herald-Tribune average indicated an eventual low of 112-109. The October low was 115.92. Friday's figure is not available, but \70uld venture the opinion it is fractionally below the October lovi. The early 1947 top indicates about the saine range. The Dow-Jones 65-Stock Composite average indicates 55 1/2 – 55 1/2 if the October low slightly below 58 is reached. Friday's close was 58.14. /Breaking of the October lows would undoubtedly bring in stop loss selling. However, it could he over very rapidly anJ. the averages could rally back quite sharply after the liquidation is over. Several tines in the past, after a long line formation such as the September 1946-May 1947 range, the averages have penetrated the 10Vis and after a few points reaction have rallied back into the range. Based on the technical indication of the various averages, would expect this to be the case in this instance. This is also borne out qy the action of industrial issues. The dovmside objectives of individual issues, compiled on October 14th, indicate that most of them are now being reached. Still believ the 170-160 area will prove to be a long ter,n buying range, even if very temporarily violated. ; ' EDMUN D . I ABELL n. In,. opinion, e,prNled in Edmund W. T.b.n .nd this .r. I.tter ere the parsona' interpretation of not prnted tho opinion .if'ij;/Oldlli ch….. cfo..,QIY'p ANY , ,J.il

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Tabell’s Market Letter – May 12, 1947

Tabell’s Market Letter – May 12, 1947

Tabell's Market Letter - May 12, 1947
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Technical Market Action The market went through another gloomy session on Monday with the market closing on the lov!s of the day. The industrial average declined 1.87 to 169.80 while the rails closed 45 cents lower at 44.52. Trading was very slow for the first four hours lith a turnover of only 420,000 shares. Volume picked up in the final hour, while the average Vias losing 99 cents, to total 700,000 shares for the day. At the day's low of 159.76, the industrials just touched the minor uptrend line extending through the April 15th low of 165.59 and the April 29th loVi of 167.42. Ability of this minor uptrend to hold would be encouraging. Penetration wo\lld mean a testing of the April low, although there is a good support level at 169-167. A penetration of this minor uptrend line Vlould not be as important marketwise as ability to cross the intermediate downtrend line from the February highs. /The market has again entered the upper part of the 150-170 range which has been a support area for the last nine months. Believe that this range is a broad accumulation il.re from which the market 'I!ill embark on another uptrend. II'hile; it is discouraging for the moment, the 1015 er the market remains in the accumulation area the greater becomes the base area and the eventual rally pOssibilities. Numerous issues are again getting close to buying levels. Believe E. VI. Bliss is one such issue. At Monday's close of 20 1/4, the stock Vias near the 1947 low of 19 l/e and 1946 low of 18 1/4. The 20-18 area is a very strong long term support level. Bliss reached a high of 26 5/8 in 1947 and has buHt up a very interesting base pattern. First quarter earnings v;ere 2.0l a share. May 12, 1947 EDMUND Vi. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 55-Stock 169.80 44.52 50.04 The opinions iIllp,-oued in this leHe, MO tho penon.!lt interpretation of cham by Mr. Edmund W. Tobell lind re not presented 41 the opinionl of Shield. & Compony.

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Tabell’s Market Letter – May 15, 1947

Tabell’s Market Letter – May 15, 1947

Tabell's Market Letter - May 15, 1947
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Technical Market Action The market firmed on Thursday and the industrial average closed 1.20 higher at 167.88 while the rails were 17 cents higher at 45.24. Thursday's rise was the first up closing in nine trading days with the exception of the 15 cents rise of last Saturday. Volume was 770,000 shares. Excellent first quurter earnings reports, increased dividends, the ratio of stock to bond yields, the possibility of constructive fiashington legislation, large and yet unfilled needs, favorable business, income and employment indices and many other statistical figures would seemingly indicate that stock prices are greatly undervalued at present levels. This would seem particularly true when we take into consideration the fact that stocks are not selling at their highs but 25 to 70 below their peak levels of almost a year ago. It riould also seem particularly true when it is realized that the lows in the averages Vlere made almost nine months ago in anticipation of a drop in business that has not yet occurred except in a number of industries that were boomed to unprecedented heights by the war economy. It 1V0uld also seem particularly true when it is realized that, in relation to other things, stocks are about the cheapest thing money can buy. Stock prices are approximately 50 higher than their pre-war levels while prices of farm products are 200 higher, wholesale commodity prices are 100 higher, earnings of factory workers are 91 higher, manufactured products are 77 higher and the cost of living is 61 higher. owever, for the shorter term, stock prices are influenced mainly by public psychology rather than by intrinsic value. At the moment, a portion of the investing and trading public, after reading the gloomy prognostications of some economists, newspaper columnists and radio coentators of both local and foreign origin, is seemingly convinced that Vie are on the verge of a depression comparable to 1921, 1957, or even 1929. It is undoubtedly the best advertised depression that \7e have ever haa — if we have it. Another portion believes we are going to have a recession, others think we are going to have an adjustment and still others just a return to normalcy. The present market is evidently attempting to discount the extent of this foregone whatever you call it. This would seem to be a rather hazardous occupation at a price level \7here stocks are selling, in some instances, at two to four times their present rate of earnings to yield 8 to 12. Honever, public psychology is notable, at times, for temporarily swinging too far in either direction. The bearishness of today may eventually turn out to be as nonsensical as the wild scramble, just about a year ago, for new issues at two to ten points premium over their offering price regardless of intrinsic value. How much longer the bearish investor psychology will continue is open to question, but still consider the 170-160 area a long term buying range. EDMUND H. TABELL May 15, 1947 SHIELDS & COMPANY Closings Dow Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 167.88 45.24 59.14 n.. opiniOft e.p,eaed In this tetter r. the pet'W intarpretation of cherts by Mr. Edmund W. T.ban and .r. not present.d .s the opinions of Slti.td. , Company.

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Tabell’s Market Letter – May 19, 1947

Tabell’s Market Letter – May 19, 1947

Tabell's Market Letter - May 19, 1947
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Technical Market Action Pepsi-Cola has shom ouch better action than the general market and its technical pattern is etremely interesting. Monday's low of 25 1/4 was still above the previous 1947 low of 24 3/4 reached in January and considerably above the October 1946 low of 21 1/2. The 1946 high as 40 1/2 and the stock reached 31 1/2 in the February rally of this year. Continued ability to hold above 24 would broaden the already large. base area around the 25 level. This base pattern indicates the possibility of an eventual rally to around the old 1946 high. Its technical action suggests excellent buying in the stock and indicates that it will probably hold above the rather important 24 level. Pepsi-Cola closed at 26 1/4 on Monday, a rally of a point from the day's low of 25 1/4. It would seem an interesting purchase on market irregularity Another issue that has shown excellent market action is National Supply. Its indicated long ter,. reaction, outlined by the early 1946 distribution range, was 15-10. This was the level mentioned in our general compilation of downside objectives listed on October 14th. The 1946 low was 11 7/8. On Monday, National Supply sold at 12 5/8 and closed at 15 1/2. The day's low was only 1/8 of a point below the previous 1947 10Vi of 12 5/4. A substantial potential base pattern has been formed around present levels that indicates an eventual rally to around the 1946 high of 25. Earnings for the first quarter of 1947 were 1.25 a share. The industrial average tested the October lows on Monday and, after reaching new lows for the current reaction, rallie(! in the final hour to close 55 cents higher on the day at 165.55. Both the clOSing price of 165.55 and the intra-day low of 161.38 were above the cOhlparable October figures of 165.12 and 160.49. The rail average reached a nel1 lOVi at 40.45 and closed 4 cents lower at 41.16. The 65-Stock Composite average reached a low of 56.56 and closed at 57.35 off 5 cents. If the industrials penetrate the October lows, stop loss selling could carry the market som9l1hat lower to a figure around the 55 1/2 55 1/2 level in the Dow-Jones 65-Stock Composite average. Both the New York Times and New York Herald-Tribune averages reached nel, intra-day lows on Monday but are close to the downSide objectives outlined in our letter of October 14th. In the same compilation, the downside objectives of over 400 issues were listed. The issues that did not quite reach their objectives in October are reaching them now while otilers are holding. Very few issues declined below their indicated objectives. In such cases, they were in volatile groups. Regardless of the possibility of a quick shake-out before a rally, believe many individual issues have reached or are very close to their lOWS! May 19, 1947 EDMUND 'ii. TABE!.L SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 165.55 41.16 57.35 Th. opinions .,preued in this I.tter ere the penon&1 interpretation of cham by ,Mr. Edmund W. rabell and are nat pr…n'hd 4' the opinions of SM.r. eomp.lny.

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Tabell’s Market Letter – May 21, 1947

Tabell’s Market Letter – May 21, 1947

Tabell's Market Letter - May 21, 1947
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Technical Market Action There are very few issues that have been able to show a definite uptrend in a general market that is selling close to its lows of the last nine months. One such issue is Pepsi-Cola which Vias mentioned in our letter of i\londay anLl has Doved up over three points froJ the low of that day. Another issue y.-ith a sillilar pattern is Cities Service. Cities Service reached a high of 41 7/8 in 1946 and subsequently built up a distributioal pattern that indicated a reaction to around 21. The October low nas 20 1/4. Since that time the stock has been in an uptrGnd vlith successively higher lows of 23 1/4 in January, 24 5/4 in April and 25 5/8 on Monday. Cities Service closeu at 28 1/4 on liednesday, up 1 5/4 0;1 the day. The base pattern built up over the past nine months indicates the possibility of an eventual price objective well above the 1946 high of 41 7/8. This year's high is 52 5/8. Recent SEC approval of Cities Service recapitalization plan brings the ultimate capital set-up nearer to cOnsummation. Eventually the stock, after disposal of public utility properties, will be the common stock of an oil and natural gas co,;lpany with estir.lateci earnings of around 6 a share. Believe the issue offers interesting profit possibilities. The market turned strong on Wednesday and, o volume of 1,020,000 shares, closed up 2.18 on the industrials at 165.77 and 68 cents higher all the rails at 42.14. The lllarket is drawing m,ay from our suggested 164-161 reaction obj ective, which was reached at Monday's low of 161.58. The rails also r.let supIJort OIl Monday at 40.45, a shade below our 42-n objective. The New York Times and New York Herald-Tribune averages also Jlet support at or near their long range down objectiveR of 107-95 and 112-109, respectively. Monday's lows were 105.51 and 115.90. Expect the current rally to carry further. May 21, 197 EDMUND Ii. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials Do,–';onE's Rails Lew ..1; JPq f5 ft')ck lSf.77 42.14 58.24 Th. opinions expressed in this letter ere the personol interpretotion of charta by …..,. Edmund W. T.bell end ere not pr…nted. ., the opin.oM of Shi.fd. A Compa,.

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Tabell’s Market Letter – May 26, 1947

Tabell’s Market Letter – May 26, 1947

Tabell's Market Letter - May 26, 1947
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Technical Market Action Below is a reprint of the Business Outlook column of The Journal of Commerce, issue of May 26th. It is an excollont factual article and ties in closely ith the present technical market pattern. Business news is far better than business sentiment. Pessimists will soon have to revise their predictions about the severity of the business recession or postpone their timing of the main decline to a later date. The fact is that business activity is holdinr quite close to the peak level of the postv;ar boom through the current qlarter. Despite difficulties experienced in some lines and the widespread belief that a recession Kill be in full sY;ing before the end of the year, both output &nd trade are well sustained on an over-all basis. The index of industrial producMon of the Federal Reserve Board reached a postwar high of 189 in lvlarch. A decline of only 2 or 5 points from this peak is indicated for April and May. It now appears doubtful that June will show r.luch more of a drop. Retail trade similarly nearly or actually is holding its Olin. True, department store sales are registering a smaller rise over a year ago, than retail prices, t,hich would ordinarily mean that a decline has taken place in unit sales. But there is a general tenency among retailers to offer more lower-priced goods. TakinG such substitution of lower-priced merchandise into account, we must conclude that unt sales are close to the 1946 level, and are larger in some lines .. Durable goods industries are chiefly responsible fur business holding up so Idl. Outstanding is the record of the autOlobile indt stry, which will not be able to satisfy the backlo/; of demiind that exists for cars this year, and ,1ay not even be able to do so if it continues to operate at present capacity through next year. But the steel industry, the electrical industry and others a10 have sufficient orders on hand to keep Going at or near their current practical capacity through most or all of the rest of 1947 and into 1948. Evun building activity holds at a high level Vihile nevI contract awards have dropped. There 18 always a lag of several months between the rate of building and of contracts let. 'This lag Vias notable in April, when contract awards fell whUe actual expenditure upon nevI construction for the month was 20 per cent higher than in April, 1946, according to the Department of Commerce. If new contracts stay down, building activity naturally will turn down soon. But should contracts register a ain from the recent level, construction may not register anything like the decline that pessimists have been predicting. There are soft spots in the business pjcture, of course. Retailers are buying very cautiously, which has many manufacturers worried. In textiles, in foods and some other fields there has been real inventory liquidation, with price declines and pressvre to curtail production. But the high over-all business indices show that these trouble spots are only a small part of the over-all picture. Furthermore, the prevailing caution hastens the clearing up of these trouble spots before they can get out of hand. Thus, the fur trade is reviving on a sounder and safer price and inventory basis, following last year' 5 shake out. In canned and frozen foods and in fats and Oils similarly, price declines and speculative inventory liquidation have been going on Tlhile buSiness generally rel.lains prosperous. Reduced retailer buying is correcting the store outstanding order and inventory picture. Such corrections are bound to moderate and shorten whatever recession business has yet to undergo. Continue to believe that the 170-160 area in the DowJ ones industrial average is a broad long range buying area. In individual issues continue to like the action of Pepsi-Cola and Cities Service. Advise their purchase on minor price weakness. May 26, 1947 EDMUND … TABELL SHIELDS & CO,,1PANY Th. opinions IlIpreed in this lett.r er. the personal interpreteticn of ch….. by Mr. Edmund W. Tab. and are nof prennfed a& the opinions of Shi.fd. & Comp.ny.

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Tabell’s Market Letter – May 28, 1947

Tabell’s Market Letter – May 28, 1947

Tabell's Market Letter - May 28, 1947 page 1
Tabell's Market Letter - May 28, 1947 page 2
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Technical Market Action shown Both Pepsi-Cola and excellent lilarket action. Cities Service, recommended last week, have ;-'( ,/Ii ,/ Pepsi-Cola reached a high of 50 5/6 on Wednesday, up over five/' points from last week's low of 25 1/4. The stock is near the 1947 high of 51 1/2 reached in February. Wednesday's close was 50 1/4. The technical pattern indicates no important upside resistance until the 54 level. Ulti- mate indications pOint much higher. Cities Service also approached its 1947 high of 52 5/8 to reach 51 1/2 on Iednesday. At that price, the stock was six pOints above last week's low of 25 5/8. The technical pattern dpes not indicate Duch resistance until the 36-58 area. ednesday's close was 50 7/8. Would continue to accumulate both Pepsi Cola and Cities Service on soft spots. Another issue with an encouraging technical pattern is Westinghouse Electric. Its early 1946 distribution area indicated a reaction to 21. The October low was 21 liB. Since that tirJe, the stock has built up a.sizeable base pattern between, roughly, 25 and 28. Last week's low was 22 1/2. The base pattern, if penetrated upside, suggests a return to the 40 level. Westinghouse closed at 25 5/B on Wednesday. It is interesting to note that Westinghouse, after adjusting for the 4 for I split in 1945, sold higher than its present price of 25 5/B in every year since 1956 with the exception of 1942 and 1945. The earnings for the first quarter nere released Wednesday and showed 81 cents a share. AdVise purchase of Westinghouse Electric as an undervalued better quality issue. . Technical action of the general market is extremely impressive. The iJarket successively met the test of last week's low on TUesday when liquidation dried up and the oarket rallied to close unchanged. The rally continued on llednesday vrith gains of \n.89 for the industrials and 1.18 for the rails. Since September, the market has declined to the lSS-160'area six tL'Jes and has held each tilne. In the process,. it has built up e. size- able base pattern that would indicate the possibility of a rally to the 197-205 level if the February highs were passed.However, the February highs are quite a distance above the market. A nearer confirmation of the upswing would be indicated at 175. That level is ir.lportant because, if it were reached, it v;ould result in the breaking of not only the dovmtrend line froD the February highs but also the major downtrend line connecting the May 1946 high and the February high. It would also result in the upside penetration of the 200 day lloving average. In such an event, the backbone of the down- trend would be broken. This possibility is quite out of line with the over- whell.lingly popular predictions that the average will aecline to the 145-125 level before the bear lJarket ends. H0\7ever, it is in line with the constantly reiterated opinion of this letter that the 170-160 area is a long term buying range. EDMUND W. TABELL May 28, 1947 Closing Dovi-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock SHIELDS & COMPANY 168.06 45.64 59.41 T1t. opinionzp,…..d itt this IsHer ate the psrsonaJ interpret.ticn of chem &y Mr. Edmund W. label! and ar. not prelontecl as the opinIons of Shi.ld. & Company. ————————– Mey 28, 1947 / f Despite the ceneral e5imism. tllere is a potentially bullish technical pattem that could possibly .e in the process of form,.tloLl. '.lhe first cOl's'rllcti1(e ; poillt WIJ.S the ability of tile Lo,,-Jones il1uustrial average to meet sUP,;JOl.,t last idoneiay, !.lay 19th, at an intra-day low of 161 036. 'ihis 1017 ,as … fraction above the October 50th 10.. of 160.49.,. The second conseructive pi'l'I; 1s based on yester- ciayls action. J1fter a r'Jlly ,rom the l.lay 19th 10v; of 161.3&, to a high of 167.BC on Iay 21Sra, the avera.;e re-actea to a low f 164.59 yesterday. At this lJoint (au appruJUiaately 50 correctioll of tile six pOinL rally from last Monuay's lows) the. sellir\6 driao. up and the major part of the 0.ayl s tieclines V/Cre regainerl. lVolume inc.lcc,tio'ls v;al';' also ,avorable. 'Ille thirci falt-orable point woula be the ability of tl,e lndstrial average to penetrate the ,i,ay 2Brd high of 167068. If this llapened, the milor tread ,ouiCt be indicated as p. The fourth. favorable incllcatioll'VlOuld be the ability of the indt,strial avera6e to 1.J.ly above 175. In sUlh tl.ll event, not oilly the aowntrenu line from t.he February lOth high of 164.96 trou!;,il tbe sucee;)lvely lower highs of 162.48 on 1.larch th, 179.68 oa ;.larch ;obth a'\o 1'15,,06 on Jjlay 5th would ue penetrated, but also the downtrend line from the ,,,ay 8th, 19',8 hilstl of 215.56 throu;h the .Febr 10th h11';\h of 184.)16 vTOuld 0.1&0 ,be penetrateu. 'In st,ch a;, event, t.he baekbone of the dOllll- trend I,oulci be aroksn. If that happened, the f.lfth favorable indication \ ou1d be a pen&traticm of tele Februa.cy hig), oj 164.96. In that event, the base paUecrn built u!) from Septembc.r 1946 to Mail 1947 \7Crld indicate a 11Ot81ltlel rally to 19'1-205. Aomittedly, this projeetion presupposes five possibilities l.!1C oaly t'1l0 of tA.s live huve actually come to pass. HO;1ever. from a study of the tednichl patten, I con.;icier it u much oette!' pr-obabilit;y' than the OVE1'Nhclm.i.llgly popular prediction tlw.t the averc..,es will (ecline to the 145125 area before the beul' mal'iwt encis. -'l'abell- – !-. ———— ——– ————

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