Tabell’s Market Letter – September 29, 1947

Technical Market Action Youngstown Sheet & Tube continues to show excellent technical market action and, at Mondayls closing of 70 3/4, is selling above U. S. Steel which closed at 70. Both stocks are in our list of recommended issues with Youngstown originally recommended in 62-60 buying rcnge while U.S.Steel was orttinall1 recommended in the 67-64 range. With both stocks selling at approximately the J same price and paying the same dividend, it seems unnecessary to keep both issues in the list. While'U.S.Steel indictes a higher price level over the loriger term, believe it will be outpaced Youngstown. Therefore, we are dropping U.S.Steel from our list of recommended issues and in the hibher priced steel group, concentrating on Youngstown Sheet & ,Tube. Have previously suggested svlitching Be'thlehem Steel into Youngstown. Other steel issues vmich we still recommend holding for substantially higher levels are Jones & Laughlin, Sharon Steel and Wheeling Steel. Since the July highs, a number of issues have been holding in broad trading ranGes, Usualy a penetration out of the range indicates a sizeable near term move in the direction of the penetration. Three of our recommended issues have moved out of this pe 9f formation on the upside and are continuing their excellent technical action, namely, Borg Warner which equalled its previous high of 52 1/4 on Mond, and Internationel Paper and Standard Gas' fd. both of vmich reached new highs for the move at 54 1/4 and 30 1 2. Nearer term price objectives for these issues are 57 for Borg llarner, 59-61 for International Paper and 33-37 for Standard Gas 4 pfd. Listed below arc a number of other issues that have built up a similar t.1Pe formation. The upside and downside penetrations are listed together with price objectives for both the up and down',. Based on the general market action and the fact that penetrations so far have been on . the upside, lead,to the expectation that ultimate breakout will be on the upside. The indicated price levels are for the shorter term and are not to be confused Vlith longer term objectives. Issues marked with an asterisk are in our recommended list. Last Upside IJauld Downside Would Sale Penetrat;!,on Indicate Penetration Indicate Alleghany, pfd. 37! American Smelting 59 7/B Atchison, Topeka & S.F. 82t Case (J.I.) 3B 1/2 Chrysler 5B 1/2 DuPont lBB Illin6is Central 261/4 Jones &Laughlin 323/4 Southern Pacific 431/4 Southern Railw 37 1/2 Youngstown Sheet & Tube 70 3/4 40 65 85 41 61 193 28 35 45 41 71 44-46 72-74 100-105 44-46 66-71 202 32-35 41 50-55 44-47 77-7B 34 57 79 36 56 lB6 24 30 40 35 64 27 53-49 75 33 52-48 lSi 22-20 30-2B 37 32 58 A number of other issues in our recommended list have seemingly had a sufficient correction of their advance from the May lows and would appear to be at or close to a buying range. In this group, among others, are American Cyanamid (44), Colorado Fuel & Iron (14 5/B), General Railway Signal (251/2) National Supply (18), Pepsi-Cola (2B 3/4), Worthington PUmp (56), and Westinghouse Electric (27). The market reversed its usual Monday procedure of the last two months closing 99 cents higher. Once again the industrial average held at the 174-175 support area and pulled away. The rail average also closed 29 cents higher. In- dicatiGDS still point to the 175-174 area as a strong support level, but even if this support were broken would expect only moderately lower levels to possibly the 172-170 area. The first indication of a change of trend would be the abilit.1 of the averages to penetrate 179.37 and 49.02. The next objectives would be the July high of lB7.66 and 51.92. Believe the wide trading range of the last year, between roughly 187 and 161, has been a period of accumulation and that the highs of July will be ultimately penetrated. The timing depends on when the public begins to realize that stocks are one of the few forms of property that are still selling at pre-war bargain levels. EDMUND IV. '1'ABELL SHIELDS & COMPANY The opinions 8J1pressed in this IlI!itter ere the personal interpr.tation of cham by Mr. Edmund W. TabeUand are not presented as the opinionl of Shields & Company. I L