Viewing Month: January 1948

Tabell’s Market Letter – January 05, 1948

Tabell’s Market Letter – January 05, 1948

Tabell's Market Letter - January 05, 1948
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Technical Market Action After the rail average had reached 54.17 on Monday, a new high above all the six preVious highs since the September 1946 decline,profit taking took its toll and both .verages worked lower in the final hour. The rail average lost 1.13 and the industrials were down 1.51. The ost encouraging feature was the volume at only slightly above a million shares. Vfuile this was above Friday'S restricted volume of 700,000 shares due to storm conditions, it was below the average of recent trading days. While Mondny's action was disappointing, do not believe it has other than teporary significance. Much more important is the improved action of the rails. As we have mentioned before, this is the first time in almost two years that this group has been able to lead the market. As for the near-term, the failure of the industrials to confirn the advance by the rcils indicates that some further irregQlarity may be encou.tered before the advance is resumed. Would expect the 179-175 area to be an effective support zone in the industrial average while the area between 52 and 51 is a strong downside reSistance area in the rail averc.ge. . As long as any decline in the industrial average holds above the September low of 174.02, there is no particular sibificace to the backwardness in this group. A decline below that fignre, while of no long term significance, would indicate a return to our long t.erll buying range of 178-160. This \7ould 'be disappointing from a time angle Jt would greatly enlarge tae potential base arell. In that case, intermediate term indications would be much gre2.ter than the 210-215 now indicated if the July highs are penetrated. January 5, 1948 EDMUND W. TABELL SHIELDS & COMPANY lli.!!!!.. Doy.-Jones Industrials DowJones Rails Dow-Jones 65-Stock 179,53 52.72 64.90 Th. opinions exp,essed in this I.tt., IIr. the penoRal interpretafion 01 charis by Mr. Edmund W. Tabell and ar. not prosent.d 4S the opinions of Shield, & Company.

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Tabell’s Market Letter – January 06, 1948

Tabell’s Market Letter – January 06, 1948

Tabell's Market Letter - January 06, 1948
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Technical Market Action After selling off for the first four hours of Tuesde's trading, the market reversed in the final hour and regained a good portion of the Gay's losses with many individual issues closin;;; higher on the day. The intra-day 10Vis v.ere 177.7B on the industrials and 51.54 on the rails. At the close, the avere,ges had rallied 1.34 and 85 cents from the lovls of the day. Volume indications, as Oil Monday, were favorable. Total transactions for the day were 1,030,000 shares of which 290,000 shc.res were in th'e final hour rally. At yesterday's lows, the averages ho.d reached the middle of the 179-175 nne 52-51 support levels mentioned in yesterday's 18tt8r. Tuesday's action inGicates the possibility that the minor correction has been completed. .' This letter has lon contended that the sixteen-month trading range, between., roughly 187 and 161 in the industrie 2,vera;;e, has been a long period of accumulation prior to an upside penetrtion and sharply higher prices. One of the standard bearish ar5cooents has been that a bull mtirket has never strted from such a hi;h level. The high of the trading runge ils 13 below the 1946 high of 213 whic1 is the high for the previous 15 years. The low of the range is only roughly 20 'below the high. Is such an argument valid Let us talce the period of 1923-1924, just prior to the greatest bull market in hIstory. The industrial average in that two year .period was in a trading range betvlGen roughly 105 and 86. The previous top had been in 1919 when the average hit 119 which was the highest level ever reached by the industrial nverage in the history of the country up to that time. At. the high of the 1923-1924 ran;;e, the average was only 12 belovi the 119 high end at the low about 25 below the high. These figures are about the same ratio as the trnding runge of today. The market started an advance in the last month of 1924 that carried to 386 in 1929. Ja.'1.uary 6, 1948 EDMUND IV. TABELL SHIELDS & COMPANY Closingl! Dow-Jones Industrials Dow-J one s f.ails DOW-Jones 65-Stock 179.12 52.39 64.67 The opinions expressed 'n lhis leHer are the personal interpretation of charts by Mr. Edmund W. lebell end are not presented as the opinions of ShJekfs &. Company.

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Tabell’s Market Letter – January 09, 1948

Tabell’s Market Letter – January 09, 1948

Tabell's Market Letter - January 09, 1948
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– Technical Market Action At times, it sees that earnings and balance sheets are but minor factors in evaluating the price of a security nne that the state of mind of the investing and speculating public is the predominating element. Of course, over the longer term, this is not true. Stock prices ultimately reach their approximate true value. However, the distortions due to temporary nass psychology are sometimes quite fantastic. It is difficult to rationalize, for example, the fact thDt Illinois Central, in 1947, fniled to reach the 1937 high of 38. In 1937, IllinoiS Central earned 70 cents a shr.re. The previous year, 1936, it showed a deficit of 26 cents a share. The following year, 1938, it earned 8 cents a share. In 1937, it had a top-heavy funded debt with fixed charges of 17.3 million. The balance sheet showed cash and equivalent of 9.6 million. Why the stock ever sold as high as 38 is a mystery. It was an excellent example of mass optimism. Later in the year, the stock reached a low of 8. Now let us look at Illinois Central today. Estimated earnings for 1947 are 8.50. It earned 4.67 in 1946. By the end of 1946 the funded debt had been reduced 125.7 million from the 1937 figure. Fixed charGes were down 5.3 million to 11.4. The balance sheet showed thnt cash and equivalent had increased 55 million to 66.6 million. Why the stock ever sold as low as 18 1/8 in 1947 may turn out to be equallY mysterious. I believe it will turn out to be an excellent example of mass pessimism. The technical pattern of Illinois Central in early 1937 indicated that the stock was in a distributionil area. The present pattern indicates the reverse. The recent upside penetration out of the long sixteen month 18-30 trading range' is extremely constructive. The first upside objective appears to be 37-39 followed b,r substantially higher levels. The same basic pattern is present in other rail issues. However, selection is important. Some of the ruil patterns, notably the eastern roads, are below average and indicate that further backing and filling is needed before a worthwhile rise occurs. My recommended list of rail issues include the following- 1946 High Last Alleghany, pfd. Atchison,Topeka & Santa Fe Chicago & Northwestern Gulf, Mobile & Ohio IllinoiS Central Kansas City Southern Northern PacifiC Seaboard Air Line Southern PacifiC Union Pacific 69 1/4 121 43 1/2 30 1/2 45 1/2 40 1/4 36 39 1/2 70 168 1/2 41 95 1/4 18 3/8 14 3/4 31 l/S 28 1/2 20 1/2 17 1/4 49 161 5/8 It will be noted that I am again including Chicago Northwestern in the list. The above stocks, in my opinion, represent above average appreCiation pOSSibilities in a group that shows better than average technical action. Believe the above rails should be bought on any market softness. 'January 9, 1948 EDMUND IV. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 180.09 52.85 65.08 The opinions expressed In this lener are Ihe personal Interpretation of ch.rtt by Mr. Edmuncf W. TabeU and ere not preented as the opinions of Shields & CompaOy.

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Tabell’s Market Letter – January 13, 1948

Tabell’s Market Letter – January 13, 1948

Tabell's Market Letter - January 13, 1948
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Technical Market Action The net change in the industrial average for the year 1947 was 2 1/2. To find a narrower yearly net change, it is necessary to go back all the way to 1926 when the net change was 1. It is perhaps Significant tht the industrial verage in 1926 ranged between 1.35 low and 166 high and in the final month of the year started the dync phase of the bull market that eventually reached 386 in 1929. Not only did the aversbes show little change from January 1st to December 31st, but the difference between the high and low of the year was only 14 1/2. This range was the smallest since 1896 with the exception of 1944. Nevertheless, there were a large number of issues that showed worthwhile moves and if one had paid more atten- tion to individual issues and less to the action of the averages, there were plent,y of profit possibilities on both sides of the market. For example, there are a great many issues thct, regardless of the action of the averages, gave individual bull market signals of their own, thus indicatin& that their major trend is up. Below is a partial list of the more important issues on the New York Stock Exchange and New York CUrb that have given individual bull market signals- . Acme Steel, Adams ExPress, Addressograph,Allied Chem &Dye,Allied Products,Allis Chalmers,Amerada Petro1eum,Amer.Ch1cle,Amer.lnternational,Amer.RepubLics, American Sme1ting,Anaconda Wire,Atlantic Refining,Atlas Powder, Babcock &Wilcox, Barnsdall, E.W.Bliss,Borg Warner,Bucyrus Erie,Bfron Jackson,Campoell,WYant &Campbell, Cannon Mills,Csrrier Corp., J.I.Case,Celanese,Chlcago Corp. ,Chicago Pneumatic Too1,Chrys1er. Cities Service,Cit,y Ice &FUe1,Clark Equipment,Coca Co1a,Co10. FUel &Iron, Commer- cial Solvents,Congoleum Nairn,Consol.Steel,Continenta1 Oil,Cooper Bessemer,Copper- weld Steel,Creole Petroleum, Crown Cork & Seal, Crown Zellerbaeh,Dana Corporation, Davison Chemical,Deere & Co., Doehler Jarvis, Duplan Corp., DuPont,Eag1e Picher, Elee.Storage Battery,El Paso Natural Gas,First National Stores,Flintkote,Foster Wheeler,Gaylord Container,Genl Refractories,Glen Alde Coal,Glidden,Granite ity Steel,Gulf Mobile & Ohio,pfd.,Gu1f Oil,Harbison Walker,Houston Oi1,Illinoi8 Central, Ind.Rayon, Inland Steel,Interlake Iron,Inter.Harvester,Inter.Paper,Inter.Shoe, Inter.Silver,Intertypo Corp. ,Island Creek Coal,Joy Mfg. ,-Kelsey Hayes Wheel B,Life Savera,Link Belt,Mack Truek,Maracaibo Oil,Martin Parry,Mathieson Alkali,McGraw Elec. Merritt Chapman Seott,Mid-Continent Pete. ,Mission Corp.,Moore-MeCormack,Motor Prod., Mullins Mfg. ,Murray Corp.,Natl Cash Register,Nat1 Lead,Natl Steel,Nat1 Supply,N.Y. Chicago & St. L.Pfd.,Newmont Mining,Ohio Oil,Oliver Corp.,Pacific Western Oil, Penn. Coal &Coke,Pppere11 Mfg.,Petroleum Corp.,Phe1ps Dodge,Phileo,Phi11ips Jones, Phillips Pete.,Pitts.Coke & Chem.,Pitts.Consol.Coal.,Pitts.Stee1,Pitts.& W. Virginia Pittston Co.,Plymouth Oi1,Proctor & Gamble,Pure 01l,Rayonier,Reo Motors,Ruberoid, Seaboard Oil,Shamrock Oil, Sharon Steel,She11 Union Oil,Si1ver King,Sinclair Oil, Skelly Oil,8l06s Sheffield Steel,Socony Vacuum,So.Pacific,Spencer Kellogg,Standard Oil of Calif.,Standard 011 of Ind.,Standard Oil of N.J. ,Standard Oil of OhiO, L.S. Starrett,Superior Oi1,Texas Co. ,Texas Gulf Prod. ,Texas Gulf Sulphur,Texas Pac.Coal & Oil,Texae Pacific Land Trust,Tidewater Associated Oil,Timken Roller Bearing,TruaxTraer Coal,Union Bag & Paper,Union carbide,Union Oi1,Union Pac. R.R., United'Aircraf United-Carr Fastener,United Elec.Coal,United Frult,U.S.& Foreign Sec., U.S.Freight, U.S.Lines,U.S.Pipe, U.S.Steel,Victor Chemical,Va.Carolina Chem.,Warren Pipe &Foundry Wesson Oil & Snowdrift,W.Va.Pulp &Paper,Westinghouse Air Brake,Westinghouse Elee., wesQ Chlorine, Wheeling Steel,ilcox Oil,Woodward Iron,Youngstown Sheet & Tube. / I t will be noted that the vast majority of these issues are in the groups that this letter has conSistently recommended all during the year in the 160-170 buying range. The groups are oils, stee1s,ehemicals,rails,building,farm implement, machinery, metals,papers. Such action points up to the opinion that the narrow trading of the past 17 months is an accumulation range. However, it is a patience tr,ring market. Recent action has been discouraging. The market sold off again on Tuesday and pene- trated last week's lows of 177.78 and 51.54. Tuesday's lows were 177.25 and 51.41. Penetration of the September low of 174.02 would indicate that the 187-175 range of the past six months was an intermediate top area and necessitated a dip to the top of the 170-160 buying range to about 171-167. On the other hand, ability to hold above 174.02 would indicate a triple bottom and would be extremely constructive. No matter which action takes place, it iD no.way alters the basic accumulation pattern. In fact, a penetration to the top of the 170-160 buying range would enlarge the potential base. As the base pattern now stands, the upside objective is 210-215 if the ranGe is penetrated upside. A dip to 171-167 would enlarge the potantial upmove 25 to 30 points. Would use weakness down to 175 for buying. If 174.02 is penetrated, would resume buying in the 171-167 area. January 1.3, 1948 m.ruND 1'1. TABELL SHIELDS & COMPANY Thi opinkms expressed in thls leher ora th. persoQaI interpretation of cherts by Mr. Edmund W. Tabel! .nd are not pr.s.nted as the opinions of StMelds & Company. .—-

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Tabell’s Market Letter – January 15, 1948

Tabell’s Market Letter – January 15, 1948

Tabell's Market Letter - January 15, 1948
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Technical Market Action The industrials helc. above the lows of both Septmber and Decenbcr' on Wednesday and Thursday au erc is the possibility that a triple bottom pattern may be in the process of fornation. The September lowwaa174.02 and the December 101'1 vias …. 175.19. The lQWS of 17ednel'day und ThurSdy rlero 176.50 &Dd 176.54. The rails, of course, are considerably above the conparable Septeober and Decer.lber lows of 46.91 and 46.00. Thursday's low on the rails was 50.99. Thus, both aver.ges have, so far, held in the dovlllsic1e resistance areas tlentioned in this letter ten days ago, nar.Jely, 179-175 and 52-51. Volul'le indications l'ief'f also fvorable with transactions on the retesting falling off to 820,000 shares on l,ednesday and 780,000 on Thursday. Abili ty to hold age.in in the trading rc.nge of the last Six months Vlould be very constructive. A downside penetration, while in no .Iay dtering the major term io- plicctions of a lone period of reacctLJulation, would indicnte a dip to the upper pnrt of our old 170-160 buyill, area which has been entered on nunerous occ'.sions in the past sevente8n months. ' The current weekness hils uroueht a number of r'ecoml'lended issues dorm to what \'fould appeer to be advantageous tUYl.ng levels for those who cid not purchase at the Imler price levels at our tiJ.16 of original recommendation. Hso, a nunber of others, which we ware watchin closely for a buyinr; spot, are do'Wn to what 1'lOuld appear interesting price levels. Bliss (E.W.) Closd at 26 7/8. It was originally recomf-'ended in the 18-20 rangE but i t is lawn sharply from the 1947 hiGh of 35 1/8. It is in the favored heavy machinery group and indicates considerably higher levels for the longer term. Cities Service closed at 35 5/8. This stock ws ori&inally recommended in the nid 206. It is daVin approxir-.at8ly six points fror.l its 1947 high of 1947 and ,appeurs ready to resune its uptrend. Deep Rock Oil closed at 37. This issue has he.d a 1947-1948 trrcding range of 45 7/8 and 28 1/2. Earninfs for 1947 arc estir.,c.tc at 8.00 a share. It is in the lovler range of a broad 37-45 tnCinE shelf and appears to be behind the oil t;roup. This is a new recomnendation. Denver Rio Gre.nde & iestern closed at IS. It is a newly recOlllnendeu issue in our rail group. This reorgcnized rail is ,close to the'top of its 947 range of 19 3/8-6 3/4, but the pattern sussests higher levels. 1947 ernings are estioated at close to 6 and, on the basis of the recent freiGht rate increase, earnings of 12 – 14 are possible in 1948. Distillers Corp-Seagran closed at 15 1/4. The stock has built up an interest- ing pattern in the 18 1/4 – 11 1/4 ranee. Earnings have h01d up well and totalled 4.88 for the latest fiscal year. Earnings for the three months ending October 30th were 2.18 a shcre. The issue appears undervaluel fro;;J a technical viewpOint. Thi s is a newcooer to our recoI.mennsd list. Hewitt-Robins closed at 25 1/2. The 1947 range is 29 1/2-20. This rubber products compeny has built up sizeable potentie base area in the 29-20 ran&e. The stock appears attractive. This is also a newly recomended issue. Mullins Manufacturing closed at 22. It is down over five points from the recent high of 27 1/2 and is at the strong 22-21 support lve1. Purch9.se is advised. Estimated earnins for 1947 are 7-,8 a share. Rheem Manufacturiclosed at 23 5/8. The stock has built up a strong potential base area in the 25-19 rmge and an upside breakout V/oulc inc.icate sutstan- tially higher levels. It appears to be an attractive purchaSe. This is also a newly recommended issue. , Sharon Steel closed at 33 1/2. The 1947 range was 40 5/8 – 24 3/4. The stock is close to our originally recommended level and at a strong support point. Purchase is recommended. Viskinf Corporction closed nt 32 3/4. It is near the 1947 low of 31. The hi;;h was 38. It appears to be builtling up e. substantial bse pattern. Purchase is recol'lmended. This is the first recommendation of this issue. beelin' Steel closed at 41 3/4. It is down over 11 points froo the 1947 high of 53 1/8 due to selling advice from en advisory service. From a technical vie\point believ the stock should be boueht in this rea. YounGstovm Sheet & Tube at the closin price of 73 3/4 is also close to u strong support level. EDMUND t. TABELL January 15, 1948 SHIELDS & COMPANY The inlons expressed in this letter are the personal Interpretation of charts by a.Mr. Edmund W. TbeK and are not presented as the opinions of Shields CompaOy. –!-

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Tabell’s Market Letter – January 19, 1948

Tabell’s Market Letter – January 19, 1948

Tabell's Market Letter - January 19, 1948
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Technical Maket Action From n technical point of view, the chart patterns of individual ril issues have dynamic potent) al possibilities for longer term llorket appreciation. In an uttenpt to rationalize these technical indications with the fundaental bnckground of eurnint;s and financial position, I hnve been exa;Jininc sone earnings und balance sheets of vari0us rai roads coing back over c long pEriod. of tine. While not pretending to be c rc.ilroad ana.lyst, I was much ir..pressed. by what I found. It is eenerally knovm that earnings,. startinl; in 1941, stared a. renarkable comeback fron the depressed level of the' '30s. I,bile rail earnings today ,re below the sensational figures of the \lar years, they t.re v8ry substantinl l.n rtlation to current prices of rail securities. Based on 1947 barninGs, 'Jany rails are today selling at only three to six times earnings. If the recent freight incfeas is tcken into consideration, a projection of present earnings into 194 indicates thut meny rails are tode.y selling at only one anc'. one-ho.lf to four tines possible 194 ee.rnin;s on 1947 voluoe of traffic. \,hile the earnings picture is possibly recognizeu, 1 wonder if L1any people realize the trmendous improveIent in the financial condition of mny of the roads. In me.ny instances, inciVidual railroads are in ubout the best financ12.1 condition in alr.lost forty years as far 125 vorkinl; capital and fundeu debt ure concerned. Take Illinois Central, for exatlple, which we revieweel rGcently in comparing the 1947 situation ,lith thp.t of 1937. In this insknce let us go back to 1929 when Illinois Central sold in a price rnge of 153 1/2 – 116 anel was payinc a 7.00 elividend. At the year-end of 1929, current assets were 37.4 million and current habilities were 31.2, lO6.vin n workinG capital of 6.2 million. At the year-end of 1946, current assets Vlen 101. 3 million end current linbiliti;jfl; were 59.6, leaving a Vlorkine capital of 41. 7 million or more than six tir.es the workin capital of 1929. At the end of 1929, cash QUd equivlent was 7.8 mlllion, At the end of 1946, cusn und equivalent was 66.6 rillion or over eight tines the cr.sh and ,quiva, lent of 1929. But even more anzing is the fact thct while the cush and working capital has been improving, the debt has been drastically reduced. At the end of 1929, funded debt vms 366.4 million and fixed c!Jc.rges were 18. million. At the end of 1946, funded debt was 241.9 mElion ,no fixed charges vlere 11.4 lJillion. The 1947 bulance sheet is not yet available but it is recBonable to assume at least about the sume i f not a slightly improved condition. Equ&lly f,'vcrble comparison with past talao e a h e eta could be shovm with othf-r un-reorganized rails in our recomr.,enoed list, namely, Atchison, Topeka and Santa, Kansas City Southern, Northern Pacific, Southern Pacific ano Union PacifiC. The reco;mnended issues in the reorganized rail group, Chicago & Northwestern, Denver & Rio Grande, Gulf,Mobile & Ohio and Seaboard Air Line have lhderfone drastiC recapitalization v.'i th the old cotlmon and preferred stocks wiped out. Their fixed charges have been eVGn more drnstically reduced than in the un-reorganized croup. AllcghrulY Corp. is a railroac holdinf, company that has dao reduced its lone term debt. Advise purchase of recoml;rended rails on price 'Ienkness in the general l,arket. The market sold 10Vier on Monday and, at the day's loVi of 175.21, practically reached the December loVi of 175.21 but held bove the September low of 174.02. The re.ils at 49.85, were considerably c.bove the December low of 46.00. A penetr.tion of the S8ptember low would indicate, .s noted two wec,ks aco, a decline to the upper pc.rt of tl.le 170-160 buyin rrulGe. Such a decline, i f it occurs, would be disappointing fror.! a timing point of view, but it would not alter the long term pattern. In fact, it would enlarge the potential base mId sugest ultimately higher levels than nov, indicated. January 19, 1948 EDMUND i/. TABELL Closings SHIELDS & CmllPANY Dow-Jones Industrials Dow-Jones Reils Dov-J ones 65-Stock 175.95 50.09 63.0 The oprnfons expressed in thts JeHer are the personal interpretation of chart. by Mr. Edmund W. Tabell and are not presented as the opinions of Shields. Company. –

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Tabell’s Market Letter – January 21, 1948

Tabell’s Market Letter – January 21, 1948

Tabell's Market Letter - January 21, 1948
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Technical Market Action The market sold off sharply in the final two hours of \ednescny' s trading and the industrial average penetrated both the December and September lows to reach an intra-day 10Vi of 173.32. The,close Vias 173.53, off 1.74 on the day. The rail average at the intra-day low of 49.61 and the closing level of 49.73, was' considerably above the Decellber low of 46.00. Volume picked up on the decline and in the final hour of trQding, when the averages suffered the major part of their loss, transactions totalled 550,000 shares against a total voluI1e of 1,190,000 shares for the day. l'ednesday's downside penetration of the trading range in 'Ihich the industrial average has held since Septer.Jber, indicates the probability of slightly lower levels. pso, none of tho various movine average indicators, as Y8t, indicate an oversold condition.' The top count indicP.tions point to a decline to the upper part of our long advised 170-160 buying range. In actual figures, See the possibility of 171-167 as a buying range. The ril average, on the other hand, shows a stronger pattern. Believe the rails should meot support above or around the 48 level As mentioned before, the decline is discouraging fro a tining vievoint us it delays the upside penetration out of the seventeen-month trading range between 187 &nd 161 on the industrials and 54 and 40 or! the rails. It is interesting to note, incidentally, that the industrials at Y/ednesdayl s clOSing Vlere almost exactly it! the r.d.ddle of this extended range of 26 points. The re.ils, of course, are nearer the top of their 14 point trnding range. Howelrer, the decline in no way alters the longer terr;l pnttern of an extended potential accucrulation area cf seventeen nonths duration. The potential advance now indicated if the area is penetrateu upside is 210-215. If the current decline again enters the 170-160 area, as it has on many occasions in the past seventeen months, ruld holds in the.t area, !Ill upside breakout would broaden the potential base by 25 to 30 points. Further weakness should present sane excellent buying opportunities. Would purchase recommended issues in the 171-167 'irea or upon receiving an oversale signal. EDMUND W. TABELL Januo.ry 21, 1948 SHIELDS & COi\lPANY Closings I Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock ).73.53 1.9.73 62.39 The opinlonl tlxprelled In Ihis letter are the perjonel lntlllrpretalion of charts by Mr. Edmund W. T.ebeH end are nol preHnted 0; tho opinion. of Sh50kb & Comp.e\'. —

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Tabell’s Market Letter – January 23, 1948

Tabell’s Market Letter – January 23, 1948

Tabell's Market Letter - January 23, 1948
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Technical Market Action The industrial av!!rage continues to drift lower and, at Thursday's low of 171.37 was near the top of the indicated reaction objective of 171-167. Tht rails, on the other hand, continuE' their h8tter-than-market action with the average closing at a small gain on Thursday and an even smaller loss on Friday. This'divergence of the industrial and rail average is an interesting development. This type of action has occurred P.t alr.lOst every inport('.nt top and bottom of the market ince May, 1947. In May, the rails reached a new low while the industrials held above the low of the previous October. At the July top, the industrial average reached e. new high which the rails failed to confirm. In each case, the divergence signalled an important turn in the market. Also, in December, the rail average made a shallcw new low while the industrials held above the September low. This divergence has also been evident in the various combined averages. While the Dow-Jones 65-Stock average and the New YorkHerald-Tribune 100-Stock averagehas held above the December low, the New York Times 50-Combined has penetrated the December low by approxi mately a full point. Penetre.tions and fluctuations within a trcding range, such as the seventeen month shelf of the present market, are apt to have le 55 sil';nific!lIlce then those taking place in the clear. \'hile there is an outside possi bili ty tho. t the lows of the declint may have been witnessed at Thursday's low of 171.37, believe a further moderr.te dip into the 171-167 mnge 1.5 more probable. The short trm indicator signalled an oversold position on Friday, but the longer term indicators hve, as yet, failed to give a comparable signal. Also, the technicr.l patterns of individual issues inClicate slightly lOTIer levels. The signal on the short term indicntor may point to a technicnl rally to the 174-175 area to be followed later by a dip into the 171-167 area before the Mjor advance is resumed. Believe the current decline will result in a broadning of the treding range of the past seventeen months and that the eventual penetrtion will be on the upside. Heakness between here and 167 should be useCl for buying recommended issues. Listed below are the possible downside objectives of a number of issues in our recommended list. These should be the buyin3 rrmges for each individual issue regardless of the ction of the averaEes Anerican Cyanamid 38-37, Atchison Topeka & Santa Fe 88-86, Brrnsdall 30, E. Ii. Bliss 26-24, BorE' j';arner 45, Crunpbell I,yant 24, Celotex 22, Chicago t-lorth,st 17-16, Distillers Seagram 13, Doehler- Jarvis 31, Eagle Picher 20, Elliott 16-15, Flir,tkote 3Q-28, General Railway Signal 22-20, Hewitt Robins 23-21, Illinois Central 28-26, Interlake Iron 12-11, Inter- national Minere.ls 27-25, International Paper 47-45, Joy Mfg. 33-31, Kanse.s City Southern 24-23, Phelps Dodge 41-40, Rayonier 23, Revere Copper 16-14, Schenley 28-25, Shamrock Oil & Gas 27-25, Sharon Steel 30-27, Simmons 29, S0uthern Pacific 44-43, Union Carbide 92-87, Wheeling Steel 37-35, Youngstown Sheet & Tube 7Q-66. Some of these issues have reached inclice.ted downside objctives but the majori ty arE. a point or two away. EDMUND W. TABELL January 23, 1948 SHIELDS & COMPANY The opInions exprened in ')'is letter 21111 Jbe pel,,!, JntearJo of charts hy Mr. Edmund W. labell and are not preJented as the OStlnionl of Shietds & COrnperyy. —

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Tabell’s Market Letter – January 26, 1948

Tabell’s Market Letter – January 26, 1948

Tabell's Market Letter - January 26, 1948
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Technical Market Action Perhaps the outstandint; feature of the 1947 stock narket was the extreme selectivi ty in individual iSBU es while the gener.l nc.rke t e.verage s Quctue.ted in a relatiyely ne.rrow range and closed the year practically where it started. This typE of nction is liable to continue nt lc,st during the early part of 1948. lihile the tehnical pnttern of the avere.ges indicates tho.t the general mo.rket is in 11 broad potentil accumulation area, the pp.tterns of individual issues are quite diverse. Many issues ho.ve reo.ched their dOlmsida objectives, as outlined by the eprly 194, tops, and have formed subskntial potential base arc9.s. In many instznccs these arer.s have been penetrated on the upside (ind the individual issues are in an uptrend and in an individual bull wlrket of their own. Others 'lre still in a tr.,.c1ing range but have built up potentir.lly strong patterns. On the other hand, a great nunber of issues he.ve not yet formed base areas, or if they have, tbe pot.ential bas6 or accumulation arEa is very snal1. lihile t,hese iseu6s may he.vE. re3.ched or alnost reached their respectivE lows, it would GeerJ the.t a 1010; penod of backing and filling is needeC before a worthwhile move is inc1icted. This diversity of technical patterns is noted in low-priced speculative issues as well as in the higher priced groups. For example, listeC belol/ ere a nunber of iSSUeS sellin!; bela; t.8n dollars a she.re who e t.echnical patterns are relatively unattract.ive ACF Brill, Adniral Corp., Alasko. Juneau,f,nerican & Foreign P01IIlt',f.merican -Ice, American Machine & Met.als, Amence.n Power & Light, flndes Copper, Braniff, Central Railroad of New J8rsey, Conrle Nast, Coty, Eversharp, Farnsworth, Gabriel, Grcllam Paige, Mojud HOSiery, National Linw, Norwdk Tfre, Pan-Arlerican Airways, P'.rmelee, Penn-C,en tral Airlines, Radio-Kei th-Orpheun, Rexall Drug, Roan Antelope, Savage Arms, Spear & Co., Tdcott, Telautograph, Third Avenue Railvmy, United Dyewood, Uni t.ed Cigar-l'!hellln, We oster Tobacco, Zoni teo Th6re are also a number of lovl-priced issues that have already built up substantial potentit'.l base areas and would indicat'i cood percentage appreciation on an upside penetre.tion of the trading range. Included in this group of lowpriced isues vlith potent.ially attractive t.echnical patt.erns are – Closing Pricer Alleghany Corporntion ArkansD.s Natural Gas A General Realty & utilities Pacific Tin Radio Corp St.Louis & San Francisco 3 5 1/8 43/4 5 8 5/8 9 3/4 The industrial average continued its slow decline on Monday and reached an intra-day low of 170.70. At this leve!., the average had reached the upper part of the 171-167 downside objective. Monday's dip wss the seventh successive day of lower closings. The industrial average was off 49 cents on the day but the rails continued their better than average act.ion and closed 6 cents hiher on the day. Volune waS small at. 650,000 shares. While Sowe further irre!',ularity is indicated, believe the market should be in a buying range- on any further weakness. Sue-,est 'purchase of recommended issues in t.he 171-167 range of tho industrial averaGes and the 50-48 arba for the rails. EDMUND VI. TABELL January 26, 1948 SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-J ones RRils Dow-Jones 65-Stock 171.18 50.02 61.87 The opInions expressed In thk leHer are the personal interpretation 01 charts by Mr. Edmund W. labell .nd are not presented aI the opinions of Shields & Compilny.

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