Tabell’s Market Letter – February 18, 1948

Technical Market Action Ever since the narket break of alr.lost a year and a half ago, this letter has consistently stressed two points. The first point was that the 160-170 level of. the Dow-Jones industrial average was a long tern buying range and that the base forDed in that area would ultinately be the foundation for a new bull Jlarket. The 160-170 area was reached at least a dozen ti!'ies with low levels of 160.49 in October, 1946, and 161.38 in May 1947 and 164.07 last week. The second point was that the market leaders of the neVi advance would not be the sensational clovers of the 1942-1946 advance, such DS the moving picture issnes, departJlent stores, liquors and other luxury iteo issues, but that the nelV leaders would be found in the groups that were comparative laggards in the 1942-1946 advance. This letter favored such groups as the steels, agricultural implenents, nachinc conpanies, oils, building stocks, chenicals, etc. We further stressed this selectivity by Jlentioning that even in the same groups, some stocks had attractive teclmical patterns while others in the same group had relatively unfavorable patterns. For example, we have mentioned, on occasion, that Phelps Dodge appeared more attractive than Anaconda, that Illinois Central appeared more attractive than Pennsylvania or New York Central. How this selectivity has worked out can be noted in comparing the two tables below. The first or left hand column is composed of issues in our reconirnnded list with prices at the lows of May 19th, the day the average reached 161.38, conpHed Y/ith Wednesday's close with the averages at 168.04. The second OT.J right hand column is composed of issues that had relatively unfavorable patterns. LoY/ iay 19th Barnsdall Oil 21 1/8 E. W. Bliss 18 1/2 Borg Warner 37 5/8 Chrysler 45 7/8 Cities Service 25 3/8 Electric Pro & Lt. 11 1/4 Flintkote 24 General Cable 8 Illinois Central 18 1/8 Inter.Minerals 22 1/4 Joy Manufacturing 28 1/8 Mullins Mfg. 14 3/4 National Supply 12 5/8 Rayonier 17 3/8 Sharon Steel 243/4 Texas Pac.Coal 25 1/2 Union Bug 25 1/2 Union PacifiC 122 Wheeling Steel 31 Youngstown S & T 54 Wednesday's Close 33 1/4 25 46 55 7/8 32 1/2 14 5/8 33 3/4 9 7/8 28 1/2 24 3/8 33 1/4 20 7/8 20 21. 31 1/2 40 3/4 28 3/4 156 39 1/8 68 Low Ma;y 12th Air Reduct.ion 29 7/8 American Can 86 3/4 A..ler. Telephone 159 5/8 Bridgeport Brass 13 Cerro de Pasco 30 ConsoL Edison 25 Continental Can 35 Corning Glass 34 3/4 Decca Reords 15 3/8 Ever sharp 12 5/8 Gt.Western Sugar 22 1/8 Inter .Nickel 29 1/2 Lanbert 28 1/4 LoeY/'s 20 Nopco Chemical 42 1/2 NorY/ich Pharo 13 Oppenheim Collins 20 Parar.ount 22 3/4 Pennsylvania R.R. 17 7/8 20th-Cent-Fox 26 3/4 Wednesday I Close 23 3/8 77 3/4 149 7/8 10 23 3/4 22 33 18 1/2 11 8 5/8 20 7/8 26 23 3/8 161/2 331/2 12 1/8 22 3/8 18 5/8 17 1/8 19 3/4 The stocks in the first column show, in most instances, a fair gain at today's prices. On the other hand,some stocks in thE second column, with the averages almost eight paints higher, shaY/ substantial losses. After the present accumulation period is completed, believe the ensuing advance will be selective. While a great !lany issues have completed their base patterns and indicate substantial upt.rends, other issues are in the early stages of accumulat.ion and require a long period of backing and filling before a worthVlhile move is indicated. At this stage of the market, a great deal can be lost by holding on to laggard issues in the vain hope that they will join the advance momenta- rily. EDMUND j. TIIBELL February 18, 1948 SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 168.04 48.80 60.70 The opinions expressed in this leHer are the personal interpretation of charta by Mr. Edmund W. label! and are not presented as 'he opinions of Shields l Company.