Tabell’s Market Letter – March 15, 1948

Technical Market Action There is an excellent article in the IIhrch 20th issue of Collier's Magezine entitled hat ;e Are Afrad Of by Howard llhitle.n. Mr. ialitmlU IIri tes about the fear psychosis 'ihich seens to be ;ripping our nation today. I recoIlJlend this article as Dust reading. It is this fear psychcsis which enables us to buy good securities at prices of two to six tiL1E.s yearly earnings at a yield of 6 to 12. It is this fear psychosis that holds dovm the stock ,arket in the fac'e of record earnings, record enployoent and a trenendous pentu!J deJ.lnd — a deoand built up not only by five years of under-production cf p,.,acotiDe goods during the war, but also lack of buying pover during the t,n previous depression years. It is this fear psychosis that 11akes nost investors and speculators pay nore attention to the intangible factor of what might happen than to the tangible factor of what is happening. /rr,iS letter has continuously stressed the opl.nion that the trading range of the stock market for the past eighteen oonths is an area of c.ccumu- lation, with stocks passing froJ! weaker into stronger hands. Out of it 17ill cone an advance that should reach levels, in selected stocks, substantially above the highs of 1946. There is no telling when the advance will start. The present feur psychosis may continue for a While lonEer. ,hat will change this psycholoGY is problenaticaL Perhaps because we cannot continually sustain the sal1'e enotioll at a hiGh pitch for an indefinite til,le, it will just Viear itself out. Fron a technical viewpoint, the stage is set for a sharp rise in prices. All that is needed is the spark of a changed investor psychology. l,'hen that occurs it is boing to make sone of the apostles of gloom feel just a little bit foolish to realize they have passed up the opportuni ty to buy securities at a deflutcd price level that is not only failing to take into consideration the present level of busic.ess, but is discounting a possible tenporary dip that would bring the naladjustments of our present econonic pattern into line., There are SO10 slight technical signs in the action of the present market that indicate th noarby possibiE ty of an upward mo.ve of some iuportance. v,l1i.le voluoe renains 511a11, tn.ding has been concentrated in stocks which are noving higher. For exaJ,ple, of the fiftee.n nest active stocks last week, thirteen closed hir,her, onc was unchanged and one finished the week oneeighth of a point lower. This upswing in heuvily traded issues was in the face of u general narket that was practically unche.nged for the week. Incidentally, three of the stronger stocks ere part of ny list of recoended issues, nanely, Gulf.Mobile & Ohio, Electric Power & Light and Radio Corporation. Another favorable sign is the continued firess and strength in the rail group. At today's prices, the rail average is only four points below its high of the past eighteen Bonths while' the industrials are still tVienty points below their cO1parable highs. I expect the rails to be th leaders in the next upward sning. EDMUND Ie;. TABELL March 15, 1948 SHIELDS & COMPANY The opinions ellproned in this I.He, .re the personal interpretation of cherts h'l r. Edmund W. label! and ere not presented as the opinions of Sield. & Company.