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Technical Market Action Both averages have brolwn out of the Hne fornation of the past few days. On Thursday, the industrial average reached a high of 17S.14and the rails reached a high of 54.06. The high on the ruils \las just a shade below the 54.17 hibh of early January. If the LlDrkGt follows a nornal technicd pattern, SODO tenporary resistence night be expectfl0. at the 179-1S1 level of the industrials an'! either at around present le,vels for the rails or at 57-58 if the 54.17 high is penetrated. This resistnnce could be follormd by a one-third to one-half correc Gion of the aevance fran the Harch lows of In5.0) Md 48.8). Under t.hese circu1stances, it lfOuld seen that there is chance for a trnding turn by selling on strength froo present levels nd buyinG back at 175-173 ancl 53-52. HOI/ever, it nust be realizeu that the narket has a clynaoic potential upside pattern. The potential base areas forned by both averaGes would indicate the possibility of lon&-tern objectives of 250-260 and 75-S0, if both averaees penetrate the hjglls of 187.66 and 54.17 and signal p. bull narlcet. The volune indications of the past triO weeks i.ndicate the possibHity of a chull;e in the fenr psychosis which has held back the narkct lor the past year in the face of record earnings. As I have scid so'nany ties before, the stage is sct for a trtrlendous bull w.rket. All that is needfld is a che.nge fro,l a nation of econoDic hypochondriacs to U l1oe sensible evaluation of earnings, balanefl sheets and prospects. Under the circunstences, playing for the r.linor swings could prove E.xpensive unless one is Hillin;; to re-enter the lJarket at higher prices in the ever-t that the nornal tecrulical corrections do not take place on schedule. A nunber of issues in our reconnended list have either outpaced the narket and are very near their intenLedillte tern obj cctives or they have about rellched near-tern resistance. It nay be necessary for these issues to consolidate and back and fill in a trading range before the rdvnnce is resuned. However, with the eeneral narket indic(lting subsknticlly higher levels there aro, on the other hand, a great nany issues that appear to have just Dtarted their upsl1ing. It would SeeD adn sable to teke profits on the first '!entioned t;roup anel awitch into issues in the last nentioned catogory. \'lith that idea in nind, I suggest the folloWing. Allegheny Ludlun Steel – recom1ended ut 2S. Lst sale 31. Stock runs into resistance at 32-34. Suggest sViitching into Sharon Steel (34 1/8). Barnsdall Oil – recormended at 21. Last sale 39 1/2. Base count suggests 41-45. Stock is close enough to objective to warrant swltching into either Mesta i.lachine (40) or Nen York /,ir Brake (39 1/2). Both these issues are-near their lovis. Consolidated Vultee – reconnended at 12. Last sale 15 5/8. At 16 resis tance level. AbEi ty to penetrate rellis tance Vlould be bulli sh but would prefer switching into Eastern Air Lines (19 7/8) or Electric POYler & Light (1St). Houston Oil – rccorJl.;onded in the 17-15 buying ranbe. Last sale 27. Near internediete tern objective and resistance. SuCgest taking profits ru1d switching into Kansas City Southern (28 l/S), Seaboard Oil – reconnended at 23-25. Last salo 43. Near internedia objective and resistance. SUGest taking profits and switching into Alleghany, preferred (43 1/4). Mesta Machine (1,0) or New York Air Brnke (39 1/2). Sperry Corp. – recooDended at 23 3/S. Last sale 27 3/. Suggest switching into Kansas City Southern (2S 3/S). Texas Pacific Coal &Oil – Reconenaed at 29. Last sale 49. Base count suggests Southern 50-55. HO1f;v8r, Pacific (51) or is close heeling enough to Steel (43 objective 7/S). ' to sug, gest s\litching into Twentieth Century-Fox – reconnended at 22. Last sale 25 1/4. Near resist- ance and tenporarJ objective. Suggests need of nore baCking and filling before further base is forned. Suggest stching into International Minerals & Chenical (29 l/S) or Kansas City Southern (2S 3/8). United Aircraft – reconnended at 20 liS. Last sale 28 3/4. Base count sugGests first rally objective of 28-30. Appears to need further backing and filling to forn further base. Switch into International Minerals & Chenical (29 1/8) or Kansas City Southern (28 3/S). EDMUND W. TABELL April 1, 1948 SHIELDS & COMPANY The opinions expressed in thili lePer are the penonal interpretation of charts by Mr. Edmund W. Tabell and are not presented as the opinions of Shields & Company.