Tabell’s Market Letter – April 16, 1948

,-, Technical Market Action )' The industrials reached a new high for the move at 180.63. The market gives thlappearance of slowly eating through the 181-179 resistance which has held back the llnrket for the last ten trading clays. The process has been slow but each successive push has succeeded in cr.rryinG a little bit deeper into the resistrulce as witness the 179.31 high of April 7th, tile 180.19 high of April 12th, end Friday's high of 181.69. During this ten-day period the 10Vl was 177.70 whcll was reachd on the first day of the entry into the 179.181 resistance area. At Friday's high of 181.69, the averae was very close to the December 31st high of 181.82 which was the top of the last interoedle.teupoove. Penetration of this level would be technically important end invicate a further rally to the 185-187 reSistance and a testing of the July hign of 187.66. l'ihcther the market succeeds in penetrding the 181.82 high immediately or after a minor setback is of no great long trn significance. The Dnount of potential buying power that is awaiting a ree.ction will most likely liIlit any decline to relatively cinar proportions. The technical pattern indicat..s that short tern traders end those investors who hnv nissed the advance shoulc add Ito holdings on Dinar dips to 176-175 (if it occurs) or on a penetrc.tion t 182 on the industrial average. The rnil average has, of course, already given a bull Darkat signal of its own by penetratlJ1g the January high of 54.17, which was the high of the long trading rCJ1ge since Septeuber 1946. The penetration has been decisive with the rail average reaching a high of 56.54 on Friday. The long ten. inlicntion on this average is now 75-80. The first illportant resistrnlce is at 60. If the industrial average penetrates the July high, the long tern in- dication would be above 250. I nade this statenent recently at a round table diSCUSSion of Ilarkt prospects and it was greeted by reised eyebrows. It is perhaps a coollentary on the depressed state of thought of the last eighteen nonths. While general sentilJent is changing, it is still tinged with pessi1isn and doubt. There is no reason why such a long tern objective should be con- sidered stcrtlin. In fact, it is quite .Iodest. It woulcl nOM n rise of about 55 fron tile 1947 low of about 160. This would be the snallest percentc.ge rise for a bull i1arkot in the last twenty-fii.ve years ond one of the snallest on record. The recent 1942-1946 bull !.lnrket wns over 100 end even the short 1938-1939 bull. TJurket wes 60. – While a penetration of the 187.66 high llU'3t be awaited before a dofinit, confiI'lllltion of a new bull fl!lrkct is indicated, conti1111e to believe that t'1 trading range of the last eighteen ncnths is on accur.r,ll c ti.on arc;u indice,';H!;; considerably higher le,-els over the longer tern. SOlle 7'sistance and cO'7e-tion nay be en00uotered before the July hi.gh is penetr.te1 ,fl'; ny -Hork indieD'., .hat no worthwhile reaction is indicated until the nnrket. T,r.!les 195-200 on c.r.3 industrials and about 60 on the rails. At that poin, ,,mld expect u thj rJ or half correction of the advance frou the February lo, ris nieht carry tn3 r.veragcs back to 185 and 55. Believe any intervf;r,int; c-.or.'ection will be of cirJy ninor inportance. April 16, 1948 Closings Dow-Jones Industrials Do\-Jones Reils Dow-Jones 65-Stock EDMUND W. TABELL SHIBLDS & COMPANY 180.63 55.86 66.10 The opinions expressed' In rhis letter are lhe personal interpretlliion of charts by MI. ldmund W. Tabell end are nol presenled as the opinions of Shields l Company, –