Tabell’s Market Letter – May 03, 1948

Technical Market Action The market was stronger on Monday and the rnil nvernge reached a neH high for the nove at 59.21. The rail average is now approximtely five points 9.bove its previous high of Jnnuary ilhile t.'1e imiustrials, at Monday's closE. of 181.09, are still over seven points below their July 1947 hiGh of 187.66. EvEir since September the rails have been the leaders in every advance just s they Vlere in the 1942-l9Ji' tull market. Monday's streneth in the rails Toay inclic!ltEJ an end of the ninor correction of the upswinG from Mo.rch ond an (lttempt by the industrials to confirn the rail penetration and signal a new bull r.arket. I an still of the opinion that the industrial averace l'Ii11 reach 195-200 before a full one-third to one-half correction of the advance from the February-March lows. However, if this hypothesj proVtlS to be incorrect, it would only require ('. further dip to 178-175 to oomplete a one-third correction of the 19 point advance from 165 to 184. Continue to ndvis a fully invested position in recommended issues. Celotex Corporation was recomnended for purch6.Se at, 28 1/2. Last sale WIJ.S Z7.3/4. The 1946-1948 runge wus38 l/S hiroh and 19 7/8 low. This insulating muterj issue has on excellent potential teclmical pattern with a seeuin;,; hec.d and shoul- ders bottom for1llJ.tion e.t the points 23,20 and 23 'Ihich were the bottOr.IS reached October 1946, Me.y 1947 and February 1948. Ability to reo.ch 31 would he extrenely constructive ond penetration to 34 would confirm the entire technicn.! pattern and indicate 5ubstantiIJ.l1y hiCher levels. The stock r.ppears to be a very interesting speculation. Purchase is adVised. ' Certain-teed Products Vias recently recoIlll1ended for purchlJ.se at 16 3/4 Last sale was 16 1/8. The 1946-1948 range waa.25 7/8 high and 11 5/8 low. This stock also has a potentially attractive pattern. No uptrend signal has yet been Given. A penetration to 20 would be favorable and 22 would confirm the fornation as stronely bullish. Believe the stock to be a eood speculative purchase. Chicago North Vlestern Railway has bew in and out of our list on several occasions. The last purchase recomIlendation was nade at 18 3/8. The lst sale WIJ.S 18, and the 1946-1948 ranee was 43 1/2 hig.'1 and 13 1/2 loVi. This stock has been a lagGard in the rail group and is still selling close to its low of the last four years. However, the technical patt.ern, Vlhile it has given no definite upside indication, has the e.ppearance of being in the process of fomine a very large base pattern. The stock is speculative but has extrene leverage. It sold as high as 49 1/2 in 1945 and paid ,5.00 in dividends in 1944 IJ.nd 3.00 in 1945. 1.00 was p!lid both in 1946 and 1947. The stock appears to be a good speculative purchase blJ.sed on the possibility of large potential percentage appreciation if the technical pattern is confirned as bullish. 20 anel 24 ere important upside confirnation points. Cities Service Con an Vias originally recoMmended for purchase at 28 liz. The last sale \1as 50 1 4 and the 1946-1948 rtCll;e WIJ.S 50 1/4 hi;;h IJ.Dd 20 1/4 low. The hiGh was reached last week and aGain on Monday. The lonGer term technical indicationn on this issue point to ultinately hiher levels but the intermediate tern bose formed in the September 1947 to March 1948 perioG suggests a rally to the 49-51 area. This area has been entered and it tlould seem advisable to take profi ts as, from a technical viewpoint, it Vlou1d appear thnt at h'ast a con501idting period is needed to Luild up further base area. This r.lD.y take ti;Je and in the neanwhile other recor.mended issues may show more price advance. I an temporarily dropping Cities Service fron the recommended list. Colorado Fuel & Iron was originally reconnended for purchase in the 12-10 buying rnnee. The last sale was 15 1/4 and the 1946-1948 rante Vias 23 3/4 high and 10 1/4 low. The stock is a rather slow moving issue but it appears to be in a definite uptrend with low full figure points of 11, 12 and'l) on the three declineS since September 1946. The successive highs have been 16 and 18 nnd it would appear that the last hibh will be topped on this phase of the advance. Colunbia Gas stem waS recommended in our special letter of Februar,y The IlJ.st sale Vias 12, and the 1946-1948 rane was 14 high and 8 1/2 low. In line with the change of operations of the. company, the name hlJ.s been changed from Colunbia Gas & Electric to the present title. The company is a natural gas holding company. The stock is not a vollJ.tile performer but the techni- cal po.ttern is excellent and a slow but steady percentage rise is indiclJ.ted. Purchase is advised. Crown Cork & Seal was recomnended in the equivalent of a 17 1/2-16 1/2 j Pbuying range on the basis of the new stock. The last sale was Zl 3/4. While the issue has a favorable technical pattern, its upside indications are not as rreat as other issues in our recoomended list. Suggest taking profits and switching into Electric Power & Light, Celotex or Square D. EDMUND II. TABELL The optnhmS expressed in this Jetter are 1M penonaf j!1S 0& PnNY Mr. Edmund W. Tabell and are not prosen.ed N the opinions of SJrields & CompMt).