Viewing Month: September 1948

Tabell’s Market Letter – September 02, 1948

Tabell’s Market Letter – September 02, 1948

Tabell's Market Letter - September 02, 1948 page 1
Tabell's Market Letter - September 02, 1948 page 2
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— —- Technical Market Action The market strength of Wednesday and Thursday carried the rail average past the August high of 62.14. Thursday's high was 63.36. The industrial average,at Thursday's high of 184.88, fractionally pene- trated ,the August high of 184.54. A bit more decisive penetration by the industrials, say to above 184 on an hourly average or at the close, would confirm the uptrend signal given by the rails. From the action of the rail average, it would seem that the advance mentioned in earlier letters has started eve though it is about a week late. I expect the advance will be a broad upward move of two to four months duration with a price objective somewhere around the 1946, high of 213. First resist- ance should be met at the 188-190 level followed bY,a dip back to 185 or so before 188-193' supply area is penetrated. ' In recent weeks there has been a decided 'increase in bearish prognostications regarding a slump in business' and a, depression. These predictions by economists, newspaper columnists and Washington writers, are not new. They started in the Autumn 'of 1945 when President Tru- man's advisory board warned of, a coming drop in the business index that would result in seven or eight million unemployed by early 1946. As a result, the President attempted the obviously impossible procedure of trying to raise wages while holding down prices., No prediction could have been more wrong. The ensuing predictions have been equally falla- cious. The predicted slumps in business in late 1946 and early 1947 and early 1948 have not occurred. Now the recession has been postponed to late 1949. As a result of these dire propheSies, the investing and speculating public has become so fearful of the coming catastrophe that stocks are selling at an absurdly low price to earnings ratio to yield, in innumerable cases, 5 while high grade bond yields are still hovering around the 3 level. I do not pretend to be an economist. I don't know when business will start to falloff sharply. Obviously, our tremendous business boom cannot last forever. However, the inevitable ending is not necessarily a bust. It is possible that there will 'be piecemeal adjustments as each sector of industry, one by one, readjusts and returns to a normal pattern. This has already happened in many industries. Certainly, the, shortages and demands built up by four years of war and by ten years of depression are hot going to be satisfied by the last three years of peak production, large as that production may be. This becomes even more unlikely when we consider the growth in population over the last twenty years, and the greatly increased incomes of a vast segment of our people, thus greatly enlarging the mass buying power. If the stock market had only partially discounted the vast business boom of the last three years, there might be some cause for concern about a drastic slump in the market, but even a temporary falling off in business should not, ,effect, to any great extent, a market that has no top-heavy speculative pOSitions, is not operating on borrowed money, ,and has not risen in price to discount ,the greatly increased earnings;f ,' The stock market sceptics of today are possibly forgetting the psychological state of mind of the nation. This certainly has been true for the past two years when, despite the huge earnings and dividends, a mass fear psychosis has held back the stock market despite price rises in everything else. A l!Iood of pessimism or of 'optimism The opinions .xpressed in this leHer are- the perianal interpretation of ch,uts by t..1r. Edmund W. Tabel! end are not prese,nted as the opinions of Shields & Company. ——————————————————————————– Technical,Market Action -2- however, cannot be sustained over a long period of time. Nothing changes faster than public sentiment, and, after two years of fearful forebodings of dip in business, the mass psychology is about ripe for change despite even a possible temporary 33 1/3 to 50 drop in earnings. Mass thinking cannot be measuredby statistics or fundamentals. It can only be measured by the technical action'of the market itself, by the demand for and supply of securities. The stock market has been slowly building up a strong pattern for a number of years. With the many uncertainties of te present day, it is a hazardous task'to attempt a long range forecast. The predictions of today'may look awfully bad two years from now. However, while this letter may have many faults it is always willing to state a definite opinion. Based purely on the action of some fifteen hundred charts'and graphs of the variOUS market averages and individual stOCks, I submit the following long range prediction. The price ranges are definite but the timing is only approximate and largely guesswork. I believe that the stock market in May 1942 started a long upward war price cycle, similar to that 'of 1914-1929. Such long term price cycles usually have five phases – three of advance and two of decline. The first phase was the advance from 93 in the Dow-Jones industrials in May 1942 to 213 in May 1946. The second, or declining phase, was the drop from 213 to 160 in May, 1947. 'This area was again tested in February of this year. We are now in the third phase -,a period of advance. The recent decline was only a normal intermediate correction in the major upmove. This third, or aqvancing phase, will be comparatively moderate and selective with the better-grade, wellmanaged companies leading the advance. The ultimate objective, interrupted by intermediate corrections, will be around 250 in the Dow-Jones industrials with 5 leeway on either side. This objective should be reached in late 1949. The fourth Or declining phase should culminate in the early 1950s in the 200-180 area. The fifth, or final advancing phase will be an upsurge carrying into the middle 1950s. This will be the dynamic upswing with over-speculation and heavy public participation. The pattern is not complete as regards the ultimate price object- ive for this final advancing phase, but the Dow-Jones industrials should sell above the 1929 high of 386 A preliminary objective, cal- culated from the long term base patterns, suggsts about 450 in the averages. The objectives of 250 for the present phase, and 450 for the ultimate advance, seem fantastic now, but only because of the present depressed mental state. Percentagewise, the advances are quite in line with the moves of the market over the past sixty years. It must be remembered that this country is still in a long term upward growth channel My prediction may eventually turn out to be quite conservative. September 2, 1948 EDMUND W. TABELL SHIELDS & COMPANY Dow-Jones Ind. 184.41 Dow-Jones Rails 62.90 Dow-Jones 65-Stock 69.56 The op;'ios expressed i this leiter are Ihe penon&J lnlerprefatioft 01 charts by Mr. Edmund W. Tabell and ere not presented as tho opinions of Shields & Company.

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Tabell’s Market Letter – September 07, 1948

Tabell’s Market Letter – September 07, 1948

Tabell's Market Letter - September 07, 1948
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Technical Market Action -' The industrials decisively penetrated the August high on Tuesday and confirmed the uptrend signal given by the rail average last week. Tuesdays highs were 185.64 and 63.25 as compared with 184.54 and 62.14 on August 5th. This indicates that the secondary correction of the February-June advance from 164 to 194 has been completed and the next,step is a testing of the 1948 highs of 194.49 and 65.23. If both averages succeed in reaching new high territory, the major uptrend, which is now in effect, will be confirmed. Failure to penetrate the 1948 highs by both averages, followed by a downside penetration of the August lows of 177.40 and 58.25 wouId indicate a bear market. It is the opinion of this writer that the major uptrend will be confirmed and that we are now in a broad upswing of two, to four months duration. The advance should reach the 205-215 level in the industrial average'- While the rails pOint higher, it is difficult to figure the exact objective except in individual issues. First resistance to the advance will be met'at the 188-190 level. After a minor technical correction, would expect a penetration of the 1948 highs. As for groups, believe the rails, steels, automobiles nd machinery equipment issues show the best technical patterns. As for individual issues, suggest the list in my letter of August 11th entitled Stocks With Favorable Technical Patternn. September 7, 1948 EDMUND W. TABELL SHIELDS & COMPANY Closings ,. Dow-Jones Industrials 185.36 .. Dow-Jones Rails Dow-Jones 65-Stock 63012 69.82 ,. — ,. The opinions expressed in this leiter are the personef interpretation of eMrt, by Mr. Edmund W. Ti!lbell and are not presented as the opinions of Shiefdl 6. Gornpeny.

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Tabell’s Market Letter – September 09, 1948

Tabell’s Market Letter – September 09, 1948

Tabell's Market Letter - September 09, 1948
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Technical Market Action One thing has been pretty definitely proven by the action of the market in the past two days and that is that the fear of war, or some disturbance in the Berlin zone, is the prime element that is influencing the short term trend of the market. After the excellent technical action of Tuesday, the bad turn in the Russian news completely turned the market around and in two days the market declined from highs of 185.6 and 63.25 in the Dow-Jones industrial and rail averages to lows of 179.7 and 59.89 on Thursday. In a market influenced mainly by fear hysteria, almost anything can happen temporarily. However, as yet, there has been no basic change in the pattern. The market is still above the August 11th lows of 177.0 and 58.25. Volum& indications are still favorable. Thursday's volume increased to 1,200,000 shares due mainly to a turn- over of 570,000 shares in the final hour of trading. However, part of this heavy last hour volume was on a rallying phase. Even so, as noted in the table below, the volume has been decreasing in each of the four reactions of the past two months. Date July 19th July 30th Aug. 11th Sept. 9th Low 179.58 180.0 177.0 179.7 Volume 2,6(J)0,000 1,30,000 1,310,000 1,200,000 Of course, increased liquidation could change this pattern but the market is getting close to an oversold position on the market indicator which successfully forecast the turning points of the last three declines. Two or three hours more of moderate decline,followed by a diminution in the rate of decline, would produce another buying signal. Just when the unfavorable news pattern will change is open to question. My opinion on the foreign situation, like that of a great many commentators and columnists, is worth nothing. However, I doubt that there will be a shooting war. The sHuation is something like living next to the noise of a boiler factory. There is nothing you can do about it, but pretty soon you get used to the din and don't even hear it. The present market is governed purely by a fear psychosis and anything can happen temporarily. However, I do not believe the longer term pattern has been changed by recent action. Before the present foreign situation changes radically for the worse, I believe a distributional area will be built up in the market pattern. That pattern is not evident yet. The only distribution is that mentioned in previous letters, the area of May to July. The downside indications of that top were 182-178 on the industrials. The low was 177.0. The indication on the New York Times average was l16-11 and the low was 116. The indication on the New York Herald-Tribune average was 121 and the low was about 122. Thus, there is a l,ittle leeway en the last two averages. Also, a full two-thirds retracement of the February-June rally would indicate 175 on the Dow-Jones industrials. Before a lower indication would be given, the market mu,t rally nearer the 193 top, say to 189-192, fail to penetrate and then drop down below the lows of 177. O and 58. 2 or whatever 'lows are reached on this reaction. In that event the major trend would be down. But before that happens, a sharp rally must ensue. My opinion remains the same. We are in an advancing phase of the market. If the low has not already been reached at 177.40 it will not carry much below 175. EDMUND W. TABELL September 9, 198 SHIELDS & COMPANY The opinionl expreued In this leiter are tke personal interpretations of charts by Mr. Edmund W. Tab4! and are not pres.nted as the opinions 01 SI'IIelds & Company.

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Tabell’s Market Letter – September 13, 1948

Tabell’s Market Letter – September 13, 1948

Tabell's Market Letter - September 13, 1948
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Technical Market Action There is. little new to be said about the market. The news from the Berlin zone continues to be the main motivating influence behind prices rather than internal conditions of the market itself. Technical indications gave no warning of last week's sell-off. The market appeared strong technically at last Tuesday's close. The ensuing decline was caused by news happenings rather than a weakened technical condition. I a market that declines because of fear of impending happenings, the reversal can be quite sudden when the expected fails to happen or the news changes suddenly. In the present state of fear hysteria, anything can happen temporarily. However, the market has not built up a distributional area that usually preceeds a sharp decline in the market. A penetration of the August lows, while it might bring in some stop loss selling, would not be of long term significance. It would simply indicate a continuation of the secondary downtrend to a full two-thirds of correction of the 3D-point advance of February to June. It might bring the averages down to 175. What will happen in the next two weeks depends largely on news developments. With many investors and speculators on the side-lines, it takes very little buying or selling by a jittery public to cause sharp advances and declines. The technical indicator that signalled the bottom of the declines of July 19th, July 30th and August 11th, gave an oversold signal on,the close Friday, but the market failed to follow through. Sometimes a day or two delay occurs before the market turns. September 13, 1948 – EDMUNDW; TABELL — – SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 179.38 59.72 67.28 ,' Tho opinions expressed In this lettor are the penonal interpretallons of charts by Mr. Edmund W. Tabell and Bro not presented as the opinions of Shields & Company. \ —

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Tabell’s Market Letter – September 15, 1948

Tabell’s Market Letter – September 15, 1948

Tabell's Market Letter - September 15, 1948 page 1
Tabell's Market Letter - September 15, 1948 page 2
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Technical Market Action Quoted below are excerpts from an editorial in Life Magazine. It is from the issue of September 13th. The editorial is entitled Fear of Plenty and peaks for itself. . In the year of the first Thanksgiving in 1621 the little band of Pilgrims who had lived through the starving time must have had their first inklings of good fortune along about this time in September. Whatever went through their minds, it could only have ranged from humble gratitude to surging happiness. 'The modern fear of plenty had not yet been born, the word 'deflation with all its connotations of bread lines and mortgage foreclosures, was not in Governor Bradford's lexicon. And there was no worrying about the rediscount rate on Massasoit's wampum. This year, two months before Thanksgiving, we have another excellent harvest. It is probably the best in the 341 years of our history. Our 3.5 billion-bushel corn'crop, the lineal descendant of the Pilgrims' 20 acres, is the largest ever, our wheat crop is just under the all-time record. We have raised more rice and soybeans this year than ever before, and little Louisiana is actually exporting rice to China. Soon the cattle in the feed lots and dairies will be champing on the cornj meat, milk, butter and cheese will increase accordingly. As for cotton, the 15 million-bale crop is the largest in a decade, it tops last year's yield by more than 3 million bales. But do we give whoops of joy because of all this Do we even give sober thanks in the manner of the Pilgrims We do not. City dwellers, mindful of agricultural price supports that run into 1950, can't really believe the whopping harvests will make much dent in .the food bill. Farmers, on the other hand, are in a damned-if-we- do-damned-if-we-don't mood. With the nation mulling about in an economic brown 'stUdy, the newspapers feed the popular mood by displaying a schizophrenic morbidity. The front pages are splashed with lamentations about the probability of continuing inflation. Prices on the front pages are going up, up, up. Steel is short, General Motors has had to raise wages to keep pace with the cost-of-living index. But on the fln'nancial pages of the newspapers one can find an entirely different set of woes. Here the murmurs of deflation grow louder each passing day. The price of yellow pine is off at the mill. Real estate dealers complain that houses in the lO,OOO-and-up brackets aren't moving with any speed. Cotton textiles are cheaper and s'oap is down. What we have, then,is a mixture of inflationary and deflationary portents, and the mixture has everybody mixed up. Like the donkey of antiquity who was immobilized between two equidistant bales of hay, we are immobilized between our equal fears of continuing high prices and of a down-spiraling deflation in the economy. Granted that it is no fun to pay through the nose tor things, it still remains true that the last few year's have been relatively good years for the U.S. citizen. The utopian concept of '60 million jobs' has long been a sober reality. Income has been distributed more equitably among the various segments of the population than ever before. If steak has been high, that is partly because more people than ever have been eating steak. So we can't really cry over the recent past. But, apart from the international Situation, have we any more reason to cry over the future In the face of the bountiful 1948 harvests, it strains credulity to believe that the grocer.'s bill can go higher in 1949. The pOliticians are aSking us to vote against inflation this November, but by the time the next president assumes office inflation will, barring war or a crazy increase of paper money, be a dying issue. Deflation will at 'last be on the front pages. .- – The oplnklm expressed in this kltter are the personal interpretations of (harts by eo..,……Mr. Edmund W. labell and are not presented illS the opinklns of Shields & , ( –,'JI … —-,,r——,——–,-.——..- .- J. – – — — .-.s- Technical Market Action -2- How much of a bogie must it be The GI who, fought at Anzio or Okinawa, remembering his father on WPA, may fear it more than he fears another war. As a nation we have a psychological trauma left over from the '30s, when deflation meant unemployment, lost homes and 'Brother, can you spare a dime' But, like generals who make the chronic mistake of preparing for the last war, we may be making a mistake in getting ourselves mentally prepared in 1948 for the depression of 1932. ' Our economy has changed a lot in 15 years. Wages, held in place by new social mechanisms, will not drop suddenly, which means that certain industrial prices will fall only as man-hour efficiency permits. And, since the farm parity principle is here to stay fora while, with agricultural prices linked to industrial prices at a point deemed equitable by Congress, the coming retreat from high crop supports will be'a graded one. Anyway, the main' point to be made about deflation is that it is particularly un- bearable to the individual only when he is badly in debt. A per- son can digest a loss of income when he has to payout less to live. But if he has interest charges, then it is another matter. Well, just how badly are we in deb in 1948 8S compared with 1929 We havenSt gone into elaborate skull practice with the experts, but some things would seem to be pretty obvious. Take the farmer, who would feel the first brunt of falling prices. In 1929 farm mortgage debt was 9 billion plus; in 1947 farm debt was only 5 billion. So this time the farmer can't be scissord quite as easily as he was in the '30s. Nor will the financial community be caught napping by falling prices. The stock market has discounted the comin 'depressions long ago. As for brokers i loans, they were a mere 375 million in July of this year. In 1929 brokers l loans were 8 billion and over. A deflation-in 1949 would hardly be accompanied by panic in Wall Street, for ' the financial community has not been going into debt either to buy tokens of ownership or to bet on continued high prices. Farmers and brokers don't make up the whole nation by any means, but our recent rate of general instalment buying is below that of 1929 in relation to national income. And, where falling prices in the early '30s brought out few cushioning I purchasers, falling prices in 1949 would tempt those individuals among us who still have wartime savings in the bank. Aside from the problem of the national debt, which is a special story, the U.S. economy is in far better shape to weather the change from one price level to another than it was in 1929. This time a deflation might turn out to be one of the traditional boons of capitalism more goods for less money, with people still at work earning the money with which to buy.n . (The above reprinted from LIFE by permission. Copyright TIME Incorporated) September 15, 1948 EDMUND W. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 180.62 60.43 67.81 The opinions expressed In lids 'etter are lhe personal Interpretations at charts by Mr. Edmund W. labell arlCl are not presented as the opinions of Shields &. Company.

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Tabell’s Market Letter – September 20, 1948

Tabell’s Market Letter – September 20, 1948

Tabell's Market Letter - September 20, 1948
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– – – -r———-'.,1' . .., -..- — Technical Market Action The weekend foreign news showed no improvement and the market continued its slow down drift on Monday. The industrial average reached a new low both on the closing and at the intra-day lows. The close was 177.37 and the intra-day low was 176.96. This compares with a closing of 179.27 on August 11th and intraday low of 177.40 on the same date. The rail average, however, failed to confirm the downside penetration of the industrials. Monday's closing was 58.89- against a closing of 58.66 on August 16th. The intra-day low of Monday at 58.61 was also above the comparable August low. If the rails continue their favorable action, it could be the indication of an important turning point. Volume indications still continue relatively favorable. Monday's volume of 1,260,000 shares, while above the September 13th total of 680,000 shares, was still less than the previous volume of 2,560,000 shares on July 19th and 1,310,000 on August 11th. Both of these days were days of decline. A downside penetration of both averages would indicate a continuation of the secondary downtrend. It would not, in my opinion, indicate a bear market. By stretching out the May-July distribution tops as far as possible, the worst, downside indication given is a decline to 172-171 in the industrials and 55-54 in the rails. I would be more inclined to favor 176-174 and 56. As against the comparatively moderate distributional top, there is a huge accumulation area in the 160-170 range. It is ,this range that I have considered a buying area ever since September 1946. It has been tested on over a dozen occasions. The potential upside indication on this two year old base is around 250 in the industrial average and 80-85 on the rails. Whether the rails hold above the August lows and form another bullish divergence pattern or whether they break through to new lows depends entirely on the news and the state of mind of an already jittery trading public. However, would consider the level between 176 and 171 to be the worst possible downside objective. Ability of the rails to hold above the August lows and a penetration of the recent highs would indicate a rally to a minimum objective of 195-205. September 20, 1948 EDMUND W. TABELL SHIELDS & COMPANY TIte opinions upressed in Ihls lttor are the persona' Inferpretation. of charl. by Mr. Edmund W. rebell end ere not presented .1 the opinions of Shields & Company.

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Tabell’s Market Letter – September 22, 1948

Tabell’s Market Letter – September 22, 1948

Tabell's Market Letter - September 22, 1948
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Technical Market Action The rail average has, as yet, failed to break the August low of 58.24 and thereby confirm the secondary downtrend signal given by the industrials. Similar divergence in the past has often signalled a reversal in trend. Another favorable portent, is the fact that the industrial average, at Tuesday's low of 176.94, had only fractionally penetrated the August low of 177.40. Firmness on Tuesday and Wednesday brought the averages further away from the lows. The industrials closed at 179.16, up 55 and the rails were 58i higher at 59.78. It is too soon to be certain, but the action of Tuesday and Wednesday so far favors the constructive side. As mentioned before, a downside penetration would indicate, at the worst, a continuation of the secondary downtrend to '176-171 in the industrials and possibly 56-53 in the rails. While the b'etter than market action of the rails has been quite evident, another group, the steels, have also shown excellent resistance on the decline. An average of the five leading steels reached a low of only 50.06 in September, against a low of 49.6 in August. This isoted in the tabulation below. August Low September Low 1948 High Dow-Jones Industrials 5 Steels U.S. Steel Bethlehem Steel Republic Steel Jones & Laughlin Youngstown Sheet & Tube 179.16 52.0 79 1/4 35 3/4 29 5/8 35 1/4 80 1/2 177 .40 49.6 75 1/4 34 26 5/8 33 3/8 76 3/4 176.94 50.6 77 1/4 34 7.,/8 28 1/8 33 5/8 79 1-9-4.49 83 1/2 38 3j431 7/8 37 – 87 1 2 The following steels are in my recommended list. They are Armco (28 1/8), Byers,A.M. (20 3/4), Colorado Fuel (18 7/8),Copper- weld (18), Eastern Stainless (15 3/4), Inland (44), Jones & Laughlin (35 1/4), Sharon Steel (38), Wheeling (49), Youngstown Sheet (80). Due to its improved technical pattern would also add U.S. Steel (79t) to the list. Any weakness in the general market should be used to add to holdings. EDMUND W. TABELL September 22, 1948 SHIELDS & COMPANY The opinion, ellipressed in .hlli laHer ere the personal interpretations of charis by Mr. Edmund W. Tabel! lind ere not presented liS the opinions of Shield. & Company. o

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Tabell’s Market Letter – September 28, 1948

Tabell’s Market Letter – September 28, 1948

Tabell's Market Letter - September 28, 1948
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Technical Market Action This letter is of necessity a short one as it is being dictated from a hospital bed to which an infected foot has consigned me. Some unkind people may say that I stubbed my toe on the 450 average, but I assure you it was just caused by a tight shoe. Monday's market, by reaching an intra-day low of 175.84 on the industrials and 57.42 on the rails, jointly penetrated the August lows of 177.40 and 58.24 respectively. However, today's market recovered from the opening and the penetration was fractional. I consider this action merely a continuation of the secondary downtrend and while at this time it is problematical whether or not the market will work somewhat lower than yesterday's levels, I strongly feel that we are in or approaching a very favorable buying area. The worst that can be envisioned at this time would be the lower part of the 176-171 range mentioned in my letter of September 22nd. My opinion as to what will be the leading groups on the recovery remains unchanged. The steels and the rails look particularly attractive. This continues to be an almost entirely psychological market in my opinion. A sidelight on this fact is the circumstance that over the last fifteen weeks the market has declined on 14 Mondays and recovered on 10 of the Tuesdays following. This can only be accounted for by the state of mind engendered by the weekend papers and Sunday night commentators. Despite the continuous alarums and ecursions of the last two months, yesterday's lows were only 3.74 and .97 lower, industrials and rails respectively, than the intra-day lows reached on July 19th. To summarize, I feel that we are at or approaching the end of this intermediate downtrend and the turn when it comes will result in much higher prices over the next few months. September 28, 1948 EDMUND W. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails 65-Stock Average 177.54 58.17 66.27 Th. opinion. expressed In this letter are the pananol Interpretation. of chert. by Mr. Edmund W. Tab.1I end are no' presented as Ihe opinion. of Shield. & Company.

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