Tabell’s Market Letter – September 20, 1948

– – – -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.