Tabell’s Market Letter – February 16, 1949

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby '141 While the rail average Q,t last week's low of 48.43 penetrated the November low of 51.91, the induntrial average has so far held above the comparable November low of 170.35. Last week's low was 171.03. This divergence in pattern between the two averages is a potentially bullish sign and brings up the possibility of an ending of the intermediate down- trend from the June-July closing highs of 193.16 and 64.95. Failure of one average to follow the lead of the other average into new high or new low territory is quite often the sign of an important change in trend. In recent times, this divergence occurred at the May 1945 top, the May 1947 bottom and the February 1948 bottom. If it does turn out that the market reached its low last week, the normal technical pattern would be an irrcgular-uptrend to 175-178 and 51-52 followed by a dip back to 174-172 and 50-49. After that, I would expect a long trading ranGe within the limits of the projected highs and lows mentioned abpve. In the event that the market does not hold at last week's lows, I would not expec't any great extension of the decline. The broao May-November top on the industrial average has a downside indication of 172-167 and the comparable downside objective on the rail average is 50-48. In addition, both averages are in or near the very strong support areas of 53-45 and 170-163. It would appear that the market, as measured by the averages, has either reached its low or, at the \',orst, is within 5 of such a low. For intermediate term holdings, suggest purchase of the following issues during periods of market irregularity. These stocks have been covered in previous letters or will be covered shortly. Thumbnail sketches are available on those issues marked with an asterisk .. ,\ , Closim- Closing 2/16/49 2/16/49 American Cyanamid American Home Prod. Avco Bendix Aviation Bigelow-Sanford Borg Warner Burlington Mills Cities Service Cooper Bessemer Denver & Rio Grande Eastern Airlines Electric Pr & Lt Firestone Tire Firth Carpet Flintkote Fruehauf Trailer .Hewitt Robins Holland Furnace 38 25 1/2 6 3/8 32 1/2 29 1/4 48 1/2 17 1/8 40 1/8 27 22 3/4 14 3/4 22 1/8 47 1/8 16 1/2 25 1/2 18 1/2 18 22 1/2 Inter.Min & Chern Joy Manufacturing Lowenstein Paraffine Companies Penn-Dixie-Cement Pressed Steel Car Radio Corp St. Regis aper Schenley Sears Roebuck Sharon Steel Shell Union Oil Sperry Corp Standard S'ceel Spring Sylvania Electric White Sewing Machine Youngstown Sheet & T Reynolds Metals 26 37 1/2 22 1/2 17 1/2 18 3/8 6 7/8 11 7/8 8 26 7/8 34 7/8 33 33 1/2 25 1/4 14 3/4 21 1/2 20 3/8 67 3/8 20 3/4 February 16, 1949 EDMUND W. TABELL WALSTON, !QFFMAN & GOODWIN Thb memorandum Is not to be construed .,s an offer or solicitation of oHen to blJY or lell any securities. From time to time Walston, Hoff,man &IyGftdb'nbo!l!l hay. an Interest In 10m. or all of the securities merrlloned herein. The foreQoln; material hflS been prepared by UI as e metter of Infonnelon on . d I I upon Information believed reliable but not necessarily complete, Is not Quatanteed al accurate or final, and I, not Intended to foreclose Indepen ent nqu ry. '—– – f t