TABELL'S MARKET LEnER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 The market has been going through a period of consolidation in approximately the 174–177 range for the last nine trading days, A downside penetration, if it ,occurs, should not carry the industrial average much lower. An upside penetration could continue to 180-183. The important thing to be deduced from the technical action of the market over the past two months is, in my opinion, that while the averages may have some difficulty in moving sharply higher, special situations can now be bought with much less fear that sharp downside liquidation in the general market will also carry favorable situations downward with it. Listed below are the remaining issues in my recommended list. This portion consists of the more speculative issues. Stocks marked with an asterisk show above average action and should be purchased during periods of market irregularity. American Airlines American Power & Light Avco Brooklyn Union Gas Budd Company Carrier Corporation Cities Service Combustion Engineering Continental Baking (-a-GQBpeT-Besme Denver & Rio Grande Eastern Airlines -F1r Illinois Central International Min.& C Lowenstein Niagara Hudson Penn-Dixie-Cement Pressed Steel Car Radio Corporation Reynolds Metals St. Regis Paper Schenley Shamrock Oil & Gas -Sharon-St'eei- Studebaker SUnshine Mining Western Pacific -Whe'e-n1'lg-SJ;ee-l Wh1.te-Sewing-M-ac-h1ne Closing 7/29/49 10 10 7/8 5 1/4 30 1/2 9 3/8 14- 1/44-7 1/424 1/2 14- 3/8 22 3/8 22 1/2 14- 7/8 11 1/2 24 7/8 26 1/2 23 1/4 12 21 5/8 6 1/8 10 1/2 19 3/8 6 5/8 26 1/2 25 3/4 2422 3/4 9 24 5/8 34 3/4 22 1/2 (a) Adjusted for 50 stock dividend. Approximate Originally Recommended Level 9 3/4 9 3/4 7 26 1/2 9 13 40 24 7/8 13 1/2 18 24-27 15 3/f; 16 1/2 24 1/2 25 1/8 22 1/2 9 19 1/4 6 1/2 11-13 21 7 3/4 26-30 31 33-35 19 10 20 1/442 ..44 19 1/2 July 29, 1949 EDMUND W. TABELL WALSTON,HOFFlfillN & GOODWIN Thll .morondum II not to b. construed ill an offer or solicitation of offe… to blly or ,.11 an, securitIes. From time to time Walston. Hoffmu & Goodwin mey ha…. an Intereat In SCrM or all of the securitIes mentioned bereln. 'e foroln9 material hal been prepared by UI as a matter of Information only. It Is baled upon Information bellev.d relleble but not necessarll, complete, It not qllarant..d al accurate or final, and I. not intended to foreclose Independent lnqulry.

TABELL'S MARKET LEnER 35 WALL STREET. NEW YORK 5. N. Y. Digby 4-4141 From May 5th to August 1st, a matter of sixty-six trading dars, the Dow-Jones industrial average moved in a Wide trading range of 16 pOints. From the May 5th high of 177.18, the market declined to a low of 160.62 on June 14th. This was a decline of 16.56 pOints in thirty-three days. From the low of 160.62 on June 14th the market advanced to a high of 177.17 on August 1st. This was an advance of 16.55 points in thirty-three trading days. Thus, the entire thirty-three day decline of 16t pOints was recovered in the same number of trading days. This is unusual as'the rate of decline is usually more rapid than the rate of advance. As we look at the long term picture, rather than the day to day, or even month to month fluctuations, this quick rebound from the 160 support level has considerable significance. The 160-164 support level has now been tested on four widely separated occasions, namely, in October 1946, May 1947, February 1948, and June 1949. The 160-170 areawhich I have consistently considered a long term buying area, has been' entered in eleven of the last thirty-six months. ' From September 1946 to November 1948 business and indusry were booming with the F.R.B. index of production moving in a range between roughly 180 and 195. (100 1935-1939 average). The stock market declines into the 160-170 range of the Dow-Jones industrials during this period were the result of fears that a decline in business was imminent. This de- cline in business has now occurred with the F.R.B. index dropping in seven months from a November 1948 high of 195 to an estimated level of 165 for July, 1949. In spite of this decline in business, the market has again met support at the 160 level of the Dow-Jones industrials, the low of a narrow trading range (15) of three years. This action takes on an added significance when we read the busi- ness forecast of Dr.C.F.Roos of the Econometric Institute in the August 1st issue of Newsweek. The record of Dr. Roos and his staff in forecasting the business trend over the past few years has been considerably above that of the average economist. He believes that the F.R.B. index will reach its low for the next ten years in either July or August of this year. After a rise into the later part of 1949, he expects another dip in the first six months of 1950. His opinion is that this decline will hold slightly above the August lows. He then antiCipates a rising trend until 1953-1954, hen ano- ther dip in business is expected. The decline at that time,he believes, will hold above both the lows of 1949 and 1950. From there on; his proJect- ion indicates a riSing trend to 1960. All of this is subJct to an'allow- ance of 5 to 10 for error. The opinions of Dr. Roos coincide with my long term technical pat- tern of the stock market. I believe that the narrow trading range of the past three years is a long accumulation period with stocks passing from weaker into stronger hands. The accumulation may not yet be completed and the averages may remain within the area of the last three years for a longer time. However, I made the prediction almost a year ago that the pat- tern now being built up will eventually result in a price level ,in the stock market above the 1929 high of 386 during the period betweeh 1955 and 1960. I confidently repeat this prediction again. .' . For the near term,the market has advanced approximately eighteen pOints in thirty-seven trading days to a high of 179.38 on August 5th. It would appear quite obvious thatin the near future, some technical correct- ion should occur. However, the advances in the market, since'the narrow trading started almost three years ago, have been of the more or.iless straight line variety with sharp upswings in a short periOd of' time and with comparatively no teohnical oorrections. Witness the twentyfour point upswing from November 1946 to February 1947, the twenty two point riSe from May 1947 to July 1947 and the thirty point advance from Fecruary 1948 to June 1948. . It is possible that the current intermediate uptrend will top out in the 178185 area and will be followed by a correction to the ,lower 170s. Following that, a trading range might be built up in an area bounded rough- ly by 170 and 185. Such aotion would result in a long head and shoulders bottom pattern with the November-May range of 170182 being the'I'eft shoul- der,the sharp deoline to 160 in June being the head,and the oontemplated 170-185 range the right shoulder. Suoh a pattern would be the preliminary for a strong market in 1950. August 5, 1949 . Edmund W. Tabell Thl, memorandum I, not have an Inte'lt In 10m. to or b. all conltrued a. an of the IKllfUlu off.r or lollcltatlon of mentioned herein. The oHe,. to buy or 11 any lecurltleL From ,o…;oln; mahlrllli hal been prepered by time to 111 al a timmaetteWr aolsftoInnoHrmoaftfmloann a Goodwin may only. It It bliled upon Information bellev.d reliable but not neeesullrily complet., II not filuarllnt.ed e. accurate or fInal, and Is not Intended to foreclose Independent nqulry, – ——–..– — –

TABELL'S MARKET LETTER 35 WAll STREET, NEW YORK 5. N, y, Digby ' The market appears to have,reached an area of'temporary-resistin the 180''181- range. — O'lti prlce–6bjective for the first phase of the advance has been the 180-183 area. However, the market shows no signs of a eakened technical condition and any correction should be moderate with individual stocks continuing to show above average action. Regardless of the action of the averages, selection of the right indiVidual issues will continue to be the difference between stocle market gains and losses. A perusal of action of individual groups and issues over the past three years plainly shovls that this period has been one of extreme selectivity. This action will most likely continue until the piece-meal adjustment in our economy has been completed in industry after industry. In the meantime technical market action indicates that regardless of the near term fluctuations of the averages, there will become available ,outstanding purchases from both a value and yield basis. We will endeavor to draw your attention to these individual issues in subsequent letters. In the meantime, it would seem advisable to take advantage of the current etrength in the general market to switch out of some of the issues in our recommended list. These issues fall into three categories (1) Issues that show fair profits and temp,orarily appear to have reached their upside objectives; (2) issues that have shown uncertain action and do not have, at the present, a clear technical pattern; (3) issues that have shown relatively unfavorable market action and give no indication of important nearby turn. – In the first' category I would include Cooper Bessemer, Flintkote, S.S.Kress, Sears Roebuck, Sunshine Biscuit and White Sewing Machine. In the second category I would include Bendix AViation, Eastman Kodak, Firestone Tire, Fruehauf TraUer, Joy Manufacturing, Paraffine, Sylvania Electric and Youngstown Sheet & Tube. In the third category, I would include Bigelow Sanford, Firth Carpet, Holland Furnace, Sharon Steel and Wheeling Steel. I-would continue to hold the remaining issues in my recommended list. They all continue to show favorable action, or at least average action. The better grade issues include Addressograph Multigraph, Allis Chalmers, American Cyanamid, American Home Products, American Seating, Borg Warner, C.LT. Financial. Commercial Credit, Endicott-Johnson, Federated Department Stores, General Time, Hewitt-Robins, Intertype, Johns ManVille, Kresge, Phelps Dodge, Shell Union Oil, Sperry Corp, and Standard Steel Spring. The more speculative issues include American Airlines, American Power & Light, Avco, Brooklyn Union Gas, Budd Company, Carrier Corp., Cities SerVice, Combustion Engineering, Continental Baking, Denver & Rio Grande, Distillers-Seagram, Eastern Airlines, International Minerals & Chemical, Lowenstein, McKesson & Robbins, Niagara Hudson, Penn-Dixie- Cement, Pressed Steel Car, Radio Corporation, Reynolds Metals, St,Regis Paper, Schenley, Shamrock Oil & Gas, Standard Gas 4 preferred, Stude- baker, Sunshine Mining, United Merchants and Western Pacific, August 12, 1949 EDMUND W. TABELL WALSTON. HOFFMAN & GOODWIN ,, , , .,-'' Thll memorandum Is not to b. Mtra.d 1111 an offe, or lolldt.tlon of offerl to buy or HII any curlt'.'. From tim. to tim. WalnoR, Hom, & Goodwin ma., ha.,. an nter1llf In some or all of the ,ecurltles merttloned herein. apon Information believed ,.lIable but not neceuarlly complete, The foreGoinG mate,lal h.,. been pU1p.,.d bl' III ., Is not queranteed al accllrate or flnal, and Is not mottt… Intended of to f'On'lo'ercmioaltelOIllt'IodnelpyedeIntt t,Inbqausld. -.— .s,,

TABELL'S MARKET LEnER lS WALL STREET. NEW YORK 5, N. Y. Digby 4.04141 The signs of at least a temporary top, which we have been mentioning in our letters of the last two weeks, have increased. Last week the market broke several uptrend lines. This was true not only on the price trend graphs but also on the buying power gauges. Selling pressure also decreas to break a downtrend line. However, the decline was caused mainly by a drup in the buying urge rather than a heavy increase of selling pressure. It woulu appear that the irst phase of the advance, a rise of app mately 22 pOints from 160.62 to 182.67 in two months, has been completed. ,Just how far a, declining phase will carry is problematical. A normal te'lIHJ.,- cal correction of one-third to one-half of the 22 point advance would bris the industrial average 'back to the 175-171,area. However, the averages or individual issues have not yst built up a sufficiently broad distribution area to indicate such a decline at this stage. Furthermore, there is a fair resistance area at 178-176. It would be necessary for a broader top to be built up before a decline of such degree is indicated. ' The declining phase may carry down through middle or late September, interrupted by sporadic rally attempts to the lower 180 level. Such a re- action, or rather broad consolidation, would improve the technical pattern considerably. As I have mentioned before, while many issues have already built strong base patterns, there are a great many other issues that have not yet built up a broad enough potential to sustain a strong upward move. Most issues of this type are in the groups that have shown most unfavorable action over the past few months, such as the steels and the rails. While these issues most likely reached their lows in June., their potential accu- mulation patterns appear incomplete. A month or so of reaction or conso- lidation may complete the formation. If this happens, these issues should be watched closely as they may be the leaders of the next and more dynamic phase of the advance and take the place of the more or less defensive type of issues that have been the leaders of the first phase. All of the foregoing refers to the relatively minor or near inter- mediate trend of the next month or so. The longer term pattern shows no signs of jeakening and in fact is strengthening itself during the present consolidation or reactionary period. If the advice of the past three weeks has been followed, ';roups issues marked as shoViing relatively unfavorable action have been sold on strength into the 180-183 area. Retention of issues showing favorable action has been advised as I doubt if these issues will have re than a nominal correction'even in the event of a decline into the lower 170's in the next few weeks. Would not advise repurchases until the industrial average declines to the 175-174 level or until a clearer indication of the extent of the decline is given. While many individual issues continue to show favorable action, I am omitting the list until such a time as the action of the list ca,) be observed in relation to the current decline in the averages. August 26, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thl. memorandum Is no' to b. coMtnled a. fin oHer or solicitation of offers to bur or 11 any I.curltles. From tim. to time Walston, Hoffman & Goodwin rnay haye an Int.rest In some or all of the securities mentioned h.,.ln, The foreqolnQ meterlal has been prepared by us 8S ill matter of Informetlon only. It I. bated upon Informetlon bellev.d rellebl. but not n.ceslarlly compl…. Is not quaranteed lIS accurete or final, and I. not Intended to foreclo Independent Inquiry.

TABEll'S MARKET lETTER 3S WALL STREET, NEW YORK 5, N. y, Digby 4-4141 The market concinues in a correctionary phase of the twenty-two point advance from the June lows. At the moment, tecqnical evidence pOints to the prot ability that the correctionary phase will be more in the nature of a consolidation than a reaction. I would expect any decline to reach its low not much below the 175-174 area. Obviously, this slight downtrend will be interrupted by occasional rallies. However, it would be better technical action if most of the work were concentrated in the lower area of the contemplated 183-174 trading range rather thar. around the top. The latter action might possibly build up a broader distrLbution area and indicate a decline of greater magnitude than now indl.caed. While the minor and near terla trend indicators show signs of doubtful or unfavorable act 1.0,-. the longer term'studies show no signs of deterioration. If the advice of the past few weeks has been followed, stocks in unfavorable groups have been liquidated in the 180-183 area and issues wjth favorable long term action have been retained. Would do no new buying until either a signal of the end of the correctionary phase is given or until the industrial average declines below 175. The following are in my recommended list and are attractive on prIce setbacks Better Grade Issues Stock Last Price A4l-ressogl aplr-lV'rlii-tigraph 33 5/8 Allis Chalmers 28 3/4 America Cyanamid 44 1/2 American Horne Products 27 '7/8 Amer-ican-geat-ing….. 35 3/8 ,A.t;.ctr1SOil,l'op-&. 88 3/4 Borg \arner 48 1/4 C.I.T.Financial 55 1/4 Commercial Credit 53 7/8 Endicott-Johnson 31 1/2 F'ederat!d Dept.Stores 29 General Time 21 1/2 Hewitt-Robins 14 3/8 Intertype 26 3/4 .J.ohns-Manv4-l-1e- 39 7/8 Kresge 41 1/4 Phelps Dodge 41 5/8 Shell Union Oil 36 3/4 Sperry-C0I'P,——-257i8- tahdard Steel Spring 15 Stock Speculative Issues Last Price American Airlines American Pr & Lt Avco Bro,ok-ln-)Jj'd;on-e-as Budd CompaflY Carrier Corp C1t-ies-Serv-ic-e Combustion Engineering Continental Baking Denver & Rio Grande Distillers Seagram Eastern Airlines r-ITl0-Gentr Inter. Min.& Chern. Lowenstein McKesson , Robbins lI!iagara Rudsor. Penn-DIxie-Cement Pressed Steel Car Radio Corporation Reynolds Metals st. Regis Paper Schenley Shamrock Oil C, Gas .,-st-ann'aPEi-Gas–4-p,f,!Q. Studebaker Sunshine Mining United Mer & Mfgrs We stern-P-ae-i-f-'i-c- 9 3/8 12 1/8 5 1/8 33 51'; 97P 14 1/2 1/2 15 23 16 14 5/8 26 1/2 28 1/2 24 36 7/8 13 21 5 1/2 11 lilt 20 6 3/lt 28 1/8 27 1/4 30 7/8 22 3/8 9 1/lt 12 1/8 26 lilt September 2, 1949 EDMUND W. TABELL WALSTON, HOFFl'LN &, GOODW I; T This memorandum Is not to be construed as an offer or solicitation of offers to buy Of sell any securities. From time fo time Walston, Hoffman & Goodwin may have an Interest In some or all of the securities mentioned herein. The foregoino material hal been prepared by us as a matter of Information only. It Is baled upon Informahon believed reliable but not neceuarlly complete, Is not guaranteed lIS accurate or final, and is not intended to foreclose Independent Inquiry. — t-

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4141 The industrial average has again entered the overhead resistance at 180-183. Thursday's high was 181.30 as compared with the August 18th high of 182.67, which was an intra-day high for the year. The inability of the rails to gain ground is an unfavorable near term factor. Thursday's 'high of 46.28 was below the August 18th high of 4'( .64 which, in turn, was below the August 10th high of 47.88. While the industrial average was able to reach the 1949 high in 'August , the rail average at its August high was more than seve pOints below the January high of 54.93 .. Over the longer term, this action may be of no great importance. But until the rails consolidate further and form stronger base patterns, it may hold down the general market. If the advice of the past few weeks has been followed, stocks in unfavorable groups have been liquidated in the 180-183 area and issues with favorable long term action have been retained. Would do no new buying until either a signal of the end of the correctionary pase is given or until 'the industrial average declines below 175. Would advise taking trading profits on the following issues in my recommended list. BETTER GRADE ISSUES Last Price Addressograph Multigraph Atchison,Topeka & S.F. Johns Manville 35 89 3/8 40 1/4 Originally Recommended 31 83 1/4 36-34 Cities Service Illinois Central Western Pacific SPECULA'rIVE ISSUES Last Price 52 1/8 26 5/8 27 1/4 Originally Recommended 40 24 1/2 20 1/4 September 9, 1949 EDMUND W. TABELL WALSTo', HOFFMAN & GOODWIN this memorandum Is not to be construed as en offef or solicitation of offers to buy or sell en\, securities. From time to time Walston, Hoffman & Goodwin mey have an Interest In lome or all of the securities mentioned herein. The foregoing material has een prepared by IlS as a metter of Information only It Is bosed upon Information believed reliable but not neceuatllv complete, Is not guaranteed illS accurate or final, and II not Intended to foreclose Independent Inquiry.

TABELL'S MARKET LETTER 35 WALL STREET. NEW YORK 5. N. Y. Digby 4-4141 , On sharply increased volume the market reached new high territory during the past week. The industrials reached a high of 184.09 and the utilities were at a t)P of 38.11. On the other hand, the rail avenage, as has been true in the recent past,failed to confirm the strength in the other two averages. At the week's high of 47.58, the rail average was still below the August 10th high of 47.88. At the moment the market is a a very interesting point .. A line connecting the 1929 high of 386.10 in the Dow-Jones indus- trial average, and the 1948 high of 213.36, would be penetrated if the industrial average reached approximately 186. The figure varies slightly depending on whether 2 daily average or a weekly or monthly average is used. Also, a line drawn from the 1946 high through the 1948 high of 194.49 Ilas been slightly penetrated, or just about reached, depending again on whether a daily, weekly, or monthly chart is used. It is my oinion that both of these lines will be penetrated on the upside in the not too far distant future. Such a penetration would ind.catE the start of a broad upswing out of the accumUlation perioc of the last three years. However, I rather doubt that this acton will occur immediately. Temporarily, the market has become overbought and is in need of further correction or consolidation before an important upswing can be built on top of an already sharp intermediate upswing from the June lows. From a timing viewpoint, would expect the market to reach its 101 point some time in the next thirty days. This low may be at as high a level as 181-178, or as lOR as 175-171. In either case, I believe the low point should mark the beginning of a nore dynamic phase of the upswing initiated in June. We have advised taking some profits in the 180-183 area. Such profit taking was advt.sed in se',eral issues last week. Another is added in this letter Last Price Origlnally Recommended Standard Gas & El.4 pfd 24 5/8 This stock indicates higher levels over the longer term, but for the moment has reached its nearer term objective. September 16, 1949 EDMUND vi. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not to be constrlled as an offer or sollcJtatlon of offers to buy or sell any securities. From time to time Walston, Hoffman & Goodwin may hne an Interest In some or all of the securltles mentioned herein. The fOTetdoln9 material hal been preplued by us al a matter of Information only. It Is basad upon Information believed relil!ble but not neeess,ully complete, Is not gUl!ranteed liS aceurilte ot final, and Is not Intended to foreclose Independent InquIry.

TABELL'S MARKET LETTER The technical action of the past week has been mosDt igbeyn4c-41o41uraging. The decline of Monday and Tuesday brought both the short term and intermediate term gauges to a point that has corrected the overbought condition first registered in late August. On Wednesday, the short term gauge gave a buy signal. On Friday, the intermediate term gauge was very close to signalling a buy indication and confirming the shorter term gauge. The longer term gauge was strengthened by the fact that the industrial average, at the week's low of 177.63, had made a near testing of the two hundred day moving average at 175.25. The rails also are showing better action. At Friday's high of 47.93, the rail average fractionally bettered the August 10th high of 47.88. The rail average, however, is still considerably below the January high of 54.93 and the larch high of 49.86'. Ability of the market to give further constructive signals would not necessarily indicate that the market is on the verge of another important upmove of equal scope to the June-August rise. The inference to be drawn from the recent favorable action is that the market appears to be much less vulnerable to a severe decline than at any time within the recent past. Some more time may be required for some individual issues, to complete their potentially bullish formations, but there are many individual issues that have built up sufficiently constructive patterns to indicate a further rise with only normal corrective reactions. Such issues will be added to our list in followin6 letters and wires. I would switch out of the following issues in our recommended list Last Price.. Originally Reeoinmended American 'Seating Brooklyn Union Gas Sperry Corp 41 3/8 33 1/2 25 1/4 27 26 1/2 26 For repurchase advise the following issues in the recommended list Better Grade Issues Last Price Allis Chalmers American Cyanamid 30 3/8 46 3/4 Amer. Home Prod. 27 1/2 Borg Warner 46 1/2 C. 1.T. Finane ial Commercial Credit 54 3/8 53 3/4 Endicott Johnson 31 3/4 Federated Dept.Stores 30 General Time 20 1/8 Hewitt Robins 14 5/8 Intertype 28 1/2 Kresge 41 1/8 Phelps Dodge 42 1/4 Shell Union Oil 36 3/8 Stand.Steel Spring 16 1/8 Speculative Issues Last Price American Airlines 9 378 Amer.Power & Lt 12 1/8 Avco ' 5 1/2 Budd Company 11 Carrier Corp 14 3/4 Combustion Eng. 25 1/2 Continental Baking 15 1/2 Denver & Rio Grande 24 7/8 Distillers Seagram 16 1/2 Eastern Airlines 14 1/4 Inter.Min & Chern 30 1/8 Lowenstein 24 3/4 McKesson & Robbins 38 3/4 Niagara Hudson 13 1/2 Penn-Dixie Cement 22 1/8 Pressed Steel Car 6 Radio Corp 11 3/4 Reynolds Metals 19 3/4 St. Regis Paper 7 1/2 Schenley 29 Shamrock Oil & Gas 27 3/8 Studebaker 22 5/8 Sunshine Mining 11 1/8 United Mer.& Mfgrs 12 7/8 EDMUND w. TABELL SKil1fn'fl1all, n6r,b. JoghlJ III an offer or solicitation of offers to buLPl&JlrItlHOE 3m tUiLl'It,n' Goodwin may have an Interest In some or all of the securltlos mentioned harein. The foreqolng material ha5 been prepard by U5 as ,!' matter of 'nformatio,n only. It Is baed . IslIpon Information believed reliable but not necessarily complete, is not guaranteed as accurate or final -an, , t Intended to foreclose Independent Inqui ry.

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N, y, Digby 4141 The old adage of so close to the trees that you can't see the forest quite often applies to market conunent. At times we become so engrossed in the steel strike or devaluation and Whether the market will move up or down three or four pOints that we forget the important long term picture. The market has been in an extremely narrow trading range for three years. At no time during that period has the market moved more than 10 up or down from a median of 177 in the Dow-Jones industrial average. The only comparable trading was in 1923-1924 when the market backed and filled within 10 of 95 for seventeen months. The sequel was the great bull market of 1924-1929 when the industrial average reached a high of 381.44 in September, 1929. I believe that the thirty-six month trading range between 160 and 194 is an area of accumUlation that will eventually be penetrated on the upside and will result in price levels considerably above the 1946 top of 213.36 in the industrial average. I believe that the three year range is a period of accumulation with stocks passing from weak holders to stronger hands because the whole period has been marked by ,a feeling of pessimism and gloom that has only been equalled at the bottoms of great bear markets of the past. Distribution of securities usually takes place in a period of optimism with low yields, heavy public interest and high valuation of assets and earnings. The direct opposite is true today. It is possible today to buy conunon stocks at a level that will obtain over 2t times as much dividend income as from an equivalent investment in high grade bonds. This is regardless of the fact that most stocks are earning dividends more than twice over. The only other times this has happened has been during such periods as 1932 and 1942 at the bottom of the depression and at the bottom of our war fortunes. Furthermore, the market has failed to reflect the changing value of the dollar and the great rise in the current replacement value of plant and equipment or the millio'ns of dollars of new equipment. Many dividend paying stocks are selling at less than net current assets,placing no value on the physical plant. The abnormal short interest is another indication of the recent pessimism. The short interest in July was equal to 2.40 days of average trading. This was the highest ratio since 1931. On September 15th it was still equal to 2.31 days trading. However, in the face of all the investor fears of the past three years there has not been enough liquidation to drive prices below the narrow trading shelf. In the face of the long awaited decline in business, the market again held at the 160 level in June. This was substantially above the low of 150 based on the previous individual lows of the stocks in the industrial average. It would seem that the fears obsessing in- vestors for the last three years have lost their potency and the June low of 160.62 may be the starting point of an advance that will carry consider- ably above the 1946 high of 213.36. In view of these bullish potentials it would seem that only the short term trader is justified in waiting for a lower price level at which to accumulate holdings. There is a tremendous amount of investment money now held in cash or bonds awaiting investment in the final stages of the business readjustment. There have been four opportunities in the past three years to buy stocks in the lower part of my oft-mentioned 160-170 long term buying level. With the large amount of investment money awaiting such a decline, it seems improbable that the opportunity will occur again. A more likely probability is that the ultimate realization that the market has already largely discounted any further business readjustment will result in an important upswing as sideline investors come into the market. This buying urge will be augmented by the large short interest Some further consolidation of the rise from the June lows may be needed before the advance is resumed but, for the long term investor, stocks are at a long term bargain level. September 30, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN ( 1 This memorandum Is not to be construed liS an offer or solicitation of offers to buy or iell any securities. From time to time Waldon Hof!men & Goodwin may hove u infeferll some or all of the securltles mentioned horeln. The for0901ng material hlls been prepared by us as a matter of Information only, It is baled upon Information belJeved reliable but not ncceuarily complete, is not guaranteed a5 accurate or fina', and is not intended to forecloe independent Inquiry. )

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 A glance at the graph patterns of the twelve-hundred or more individual stocks in our chart portfolio indicates that the various issues are at different stages of development. The most favorable.issues have been building up accumulation patterns for the last three years and have already started their upward trend,or appear about ready to do so. Others are at a median point of their accumulation pattern and still require more work to complete the pattern. Still others appear to have reached their lows but have formed no base and will require an even longer period of accumulation before a worthwhile move is indicated. The last two groups consist mainly of the more speculative issues. The stocks in the favorable group fall roughly into two classifications. One classification is the so-called special situations. We have drawn your attention to a number of these in our letters. American Seating, Cities Service and Standard Gas 4 pfd are examples. The second classification in the favorable group consists of the high grade dividend paying stocks. In my opinion issues of this type can be bought with a minimum risk on the downside coupled with high return and much better than average prospects for 20 to 40 market appreciation over a period of time. With bond yields at record low levels, high grade common stocks can be bought to show more than twice as much return as on high grade bonds. This spread will narrow. With earnings stabilizing and less need for expanSion, many high grade common stocks could increase their dividends as they are today paying out much less than the usual percentage of earnings in dividends. But even if dividends remain the same, a lowering of yield must result in higher prices. A stock selling at 100 and paying 6 will yield 6. If the yield drops to 5, the stock will sell at 120 and if the yield drops to 4 the stock will sell at 150. As investor confidence returns, money will gradually move from high grade bonds to high grade preferreds to high grade or better grade common stocks. This has already started and will result in higher stock prices as the demand for this type of equity increases. The Exchange, monthly publication of the New York Stock EXChange, in March of this year listed a roster of 203 common stocks on the New York Stock Exchange which have paid cash dividends every year for 25 to 101 years. Many of these issues are selling at prices to yield over 6hig. h Tyhiee ldosppworitlul nniotyt tloasbtumyucihssluoensgeorf. this type at the present abnormally October 7, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum is not to huapyone tiInnfIonrmteartuiotnin bseolmieeveodr erbleellioacfobnlteshterbusueetdcunlrioSittiteisnn emcoefe5fnestarlroo,'r,'fe dscoonhmeerlpeta,et,1'oen, T0,efnf0oOi fteersouItoaabnU7'Je.eadOtefrllinaS'l \ahcaucnuyrbaeSteeKn loltirtfleienpsatl,ehdoanmbdy tIums eafl I, not oa tImmeettWer Intended aoldf oInn,'oHrmofaftmioann o&nlyG. oOItdwIsinbmelaeyd to foreclose Independent Inquiry.