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Technical Market Action As su;,gcsted in yesterday's lettr, the lews of Wednesday marked an im- porte.l'Jt trading turn jn the market. Thursday's folarket was strong and on volume of 2,3Go,OOO shares advanced on the i.ndustrials and ;n.34 on the rails. The nlly from the V2dnesday lows 00 jhe 'L'mrsday's high was t.'1e i.ndus- trials and on th.e rails. Just how far the present rally will CL\ITj' is problematl ca.1. Rallies from ar oversold market most always occur ra;)i.ily and Vii.thout the of prior base pat.tcrn. Irom the high of approx.imately 213 the market 3') poinLs to 17! A thinl rctraccmc,nt would carr,,' to tto averc(;es back t.o 187 ,!'hile a one ha f retrflcement \f(mld ffi'3an a rally to ab0ut. 193. 1'112 first upside resistance ie 185 so w,)uld bu in'olined to select the 185-190 arC'a as the pre3ent rally objective. Aft.er thjs rally reaches its top, the nornal expcctat'on would be a second- ary rtnctiolJ and tec,tln of th, Wednesday loi\' of 173.6,4. A testing of the 10' would not necE-ssarl1y mefln R rnb.ct.ion bacte to Lhe 101 hIt rather a that ho LdG abov8 the previous 1m.. As an e;cample, if the market rc,.cpea 187 on this rally, Ii recction back to 179 'il0uLd bE a twsting of the low. Tnen.if the 1'181-kt raLlies above the 187 figure a change in tho trend would bs inciice.ted. Wai ti.ng for such a signal may be qUi t.e a process and would mean buying at a connid('rable distance the 1,)V1s. Tn fact, that is the mFlin dis- advan rcge of the Do, the0ry. (lnly aftf)r tl10 nveror,e had de,dined 27 poin,s did tho Dow 4-heory a bea' market by brelhng the February 10Vi. It. be ironic if' it turned 0'1.1. that a day aftC'r tho t)('ar market was Signalled, e new bull mClriwt started. A comparable situation occurred in 1939 ;1n approximately on, week aftr a b0ar market, signal ',JaS giVEn a new htS-1 market. started under the Dow th,;ory. Rather th3.l'l wait for the Lype of outlineri. above, Vlould utt.E'mpt t.o rick the bottom of the current decline. lleli.,vr; th,,-t. it ls on even possibilHy tha t tb, 1011 of i'IGdnt!sdAY WLre the lowe of the d'Jcline. ThE'S w('re approxi- matelY the same as the' mr\ximum domside p'ice objectiYes (1)t.lined in our letter of July 24th. rurther confi rmation is f,iven by the ct.ion or the Ne'1 York 'rime; and Nml York H8rald-1'ribUI'e averagee. The Mf!'ch j 0 Filay top a dedine to 120 on the Times nd 122 on th8 Herald-Tribune. At Wednesday's 1m'!!;, t.ely 119 and 121 \'lore reached. At Ikdnenday's lo,.'s . a great many individual. iSc,USB also reached theIr sUP1Jort lev('ls. Would bE. inclined to watch the action of indj.vidual i83118S from he'e on rather than the aVernr;p.E. Even ,r the aVF.rager. at some bubsec,uent date react hclDi'- Wednesday's lows, beli. eve, the!'e are many i.ncliv.idual issueR that reached or approximlit.dy reached their lows on that datp. During the next week, will endeavor to Est the more inportant of t.hese j,ssues. ED'WHD W. TABELL SHIELDS & COMPANY September 5, 19,46 Plosinr; Dow-J onc's Inrlustrj.als Dow-J'ones Rails Dow-Jones b5-Stock 181.18 53.79 66.42 The opinions e.pressed in titis letter are the penonal interpretation of charts by Mr. Edmund W. T.hflll find ,.re nct presented as the opinions of Shield. & Company.