Technical Market Action My enforced vacation due to an infected foot, while rather boring; is at least giving me the opportunity of reviewing my portfolio of charts in a quiet atmosphere away from the usual distractions of a busy office and a moving () tape. While I have not completed the entire list, there are several conclusions that can be deduced from the patterns of the averages and of individual stocks. (1) In the face of the disturbing and confusing foreign news, which the headlines and radio have fully dramatized for the past two months, the market has held remarkably well. IAt the extreme lows of last week, the market was less than five points lower than the July lows. (2) In the face of a downtrend, quite a few individual grous have shown better than market action. These groups can be sub-divided into two classifications. In the first classification are groups that have shown excellent technical action for a long time. ,The steel and rails are an example. In the second classification, on the other hand, are groups that have had unfavorable patterns for a long time but now seem to have reached their lows and are beginning to build up fairly sizeable potential base patterns. They are in industries that appear to have about completed their readjustment period. The rubbers, retail issues, liquors and others are in this classification. More about this second classification in our next letter. Getting back to the steels, they continue to show excellent technical action. In fact, the patterns of individual steel stocks are now similar to those of the oil stocks before they started their spectacular rise which 'culminated in July. The tabulation below shows that an average of five leading steel stocks failed, in Septem- ber,to break to the lows of August. Last August Low Week Low Week Low Sfl12t 12th Se12t.26th 1948 High Dow-Jones Ind. 5 Steels u.s. Steel 179.16 52.0 79 1/4 177.40 49.2 75 1/4 176.94 50.6 77 1/4 175.84 50.05 77 1/4 Bethlehem Steel 35 3/4 34 34 7/8 34 1/8 Republic Steel 29 5/8 26 5/8 28 1/8 27 1/2 Jones & Laughlin 35 1/4 33 3/8 33 5/8 33 1/4 Youngstown Sheet 80 1/2 76 3/4 79 78 1/8 Misprinted as 49.6 in Sept.22nd letter. 194.49 83 1/2 38 31 7/8 37 3/4 87 1/2 The rails also have excellent technical patterns. Listed below are the rail issues in my recommended list. Medium Grade S12eculative Atchison,Topeka & S.F. Baltimore & Ohio Atlantic Coast Line Baltimore & Ohio,pfd. Chicago,Northwest Chicago &East. Ill. R.R. A Northern Pacific Chicago Gt. West Cum. pfd Southern Pacific Chicago,Ind. & Louis A Chicago,Mil. & St. Paul pfd Consolidated R.R. Cuba,pfd Delaware,Lack. & Western Denver & Rio Grande W. Gulf,Mobile & Ohio Illinois Central Kansas City Southern Rwy. Minneapolis, St.Paul & S.S.M. St.Louis San Francisco Seaboard Airline,common & pfd. Western Maryland,common & 2nd pfd. Western Pacific Railroad October 4, 1948 EDMUND W.TABELL SHIELDS & COMPANY The opinions expressed in this lett.r are the personal interpretations of charts by Mr. fdmund W. Tabell and are not presented as the opinions of Shields & Company.

Technical Market Action The market continued its advance on WednesdaY and reached new high territory on the advance from the September lows of 175.84 and 57.42. Wednesday's highs were 184.25 and 60.55. Volume was 830,000 shares. Ability of the market to advance on volume of a million shares or over, would b a very constructive indication. Continue to believe that the steels will be the market leaders of the next advancing phase of the market. Even with Wednesday's upswing, the market has been a pretty affair. C. Norman Stabler, New York Herald-Tribune financial editor, summed it up very nicely in the edition of October 12th when he said -Trading is dull in the greatest securities market place in the world, there is a complete pblic apathy toward the selling prices of shares in the corporations that are supplying the goods the world lives on. Just who should be abused for this condition is a questiQn, and there are those'who would suggest as suitable candidates the members of the Securities and Exchange Commission, the 'money lenders' of Wall Street, the Communists, bankers or some other indefinite group not currently popular with the speaker. The fact remains that the present situation is amazing, and also disturbing, for the capitalistic system exists on a plan of continual reinvestment in enterprise. The reinvestment must come from those who earn money. It rests on savings and the reinvestment of such savings. It involves risk, with justifiable rewards when the risk turns out to have supplied society with something it wants. This is all copy-book stuff, familiar to all, but apparently forgotten,at the moment. The stock market, which is supposed to point the way the big financiers are going, is failing miserably. Yields and high earnings against low selling price, apparently mean nothing. There is a lack of willingness to take a risk. There is a disinclination to reinvest savings. There is doubt as to whether the giant of all times, the American industrial empire, which won two wars and gave its people a higher standard of living than ever even dreamed of before, will be able to keep it up. The explanation for such anomolies will have to come from,those who believe them, it cannot come from one who regards such thoughts as mental meanderings in a maze of misinformation. It Regardless of temporary minor fluctuations, I am firmly conthat the market at today's prices is greatly undervalued held back only by intangible fears. When this situation will change or what will change it, 1 do not pretend to know. Putllic psychology is a funny thing and anyone of twenty things could change it overnight When it changes, the present prices, yields and priceto-earnings ratios will not remain at these abnormally low levels for very long. EDMUND W. TABELL 1948 SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 183.84 60.46 68.65 \, The opinions expreued in this letter are the personlll IntefpretalioM of (harts by Mr. Edmund W. Tabell and are not presented as the opinions of Shiekb & Company.

Technical Market Action The market continues to move ahead on slowly 'increasing volume. Despite the fact that since the September 27th lows the market has rallied over eleven points, the advance has been orderly and, as yet, there are no signs of an overbought position. The pace of the advance has been truly remarkable. In the last twenty trading days, the industrial average has advanced on sixteen days and declined on only three. This average has closed higher for the last nine successive trading days. The action of the rails has not been quite as impressive. The rail average, during the same period of time, has advanced on twelve days and declined on seven. In addition, while the industrial average at Wednesday's high of 187.00 has decisively penetrated the September 7th intra-day high of 185.64, the rails at Wednesday's high of 61.41 were still quite a distance away from the comparable 63.25 high of September 7th. However, the rail average has had an equally good percentage advance from the September lows and over the longer term, the rail average is ahead of the industrials. Per-haps it is only normal that they pause and wait for the industrials to catch up. After an advance such as we have witnessed for the last three weeks, it could be in order for the whole market to pause and consolidate. However, recent market action indicates that at this stage, such a consolidation would be minor and of short duration. The action of the steel stocks has been very impressive. Almost every important issue has reached new high territory — not only for the year but for over two years . Most of the steel issues have held in narrow trading ranges for the last four or five months. U. S. Steel, for example, has held in the 76-83 range. In most cases, these ranges have been penetrated on the upside. The upside price objectives for the intermediate term suggest higher levels. Listed below are some of the leading steel issues in my recommended list together with thei'r upside objectives if the 1948 high is penetrated. 1948 HU!ih Wednesday's High Upside Ob,jective Armco Steel Colorado Fuel & Iron Jones & Laughlin Republic Steel Sharon Steel U. S. Steel Wheeling Steel Youngstown Sheet & T. 32 3/8 20 5/8 37 3/4 31 7/8 44 1/8 83 1/2 56 1/4 87 1/2 31 1/4 21 39 32 3/8 45 1/4 84 1/2 56 3/4 86 3/4 41 43 25 – 29 49 39 52 88 – 90 63 – 65 99 – 101 U.S.Steel also has a 101 objective that could be reached during this intermediate advance. The steels are in a definite uptrend with only minor dips indicated. I October 20, 1948 EDMUND W. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials Dow-Jones Rails Dow-Jones 65-Stock 186.51 61.09 69.53 , ,- , The opinions expressed 1n this leHer are the personal interpretations of charts by Mr. Edmund W. labell and are not presented as the optnions of Shields & Company.

Technical Market Action The market had a mild reaction on Monday with the industrial average closing 67t lower and the rails 51t down. Since, prior to Monday, the industrial average had advanced in eleven out of the last twelve trading days, Monday's correction should come as no great shock or surprise. In fact, the mildness of the correction was quite sur- prising. From the action of the various graphs and indicators, it would seem that the market has not quite yet become sufficiently overbought to' indicate more than nominal-corrections at the moment. The industrial average is, of course, just below very heavy overhead resistance of the May-June top. During this period, an extremely large volume of trading took place in the 190-194 range. Obviously, it is going to take some time for the average to penetrate. However, individual groups and stocks, have alreadY penetrated this resistance and I expect this selective action to continue. The steels are a case in point. As you know, this letter has been mentioning the steels as the best acting group eve'r since the September lows when U.S.Steel was almost ten pOints lower. The steels, at that time. had a formation similar to the oil stocks before that group started its sensational rise which culminated in July. As noted in the last letter dated October 20th, the upside objectives for the shorter and intermediate term still indicate higher prices for the steel group. Would expect other groups to join the uptrend as the market broadens out. The rails were also one of my favored groups .. So far they have been rather disappointing. Whi1e, percentagewise, they have advanced as much as the industrials, thy have not yet 'been able to penetrate the September 7th high of 63.25 or the September 2nd high of 63.36. However,. I believe the rails will shortly penetrate the September highs and become one of the stronger groups. Believe the following rail issues in my recommended list are attractive Atchison, Topeka & Santa Fe (117t), Baltimore & Ohio,pfd. (24t), Chicago North Western (19-li-) , Chicago,Milwaukee & St. Paul,pfd, (36), Gulf,Mobile & Ohio (17i), Illinois Central (37-li-) Northern Pacific (2Qf), St. Louis-San Francisco (14i), Seaboard Air Line (24-li-), and Southern Pacific (6ot). October 25, 1948 EDMUND W. TABELL SHIELDS & COMPANY Closings Dow Jones Industrials Dow Jones Rails Dow Jones 65-Stock 189.52 61.73 70.39 The opinions .JIlpressed in this '….r …. the p.noMI Interpretation. of cherb by Mr. Edmund W. labell end are not presented as the opinions of Shield. 6 Company.

– – – – – – – – – – – – – – – – – – — – – – – – — —– – – – – — Technical Market Action At Thursday's low of 187.29, the industrial average had declined 3.29 from the recent high of 190.88. Considering the rise of more than fifteen points from the September 28th low of 175.84, the correction has been very moderate. -It is possible that it may carry a bit lower to 185 which would be a one-third correction of the month old advance. However, I am more inclined to favor the 187-186 area as the correction objective. This area is approximately the top of the broad July-September trading range and should furnish strQng support. In other words, the market at Thursday's lows was very close to what should be a logical rallying point. Of course, the area between 188 and 194 is not going to be an easy one to penetrate. In May-July, the industrial average held in this area with a heavy volume turnover of over 70 million shares. Obviously, it may take some time and certainly increasing volume before this stock is absorbed. However, it is significant that quite a. few market leaders have been able to penetrate the year's highs. Bethlehem Steel, General Motors, U.S. Steel, Dow Chemical, Youngstown Sheet & Tube are all in this category. Believe this selective type of action will continue. Consider the steels and motors as the most attractive groups. The rails have been laggard but could easily swing into the picture. I believe the market, subject to some very minor weakness, is at a buying point for another assault at the 190-194 resistance area. The following issues, among others, are showing better than average technical action. Alleghany Corp.Pfd., Colorado Fuel, Consolidated R.R. of Cuba, Pfd., Copperweld Steel, Cooper Bessemer, Central R. R. of N.J., Electric Power & Light, Jones & Laughlin, Penn-Dixie Cement, Republic Steel, Sharon Steel, A.O. Smith, Seaboard Air Line, Standard Gas 4 pfd., U.S. Pipe, U.S. Steel, Wheeling Steel and Youngstown Sheet & Tube. October 28, 1948 EDMUND W. TABELL SHIELDS & COMPANY Closings Dow-Jones Industrials 187.73 Dow-Jones Rails 61.23 Dow-Jones 65-Stock 69.76 tn. opinions .xpreued In ,hi. letter .,. 'h' ptlrlonal Int,rpretMlon, of charb by Mr. Edmund W. label! end are not presented es the opinions of Shield Company.