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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.