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TABELL'S MARKET LETTER Although both averages penetrated the thirty-four month trading range on Monday on the basis of closing prices, the range still remains intact as far as the intra-day lows are concerned. The Dow-Jones industrial average reached an intra-day low of 160.49 in October, 1946. The intra-day low reached in the first hour Tuesday, June 14th, 'was 160.62. The rail average made its low in May, 1947 at 40.43. Tuesdays low was 40.88. The Dow-Jones 65-Stock index also reached its low in May 1947 at 56.56. Tuesdays low was 57.43. Wednesday's rally to 164.58 and 42.43 and 58.83 brought all the averages away from the thirty-four month lows. Whether these lows hold or not is problematical. Wednesday's action gave the impression that there is a good chance that they will. But whether they hold or not is, in my opinion, not terrifically important except from a short term trading point of view. The market is oversold on all the longer term trading pressure gauges. On one gauge the index is at an oversold point that has been lower on only three occasions Since 1940. At each of these times, the market soon started on a sharp upward move. Even if the lowest level were reached it should not carry the market much below 160. A downside penetration of the thirty-four month trading range at this time might be very similar to the upside penetration of the 1946-1948 range of 160-187 in May,1948. The average at that time carried on to only 194 and then built up a distribution area that started an intermediate downtrend that today is still in effect (over a year later). The trading range of the last thirty-four months is irregular. The top has been penetrated on two occasion. The July 1947 top at 187 was above the February 1947 top at 184 and the May 1948 top at 194 was above the July 1947 top at 187. On both occasions, the advance lost momentum and the market returned to its trading range. I continue to believe that the trading range of the last thirty-four months is an accumulation area. The broad pattern would not necessarily be destroyed by a temporary penetration into the 160-150 area. In fact, the potential base area has been greatly widened by the present dip. Furthermore, the downside objectives on the point and figure charts have almost all been approximately reached. Allowing for a normal margin of error, this would indicate a nearby reversal of important proportions. It must be remembered that if all the stocks in the Dow-Jones industrial average had reached their low at the same time during the last thirty four months, the average would have reached a low of about 150 instead of 160. Wednesday's rally was impressive and could indicate the start of a reversal. Normal action would point to resistance at 165-166 followed by a consolidation or a retesting of the recent lows. June 15, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum is not to be construed as an offer or solicitation of offers to buy or sell any securities. From time to time Walston, Hoffman & Goodwin may have an interest in some or all of the securities mentioned herein. The foregoing material has been prepared by us as a matter of information only if it based upon information believed reliable but not necessarily complete, is not guaranteed as accurate or final, and is not intended to foreclose independent inquiry.