The Railroad Curve is based on the Dow Jones’ 20 Railroad Stock Averages published by the Wall Street Journal. The issues used in these Averages are as follows; - Atchison, Atlantic Coast, B. & 0, Canadian Pacific, Ches. & Ohio; Rock Island, Del. Lackawanna&. Western, Erie, Illinois Central, Louisville & Nashville, N.Y. Central, New Haven, Norfolk & Western, Northern Pacific, Pennsylvania,Pere Marquette, Southern Pacific, Southern Railway, Texas & Pacific, and Union Pacific.
From the low in June 1921, to the high in November 1928, these Railroad Averages advanced nearly 80 points. They have made the highest price in history, getting above the extreme high level recorded in 1906. The fact that they advanced into new territory in the latter part of 1928 shows the possibility of many rails, which are in strong position going higher during 1929. But the fact that during prosperous times the railroads have been unable to earn an average of 6% on their capitalization does not make them very attractive from a speculative standpoint. Only those, which have merit and show large earnings, will have very big advances during 1929.
From the low in June 1921, to the high in November 1928, these Railroad Averages advanced nearly 80 points. They have made the highest price in history, getting above the extreme high level recorded in 1906. The fact that they advanced into new territory in the latter part of 1928 shows the possibility of many rails, which are in strong position going higher during 1929. But the fact that during prosperous times the railroads have been unable to earn an average of 6% on their capitalization does not make them very attractive from a speculative standpoint. Only those, which have merit and show large earnings, will have very big advances during 1929.
The fluctuations between extreme high and extreme low during 1929 are not likely to be less than 20 points and the average may be as high as 30 to 35 points, which means that many high - priced stocks will fluctuate 50 to 75 points between extreme high and low.
The Rails as a rule follow the forecast trend better than the Industrials because they represent only one group of stocks while the Industrials represent fifteen or twenty different groups. The Dow Jones’ 20 Railroad Stock Averages are representative of the railroad group and most of the railroads will follow Curve #1 very closely, therefore it is not necessary to give Curve #2 this year.
Railroad Curve #1, you will notice on page #2, runs down from January 2nd and bottom is indicated around the 5th to 7th. Top for the month of January is indicated around the 15th and after this date the main trend is down, prices working lower and reaching first bottom around March 9th to 11th and second bottom around March 28th to 29th. Accumulation should take place around this time and a bull campaign should start. First top is indicated around May 3rd to 4th; then a decline, followed by an advance with second top, possibly a little higher, around June 3rd. Then another decline and irregular market, reaching low level around June 28th and 29th. After that prices will work higher until around July 15th; then decline to the 22nd, followed by an advance to around August 8th to 9th, when final top on rails should be made for another big decline. After this top, prices will work lower from every rally. A big decline is indicated for September; another sharp decline in October, reaching bottom around the 23rd to 24th; then a rally running to around November 21st to 2nd followed by a decline to December 24th, when the 20 Rails will reach the lowest price of the year.
The following Rails are in the strongest position and should have the greatest advances at the times when the bull campaigns are indica
| Atlantic Coast Line Bangor & Aroostook Brooklyn Man. Transit Chicago Gt. Western C.M. & St. Paul Com. C.M. & St. Paul Pfd. | Del. Lackawanna & W. Erie Gt. Northern Pfd. Hudson & Manhattan Kansas City Southern Mo. Kansas & Texas | Missouri Pacific New Haven Northern Pacific Seaboard Air Line Wabash Common Western Maryland | |
The Railroad stocks given below are those, which are in the weakest technical position; have had advances and show distribution. They will be the best short sales on rallies during the times that the Forecast indicates declines. | |||
| Atchison Baltimore & Ohio Canadian Pacific Chesapeake & Ohio Rock Island Delaware & Hudson | Lehigh Valley Louisville & Nash. N.Y. Central Norfolk & Western Pere Marquette Texas Pacific Union Pacifi | AtchisoPittsburgh & W. Va Reading St. Louis & San Fran St. Louis & S.W Southern Pacific Southern Railway | |
3 comments:
Thanks for sharing this post of fluctuations and major swings in railroad stocks.
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