The Washington herald., 1907-05-23
WALL STREET NOTES
Bears Effect Vicious Drive at
Prices on Opening.
SPECULATORS HAVE TROUBLE

Reading Breaks Quickly To 0s 1-2,
and New York Central weakens
Under Rumors of Big Loan-Syndi-
cate Credited with Stopping Fall
of Union Pacific at I33.
New York. May EN- some quarters
the sharp break in prices in the first half
nour Of business to-day was attributed
10 the selling by the commission houses
of stocks carried for the account Of Gus
toners who had failed 70 respond to the
calls for additional margins sent out at
the end OF the preceding day. But while
this was probably factor, Il IS doubtful
If it was the principal one II can hardly
be questioned that bearsh attack was
far more influential There We're stop
orders left in the market, and these the
bears worked to set. They got them. To
/ do So involved a vicious drive at prices
and that such a drive should be made at
the end Of the downward movement was
/ entirely in accordance with precedent
| II gave the bears low level for covering
who were able 90 pass through IL safely
/ fer il eliminated their weaker brethren
whose position constituted one Of the
/ worst elements in the situation.
/ on the early break prices went so near
the low level Of March last that many Of
the so-caIad investors" who had bought
stock az that time, believing that It would
be safe 10 hold them for long time, be
/ came discouraged and threw thcr hold
/ ings over. lest they might incur a Joss
/ where they had hoped for a profit They
/ had a fair opportunity 90 harvest profits.
/ bat had neglected q, and seemingly last
/ their nerve at the time when they should
! have taken heart Tor another rise That
/ they threw over their stocks On such
| circumstances amounted 90 proof that
/ they We're not investors at all. Instead of
/ investing they had merely speculated
when they saw the market begin % rise
/ on the chance that prices would not drop
/ back 90 the old level asaiu.
/ The sharpest break anywhere in the
/ first half hour was suffered by Reading,
which went down % gSl2, without meeting
any support 90 speak of. The stock FUR
nsaed a typical instance Of cunning for
stop orders which were caught in album
/ dance when the price dropped % par.
| The stop orders caught In Reading at par
and under to-day did not represent the
closing out Of contracts for the rise eu-
tered into by floor traders OF professional
operators. The stops Of such interests
/ had been caught long before. Il was the
investors who had bought the stock
after the March break, who were uneasy
/ lest it should get down 90 a new low level
for that year, that let go.
Perhaps the most dis-0uragiug feature
of the market lu the first hour or so was
The weakness Of New York Central
which brought recurrence Of the rUmors
about the raising 0f new capital When
these rumors had been heard on q prev
i8us occasion they asserted that the road
would endelyor to provide for IT'S needs
by sale 9f equipment trust notes to-day
it was said that the financing would Doe
of the short time kind, but beyond this
difference there was nothing new I'm the
stories circulated.
Surmise as TO the source Of the Iqulda-
ti0n. as plainly seen in New York Central. |
did not stis5 at trfes It dealt with
names as high as any in the financial
armament. and presumed 10 tell how
great was the loss on some Of the stocks /
thrown upon the market II made mo- at- .
tempt 20 conceal !ts contempt for the T.
theory that Jhe selling was Of speculative I.
kind 20 discount the announcement Of O /
plan 90 raise new capital, and boldly as I.
serted that a better reason would be- /.
found later on.
At 153 good support was lent TO Union 4
Pacific. and the effect on re general list /
was wholesome. Nothing I'm the maisxet .
I'm the last few days had given rise % so I
much uncas.uess as the weakness in this /
stock The sight OF q 10 per cent railroad /
security selling under l55 naturally led
traders IN question the reason, and the
more they questioned. while the price
continued 20 go down. the more afraid .
they became that something serious was
wrong. At Yesterdays low point the yield .
on the market price was about - per .
cent rate much higher than the iu-
vesror expects to find combined with .
safety.
Rightly or wrongly. credit for the sup
port that turned the market for Union .
Pacific and made this stock the leader .
in a general recovery was given 20 the /
syndicate that has underwritten the con-
vertible bonds and undertaken the task
of making "A success Of the fotation OF the .
new securities. It was the first time that
anything Ike aggressive support had .
been seen. previous symptoms having
proved ilusory Organized and well sug-
tanned support it was, and when the bears
found il So they started on the rush % |
cover. a rather encourag ginC feature was
the increased number of odd lot trausac-
ti0us which seemed to indicate that tho
small investor had again come into the .
market. The traders as a rule took the .
long side after the rally had assumed .
some vigoT, and although many of them
had fair profits before closing time. they
retained their position on the bull side.
believing that the upward movement
would continue for s0me time longer.
While the selling that caused the de-
cline in Union Pacific had ceased the
street is still interested in discussion Of
what caused it. Not the least interesting
Of the attempted explanations is that
members of the syndicate may have sold
the stock as a hedge against their partici-
patton I'm the underwriting. Some Of the
subscribers 70 the syndicate we're not
overpleased on receiving their allotments
to find that they had been allotted 50 per
cent of the amount they had applied for
They did not expect more than about N
per cent and when they found that the
support Of the stock was not as good as
they had expected they became apprehen-
sivc that they might have larger share \
of bonds turned over to them next fall
than they could easily handle II the
bonds rose in price all would be well;
but if the stock declined and the bonds
declined with it, and they held both. they
might find their situation uncomfortable