New-York tribune., 1920-02-14
Heavy Covering
By Shorts Puts
Stock Prices Up
Speculative Issues RNlly
Sharply After Outburst of
Liquidation Carries Quo.
tations to New Low Levels

Speculative securities were carried
down to new low ground yesterday
when heavy liquidation hit the market
at time when demand was conspicu-
ously absent; but they rebounded with
surprising vigor, and at the close the
general level of prices waA substan-
TALLY above that prevailing at The end
of Wednesdays session. 1t was the
| first important rally the market has
had since the slump began on Febru-
ary 8.
The recovery undoubtedly was caused
chiefly by purchases of those who had
previously sold short in expectation of
the decline.
There was some buying for long ac-
count by spectators who foresaw the
rally and even little investment buy
ing coming from so-called "bargain
} hunters" but it was the shorts who
were really responsible for the upward
responsible for the decline.
The market opened with prices fairly
stable. and for time it fuctuated in
an uncertain manner. Toward the end
of the first half hour, however. liqui-
dation broke out afresh as holders who
had been looking for a rally became
discouraged and decided to get out
from under Their sales we're supple
mented by large short operations, as
the bears were quick to take advantage
OF the situation and exerted the ut
most pressure on all stocks which dis
played signs of special weakness. In
terest centered largely on United States
Stee! common, which has been the mar
ket leader, and spectators fairly held
their breath as the price of this issue
broke swiftly through the old low and
hnally touched 95, the Slowest price in
many months. Meanwhile, nearly the
whole industrial list-the rails, as a
rule, were fairly stable-was tumbling,
General Motors dropped to new low for
the year at 22SA, Baldwin Locomotive
70 TO lo3 72, Republic Steel to 9Sas, United
States Industrial Alcohol to 771z, Ma
Tlno preferred to 761a, and so on.
Losses of point or more between
sales were common, and for time it
looked as If serious collapse might
ensue.
But when Steel common touched 95
1T found considerable support, enough
to END its decline and cause q slight
recovery This proved to be the pivot
on which The whole market turned, for
When Steel firmed UP the decline in
the rest OF the list was checked. For
some time after the decline was halted
the market was relatively dull and
without pronounced trend. But we'll
shorts began to cover. When they did
SO they discovered that the market was
III temporarily oversold condition.
AS always happens, this made the de-
mand all the more urgent and prices
were bid up rapidly. The covering
movement apparently was not cons
pleted yesterday. for stocks were in
strong demand right al the close. At
the same time brokers' were inclined to
believe that a very substantial part
CT the short interest had been covered.
AS usual sentiment huctuated with
tthc market: A good many traders and
brokers who were pessimistic when
prices were falling were convinced in
about been completed and that here
after the trend would be Upward. They
argued that the break had pretty we'll
discounted any depression in business
that might come and pointed out that
the liquidation in commodities had been
much slower than was expected at the
time the Federal Reserve Bank raised
its rediscount rates as part of the
plan to bring about defation. A good
many shrewd market judges, l.owever,
said that what happened Yesterday was
SIMPLY oeldteQ rally, Sucn as is to be
expected in the course of any sustained
downward movement of security prices.
Money renewed at per cent yester-
day, the lowest renewal rate for some
time, and later dropped to per cent
The ease of money naturally helped
the market, but it was by no means
the pivotal factor.
The bond market was very active
and in general followed the course of
the stock market. Foreign exchanges
were stable