Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1922-05-08
CONFIDENCEIN
UPWARD TREND
SEEMS ABIDING
Experienced Operators Know
RecessiOns of Prices
Must Come.
Special to Indiana Daily Times
and Philadelphia Public Ledger.
nv NvnNITnR

Special to Indiana Daily Times
and Philadelphia Public Ledger.
BY MONITOR.
NEW YORK May SIN spite of more
or less backing and filing in the last
week, sentiment throughout the Street
shows abiding confidence in the continu-
ance If the upward movement COM
posite of well Informed operation might
he expected about as follows: Reactions
in the general list may be expected after
a period Of heavy trading and rising
prices or upon the receipt OF any un-
favorable surprise in news or develop
ments attending this unsettled period OF
reconstruction. Sharp setbacks may oc-
cur in groups of stocks or special issues
that have been over-bulled and thus IN
vite profit taking, or where sudden dis
appointment causes liquidation.
Every experienced market operator.
however, knows that recessions of this
character are Incidental to all upward
movements. They are welcome. except
to the unwary or impetuoIs who have
been carried away by enthusiasm and
made their heaviest commitments at the
top. The health of the market can be
preserved only by this continual process
of churning and automatic liquidation.
On the other hand, 1t Is felt that there
are no present indications of major
reversal in market form. For one thing,
the money situation continues strongly
I. .orable to a continuance of the upward
movement. The downward tendency Of
commercial paper rates is construed as
an indication of further ease and abun-
dance of money. Until a sharp advance
and persistent hardening in the rates for
commercial paper gives the signal that
business is going TO make Its legitimate
demand for funds, there will be no evil
dence that the security markets will be
subjected TO the approach OF stringency
that generally means the elimination OF
the upward movement.
In ition to this there is a dispo-
stion to go more deeply into the
economic influences behind the strength
in securities, thereby meaning the big
forces which the market is endeavoring
10 discount and express. The present
bull market is different from its most
recent predecessor that Of 1919. In that
year We witnessed the heyday Of in
flation and riotous consumption. The
war was just over and instead of de-
voting our capital to the repair of tie
ravages. we found ourselves In the midst
of an orgy of luxury buying. There was
no limit to the demand for silk shirts.
furs. diamonds and monographs. Our
plant equipment. our housing. our rail-
roads, all Of which had deteriorated
during the war. were left to shift for
themselves. Production during the war
had been developed only along special
lied Iines-lines ill-suited to rehabilita-
ton or peace. The market was largely
financed by the sale OF Liberty bonds
which sank in price. while specialtfes
and wildcat oil shares scared
Notwithstanding the uncertainties re-
garding action on rates and wages. a
feeling Of optimism prevades the street
toward the railroad shares. The March
earnings of the roads, appro1imating 8
per cent for the class / carriers and the
belief that beneficial consultations will
be undertaken before the year is out pro-
vide sound basis for encouragement.
In spite of the strength and activity
in certain Of the oil shares, the popu-
larity Of this group continues practically
undated. Refined products already have
made some advance In price. and other
rises are in prospect. Perhaps the most
encouraging feature OF the whole situa-
tion is the increased demand for fuel oil.
The decision of the Chicago & North
western to convert its locomotives into
oil burners is merely an indication of
present industrial tendencies Fuel oil
has been more or less OF a drug on the
market owing to the lessened demand
by shipping. and stocks until recently
have piled up to an extent that made the
storage of crude troublesome problem
A great many stationary plants are con-
verting from coal TO fuel oil and the de-
mand for this product has grown con-
81 in, In
believed that it is only question of a
short time before crude prices are marked
up substantially
The position OF staple commodities is
improving. Copper is tirm and wool mar
kets have been very strong. Sales at Bos-
ton apparently have been limited chiefly
by the reduced stocks on which business
has been based The leading interest in
the wooden industry has made another
advance in the price of its products Cot
ton is stronger, partly on account Of re-
ports OF crop damage, although the
underlying factor of demand Is a much
more important element. The Department
OF Commerce this week called attention to
the fact that world consum ption of cot
ton had arrived practically at the IRE
war level with an indicated absorption
for the current year Of about 81 600 00O
bales. This includes all kinds Of cotton
and compares with the consumption last
year OF approximately 100000 bales.
There are strong Indications that fully
T5.100OO0 beies OF American cotton will
he required for the season. beginning
Aug. l this year. and with the Indifferent
start of the crop as the result of foods
in Mississippi valley and Texas consum-
ing manufacturers are showing consid
cradle anxiety over the source Of their
SUPPLY of raw material.
In financial circles here the backing
and filing at Genoa has been accepted as
mat,er Of course. Economic progress
has been retarded by political pickering
hut the urgent needs Of Europe, 1t is
felt. viii force a composition Of differ
ences and permit the program of re-
babilitatfon to be carried out. Flurries of
anxiety are to be expected, but the ten
dency is enthusiastically toward a restora-
ton OF industry and credit.
The rise In sterling to a new high level
since 1919 of S4.i5, probably furnishes
the best barometer OF European progress.
The strength in the pound, of course, is
due to something besides British conf
dence in ultimate European stability 1t
is based partly on sound fiscal admins
tration. moderate imports. increasing ex
ports, and an improving trade balance
Nevertheless Its recovery would not have
been possible had there been expectation
~ Europeap chaos