The New York herald., 1922-06-21
FINANCIAL NEWS
AND COMMENT
Tremendous Covering of Short
Contracts Reverses Trend
in Stock Market.

A complete reversal of the trend of
stock market yesterday and the general
list. with but few exceptions. moved
upward with such display of buoyant
rallying power as to astonish and alarm
the shorts. 1t took but little buying of
most issues in the early trading to put
them up a point or two. and the ease
with which these slight rallies were ao-
complished frightened professional opey-
that they began to cover outstanding
commitments with little regard tq the
prices they were compelled to paU. 1t
wa: spe of those situations in, which
the bears decided to take, beck their
stocks at almost any cost and they were
made to pay in a. manner which was
extremely uncomfortable for them.
Stocks advanced from one TO ten points
and more at their high levels and with
a substantial part of the gains having
been recorded in the latetHrading. there
were few recessions from the highs OF
the day.
1t is hardly likely that there was
anything more to yesterdays market
than short covering Shrewd profess
sional traders had been on top of the
market for fortnight and knew about
how far they might go before they were
on dangerous gIbund. Evidently they
decided yesterd Ay that they had arrived
at the point where it were better to
turn about than to attempt resistance.
Whether yesterdays market marked the
end of the reaction and the resumption
Of the rise is moot question which
only time. can answer satisfactorily. 1t
rarely happens that upward movements
are started without the initial impetus
given,by a short covering movement. On
| the other hand, short covering movements
often have proven but temporary in
/ terruption of decline. The speed and
force of yesterdays rally, however. were
shch as to indicate that the most power
! full forces in the market were those COM
mitted to the bull side.
Mexican Petroleum again led the
rally, getting up to III ". an advance
from Mondays close Of 111a points ano
net gain of. approximately 35 points In
exactly a week. On only few occasions
have such demonstrations against a
| short interest been staged during a SIN
gle week. But in contrast with the mar
ket of Monday. this sharp upward ten
| dency spread to the remainder OF the
! list and heavy short interest in prac-
tically every department received ter
rifle beating. The success of the demon
| stration of Monday against the Mexican
OF! bears had lent courage to bull
traders and pool operators in other
issues and they no longer hesitated to
mark up their particular favorites.
| Foreign exchange rallied sharply
yesterday, after it's severe break on
Monday and at the close several cur
rencies had regained all Of the previous
days losses. Sterling was especially
strong. probably for the same reason
that the stock market was advanced sc
sharply--covering of short contracts
With any markets In the hands of pro-
fessionals as they were the last few
days, it is reasonably certain that specu.
lation, no matter what direction it may
be in, will be overdone, and corrective
measure soon applied. Francs and
marks, while strong. did not display the
same complete indifference to slight
pressure that was apparent in the mar
ket for sterling. but they nevertheless
scored substantially ON the day.
In the cotton market the upward
movement was interrupted for a short
time by professional efforts to catch the
turn, but these were unsuccessful and
as a result more new highs were re-
corded. Call money renewed at pei
cent and held the figure until just be-
fore the close when 1t dropped once more
to the years lowest figure of 2% pei
cent