The Washington times., 1922-06-11

There Is only one logical expiana-
tfon for the rather violent reaction
IN stock prices which began q little
after noon on Friday and con.
tinued until large number OF the
speculative leaders. which had been
moving In desultory fashion for the
greater part of the week, broke to
levels few points lower than those
on which the week was ushered In.
This weeks action OF the stock
market emphasizes the accuracy OF
the statement that bull market
requires more than cheap money
4 for its stimulus, for on Friday, just
before the reaction gathered It's fun
momentum, call money renewal
rates had been marked down to
3 per cent, the lowest in over four
years, long term brokers loans had
been negotiated at I per cent,
brokers hank loans had reached the
largest aggregate for the year to
date. and rates for bankers ac-
4 ceptances. the most reliable index
OF commercial credit, were at the
lowest In the history Of the Ameri-
can bull market.
A Sinking Spell.
II is an old-time axiom In Wall
Street that when stocks refuse TO
move higher. after prolonged up
ward movement, II is time to mark
them down. Professional operators
working for the decline and sue
.cessful longs who have accumulated
q fair amount Of paper profits, ara
gneraily the quickest to act on
this impulse and when q decline on
this basis has been inaugurated, II
. d.. I'D. ~ lxr oraf fhAra frlnn VI
uncovers the stop loss orders and
impaired margins on weekly held
small accounts.
About a month ago the stock
market experienced q similar sink
ing spell, to be revived by spectacu-
lar Developments In a number OF the
principal oil companies Of the coun-
try, and on this impetus. stocks Of
the speculative leaders were marked
up TO new high level for the year.
Prominent in this group were Mexi-
can Petroleum, California Petroleum,
Sinclair, Royal Dutch, Houston CH.
Marland, and Producers and Re.
liners. The steel stocks enjoyed a
temporary boom as the result of
mergers Of a number of the I'M
porfant companies; the tobacco
companies likewise, while the motor
shares had the stimulus of the
largest output on automobiles and
trucks in the recent history ofTths
industry. .s. u a+. e
BuIlish Bulletins. ,| 4
But even with ell these favorable
developments, professional Wall
Etreet has had many misgivings AZ
tn whether the level of prices had
not fully discounted anything that
the business situation could bring
forward for the balance of this year
at least. The large and more prcmi.
nent brokerage houses have con-.
tinued to send out their bullish bull
letins, most Of which point to the
sky as the limit for prices Of their
own favorites. But the rank and
file of speculators realize that even
this can be overdone, and, favii.g
been caught in such q trap 30 often,
they are not disposed to enlarge
their purchases whenever called vi on
20 do so. The midsummer season is
never conducive to to a bull move
ment in the stock market, though,
with the completion OF such i'm.
portant projects now under conte,n.
plation- or under actual negotiation,
Il was freely predicted that this
summer would be an exception Of
the general rule, a. prediction which.
however, does not seem to be BORNE
out by actual development.
A number of important factors Of
this week, outside Of the stock mar
ket itself. have had their effect upon
stock prices. The rise of cotton to
1855 cents a pound. the highest price
since October %. 1920; the fairly
bullish crop statement of the Federal
Department of Agriculture; the
steady Improvement Of sterling and
other European exchange: the an
nouncement of further wage reduc-
ton by the railroad labor board at
Chicago; the disappointing record Of
Congress during the week; the prac-
teal abandonment, for the time be-
ing at least, of the international loan
for Germany and the rather negative
results OF the conference between
representatives Of the Mexican re-
public and American bankers in the
matter of the settlement of the
Mexican debt, all have been matters
TO consider in estimating current
security values. .,r -. s.,
) AZ Steel Merger. ..-,
The local Lockwood committee and
the Federal Trade Commission at
Washington have furnished more or
less excitement In their examination