Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-31
ACTION OF STOCKS
D|SCLOSES BELIEF
IN TRADE RECOVERY
Break in Dark Business
Clouds Is Found by Pro-
feSSionaI Traders.
SCOPE OF IMPROVEMENT
is DECLARED DOUBTFUL
Reasons for Recent Gains in Mar
ket Are Cited-Sentiment
Better.
BY CHARLES F. sPEARE.

Special Dispatch to The Star.
NEW YORK, August 30.-Scanning
the business skies with anxious dill
gence, Wall Streets weather observers
this week have discovered here and
there break in the clouds. Reports
from the steel centers have been more
encouraging, and good news has come
from the textile trade. The improve
ment has been slight, but the financial
community believes it to be significant,
and the professional operators who are
in undisputed control of the stock
market have been bidding up prices on
this theory.
Whether they are correct in their
deductions or not is something that the
future will have to reveal, but one
thing is certain, they have no CO.
operation from the public in their eff
forts. Trading has been purely pro-
fessiopal, much of it originating on the
floor, with the outside Spectator mani
Testing superb indifference. The truth
of the matter is that it is not only the
{ business man that has his troubles but
the broker who looks in vain for COM
missions and who in many cases is not
covering overhead.
Bull Arguments.
Now, this is not to say that the
professional is in the wrong in his
attitude toward the market. All broad
upward movements in stocks originate
not with the outside but with the men
whose business it is to trade. Perhaps
it will be helpful at this point to sum-
Marie the arguments which have been
used to advance quotations. None OF
them is new, that is to say, they have
been heard more or less continuously
since the June collapse, but they are
accorded more respect now than at any
time hitherto.
The first is the action of the market
itself. There are no large blocks of
stock TO be liquidated or if there are
the fact has been successfully con-
cealed in the past i've sessions on the
exchange. There have been weak spots,
but always there has been a specific
reason for the weakness. The general
list has gone on undisturbed by the out
burst of selling in individual stocks.
Attempts to unsettle the market as a
whole by bear raids on vulnerable is
sues have failed invariably. 1t has
been easier to sell stocks than TO buy
them.
Brokers loans are at another new low
for the past three years. AS a partial
still tied up in the banks on collateral
loans. The weekly report of member
banks shows the item, "loans on Sc
curities" at $3,3l5,000, 900, which is
S60S, 000, 900 higher than it was a year
ago at this time. The total has been
reduced on the week SCI 600, 900 but still
has a long way to go before it will make
favorable comparison with 1929 Still,
liquidation from this source is reason
ably sure to be gradual
Next We have the spectacle of a bond
market with an Unsuitable appetite for
securities of the highest grade. This
is normal characteristic of a period
of business depression, but it is also
generally the forerunner of a recovery
in stocks. Sooner or later the supply
of high-grade fixed interest bearing Sc
curities Is exhausted and buyers turn
to middle grade issues and then to the
best of common stocks. There is evil
deKce to show that exactly this process
has been going on in the market this
week.
Investment Buying.
Canvass of brokerage houses reveals
that there has been investment buying
and consequent decrease in the floating
supply of the >high-grade stocks of
which U. S. Steel and American Tele-
phone are types. It should be observed
that this kind of buying never results
In any sudden price advance and that
1t Is discrimination in the highest de-
gree. The purchasers want a stock the
dividend on which is safe no matter
now long the depression may continue
nor how unfavorable events may turn
out.
Finally 1t is almost sure that we
will have a seasonal recovery in trade
Whether it will last through TO next
year or not is another matter about
which the Street Is not worrying now
Particular attention is being given to
conditions in iron and Steel This weeks
report tells of higher rate of opera
tons, but price structure none too
sturdy. The best that can be said Is
that according to trade authorities
buyers are becoming more interested in
long-term commitments.
Copyright, 1901