The Washington times., 1934-11-26

O1lC dlAA
points. Several .
of the most &C w Sx$S
tive leaders , u
closed about 2
points above week ago, these In
Guiding U. S. Steel; Chrysler, and
National Distillers. The rebound
of American Telephone from an
oversold condition allowed the
stock to recover 7 points of the IL
which it had lost the preceding
week.
As I stated a week ago, "The
go-ahead signal has been given
in high places"
Since then, bullishness has
Increased. and a truly Hoover.
esque spirit of confidence"
now prevails. The country is
entering upon another "buy
now" drive, based largely upon a
scheme to build" our way to
prosperity. With business lead
erS and bankers cooperating"
and the New Deal AdminiStra-
ton now experimenting with
conservatism relatively speak
ing), ] can see no reason why
the move may not go further.
A point to bear in mind Is
that the New Deal or Old Deal,
the stock market is g. moulder OF
sentiment. If it is desired to
convince the country that things
are on the up and up, the stock
market must rise. The SEC,
therefore, is not likely to do any
thing to hurt the market. and
operations for the rise may be
expected to continue.
Add a huge supply of credit,
and a people who are prone to
regard credit as capital, and you
have plenty of material for q
speculative move. The necessary
element of hope that radicalism
may be checked and initiation be
controlled is being administered
experimentally by the New Deal
ers in a barrage of speeches de-
signed to be reassuring to the
money changers and rugged in
dividualiSts.
AS to market action, it re-
mains true that the way stocks
held despite the crack in utilities
and the backwardness of rails, is
significant. The great majority
Of stocks have moved up in a
broad market, with volume of
trading tending to increase on
rallies. Activity is mostly con-
centrated on stocks which rise.
If one looks for the elements
Of weakness. they may be found
in the fact that some of the
leaders are very high in price,
II to % times any known
earnings per share being
pretty frequent for a young
bull market.
There is also a good deal of
uncertainty as to Cd radicalism
among the people and in Con-
gress, both monetary and Social
istic, and as to CD the. labor
situation. The President has al
ready added old age insurance
to the immediate security"
program.
AS the market nears the July
peak, it is likely to hesitate, and
another period digestion" may
be required.
So perhaps it may be we'll to
await the next little reaction be.
fore making any long-pull COM
mitments.
But some further rise seems
likely, and those who are not
mere traders should therefore
hold their sound stocks. Even
those who want to get out OF
utilities and rails on this rise
can probably do a little better
later on.
merely suggest that the arti-
ficial and inflationary back
ground of the performance be
kept in mind. One should keep
an eye on commodity prices
for unless such things as metals
get popped up, the confidence
game will not last long.
Building activity is the center
of the picture. The idea is to build
our way back. So building mate
rials and equipment should par
ticipate. The automobile remains
the main test of the American
standard of abundant life, and
the motor industry should come
along. 1t will be strange, therefore.
if copper we're not to have a spec
ulative squirt later on.
But stick to earnings. Let the
other fellow make the money
in companies which earn moth
ing and in those whose earnings
are very low compared to the
price of their stock.
Incidentally, you might note
that as long as this newly-bOrn
conservatism p v s, your
money is not likely to lose its
purchasing power.
NEW STEEL LISTING
An application to list $4,000 ad'
ditional shares of stock of 25 per