The Washington times., 1934-05-14

ages OF bO ana ~
90 stocks have
br ok n that - l'E$*$= lSass
level, but these Lewis Haney
contain many rails, utilities, and
relatively high-priced leaders" :"
Broader averages are just at the
December level. and one based
on 687 stocks is actually 10 per
cent q points, above it still.
AS to the October bottom"
which some observers think will
be reached, it remains about 10
per cent below Saturdays close.
That is most stocks would have
TO fall 4 points to 10 points (de-
pending on the height of the
present price, to go that low.
I continue to doubt such a
further decline. One of my rea-
sons is that there is a plainly
marked general level of values
established during the past II
months, and the averages are
getting down close to that. This
level was the lower resistance en-
the declines last June, July, Au
guest, September and November.
It is the level from which the
second uprush started last May,
and to which the averages rallied
last october.
It is the level to which stocks
have returned whenever the Ad-
ministration has soft pedaled in
flation and swung to conservative
policies. It would seem low
enough to make stocks sell Eek"
abandonment of gold, dollar de-
valuation, free silver, wild spend
ing, and irresistible recovery"
Even if it does not hold now,
I think it reasonably certain that
prices will return to it by fall.
I would therefore certainly not
sell sound reasonably priced
stocks held on an investment
basis or as hedge against the
dollar. I would be prepared to
buy on a scale down from here,
allowing for the possibility of g.
10 per cent decline (say points
on a 20 stock. I would favor
buying thus on any day o. pro-
nounced weakness with trading
volumes heavy.
1t is not clear that liquida-
tiOn has been completed. The
Socialists at Washington are
still dreaming dreams about regi-
mentatiOn and cOllectiveSt plan
ming. They seem willing to wreck
the industrial machine in order
to experiment with a new one.
But / don't think America will
stay cOckeyed forever, and / be-
lieve we will do one of the two
things: Either we will revolt
against the revOlterS as business
now suffers relapse, or they
will resort to currency initiation
and thus give us "ride."
So, while there may still be a
final selling wave, as last October,
I would hold the really good stocks
through.
I do not advise speculative trad
ing under such abnormal uncer-
tain conditions, but as bearing on
the possibility of an early rally,
I note the following symptoms: /.
the bad news" is nearly out
stock exchange bill, utility regula-
tion, drought, ETC., already "bar-
gain hunters" are nibbling. 2. The
weakness has now spread from the
high priced leaders to most of the
list, and several leaders have be-
gun to hold better 3. The techni-
cal position is well on the way to
being cleared up.
4. On Saturday, there were in
dications of definite resistance as
the averages neared that general
level I mention above. U. S.
Steel and Atchison rebounded
from their lows in a suggestive
way. and Telephone showed con-
-tlnued resistance of the selling
climax of the fifth and seventh.
If the market does not hold
within the next day or two, a
dip to the October low would
seem probable. Even if a rally
develops soon, a secondary" de-
cline might go lower. But unless
you really believe that the NRA-
AAA setup and New Deal colIec-
tiviSm are going to wreck individ-
ual enterprise. why sell any sound
equities that are now fairly
priced?