The Washington times., 1934-12-31


687 stocks was
about half a Lewis Haney
point lower than a year ago, and
one of 100 stocks was practically
unchanged. Losses during the
year in utilities, railways, railway
equipments, and oils, were a
factor.
The performance of the market
of late has been influenced by
the unusual year-end conditions,
including tax selling. Around
the middle Of December, prices
often react, then rally slightly
before Christmas, then dip, then
rally at the close of the year.
This final rally is apt to be
followed by a few days OF reac'
tion early in January, for ex-
ample, last year there was a
little weakness between January
2 and January Z.
It should be noted that the
Friday rebound was almost ex-
actly the reverse Of the decline
on December II, both in number
Of points and in price levels. On
Saturday, composite averages
touched almost exactly the high
made on December II, thus
making up the "tax selling" dip.
AS usual, the automobile bally-
hoo has begun, and motor shares
have been prominent in this year.
end mark-up.
On the whole, all this Is en-
Couraging. Despite political un'
certainties and the SEC regula-
tions, the market is still there,
and Operations" and "tips" still
70 on. The volume ran at over a
million-share rate on each Of the
last four days.
On the bull side. we find the fol-
lowing arguments:
/. The decline was halted ex-
actly at the lower resistance
level of November 2O-22.
2. The rally has brought the
averages back into the upward
&path" established between Sep
tember and December.
3. The prices of the most
active stocks from day to day
have mostly been sustained or
higher.
4. The rails have participated
recently.
5. Favorable industrial fig
ureS are available, including
continued expansion Of steel
production, indications Of large
demand for automobile, and
better-than-seasOna showing for
railway car lOadingS.
On the other side, the bears
will say:
l. The averages on Satur-
day halted exactly at the upper
resistance level Of November
and December.
2. They have just regained
the SelI-Off from December IL
on.
3. Saturday showed . gap"
which may be q minor 'ex-
haustiOn gap" for this little
rally. The volume increased,
but little progress was made,
and the close was love in the
range for the day.
4. The prospects for profits
are not as good as the pros
poets for business volume, on
account of taxes, prospective
labor troubles, relatively high
raw material, and Government
competition.
In addition, I would point out
that the main play now centerS
IN the capital goods industries:
but these depend upon invest
ment," which can not exist under
present monetary uncertainty. I
would also say that the threat Of
GocialiStic government control is
very real, and this is not good
for equities"
The probability seems to be
that little if any further rise will
occur until after January 4, when
. combination "fireSide chat" and
presidential message will occur.
If this is reasSuring, a little rally
might follow. But then doubts as
to what Congress will do would
check it for a time.
Probably the averages will
have to fall back q little from
Saturdays high, but If the vol
ume of trading also falls off,
it will be reasonable to expect
q January February rise to get
under way before long.
With so much political uncer-
tainty, no one can be sure, but
during any weakness in the first
half of January, would favor
speculative purchases Of selected
machinery, electrical appliance,
metal, edible, oil and meat pack
ing shares, not forgetting special
situations in some preferred
stocks.
But be ready to run Cor to shift
into the initiation stocks) if Con.
greSS kicks over the traces.