The Washington times., 1934-09-24

flation is the Lewis aaney
main factor in the financial
markets the appraisal of it still
remains mixed and uncertain.
Government bonds were highly ir-
regular.
In general, the action of the
stock market was notable for the
fact that a majority of the stocks
traded in closed higher each day
after Monday, while the more i'm
Portant leaders showed alternate
days of advance and reaction.
There was apparent some ten
aency to bring on new leaders,
and to shift interest from one
group to another, such as movies,
stores, or utilities.
1t seems fair to say that the
weeks rally was due more to
withdrawal of selling pressure
than to increased buying &C.
&ivity. This is not necessarily
an unfavOrable indication. 1t
merely suggests that doubt re-
mains as to the momentum Of
the upturn, and that the
chances of much further up
ward progress are reduced.
It get the impression that on
Saturday there was a tendency
on the part Of important stocks
to close at on near their asked
prices, while the bid prices were
considerably lower. OF course
such a condition. could change in
q moment, but it suggests little
follow through.
The market averages are now
back to what may be called the
general level for the New Deal
period-say around 80 for the
Dow-Jones industrials. This level
was reached in May 1888. It has
broken down only in October 1888,
and in July and September this
year.
Now that double bottom" re-
Sistance level has been shown
around 86, there will be less fear
Of a 1920 point decline which
many were talking about just one
week ago.
It seems reasonable to sup
pose that the market may now
remain for several weeks In q
"trading range" around this
general New Deal level. The
New Dealers have deprecated
the dollar, and will doubtless do
something further in this re-
spect. Aside from that, their
alphabetical schemes have been
q washOut, leaving industrial &C
tivity about where it was just
before and after the bank crash.
They are now holding on by
| Comment spending, and have
their ears to the ground await
ing . mandate" from the peO-
pie before making their next
! Jump.
Until October IS a certain
amount of financial "conServa-
tism" is to be expected. Then the
November elections will come.
Meanwhile, doubts as to the eX.
tent of the belated seasonal rise
in business activity are likely to
remain, and third quarter earn
tngs statements may be sour. =,
All these considerations suggest
the trading idea. On the one
hand. there are uncertainties and
threats Of radicalism. On the
other hand, there are hopes of
business gains and some swing to
conservatism. Particularly are
business men cheered by signs of
backbone on the part Of the
courts in upholding the constitu-
ton. And business leaders are Or
ganizing to defend their rights.
So the stock market has re-
bounded, but does not seem
likely to do much further bound
mig until the New Dealers pull
out another rabbit. At least q
little technical reaction Is due
soon, although it would not be
surprising to see the averages
gain another point first.
My guess is that the conserva'
tive trader should therefore take
profits" the investor or dollar
hedger should hold his position II
carefully selected, and postpone
further purchases until we see
how the market takes selling on
the next reaction.