The Washington times., 1934-12-10


ceding week,
and less than d #$<$:$ #:$<@3E3%I
q single point Lewis Haney
over two weeks ago. e. refer to
the composite averages Of all
kinds of stocks0
1 do not take much stock in
the dow theory" but common
sense tells one that if the rail-
ways do not get enough traffic
to enable decent earnings, bust
ness is not very good. In that
sense, what operators can do with
the industrials is limited by what
they can do with the rails.
1t is no sign Of SoundneSs to
find rails being run up on utterly
unfounded rumors that rates will
be raised. Actually Western grain
rates were reduced last week. No
one can know that rates will be
raised, and the presumptions are
decidedly against any general ad-
vance. Anyhow, it is more than
doubtful whether higher freight
rates would help the carriers,
since what they need is traffic.
and down to date there has been
no indication Of any rising trend
in carloadings.
The market has now moved
sideways for two weeks. Its
failure to make any progress
since November 26 is due,
think, to two facts: Q) The Oln'
inous projects for spending bill.
lions Of dollars on "wOrk relief"
schemes which were discussed
at Warm Springs, and (2) the
obvious impoSSibility of scoop
Grafton" between the New Deal
Government and the business
leaders as shown by the plankS
in the National Association OF
Manufacturers program.
It seems unlikely that any tur'
ther sustained rise can occur u1'
less and until the uncertainties
which are involved in these mat
ters are cleared up.
There has been little change IN
the arguments on the bull or bear
sides, particularly on the bull side.
The activity continues costly in
the stocks which rise, or, in other
words, the stocks which are most
active each day go up.
The volume Of trading has de-
elined on the reactionary days.
The influx of gold has contin-
ued. thus increasing bank reserves
and making money very cheap.
The spirit Of cooperation" was
tangibly illustrated by the way the
financial institutions took the
Governments increased debt.
On the other hand, we still find
the price earnings ratios of many
stocks very high, and uncertain
ties as to money and business con.
troll very great. Congress is still
coming.
The utilities remain weak, and
the rails unable to make sustained
progress.
That the rise has lost momen'
tum is plainly apparent, no prog
ress being made during two weeks.
Yet brokers' loans are up.
The proportion of stocks which
declined on Saturday was the
highest in over a month.
It seems that the two chief
possibilities as to market action
during the next few weeks are:
% A slight further reaction
here, followed by a little recovery
in a few days, but not getting
back to new highs; (2) an 1rreg.
ular and saggy market until
Congress comes.
Probably the next "fireside
chat" will cause some movement
one way or another, with prece-
dent suggesting a dip.
Thus it does not seem to be
n good time to plunge or to
risk much on a further rise.
The market is now in a position
where a further decline Of a
point would break the upward
trend line established since No
vember 1. A decline Of two points
would break the more gradual
trend established since Sejtem-
ber, and test the important lows
of November 2O-22.
Until greater certainty is made
possible by market tests" or de-
velopmentS at Washington, I
would merely sit tight with the
hacf hadoeS against initiation