The Washington times., 1934-06-07

mas TWICE LIEU 49,
exactly at the '|'>'
general level Of Lewis Haney
values suggested in this column
during the past few weeks. 1t
has thus made what chart stu
dents call a double bottom"
Since the resistance level thus
indicated is a logical one, am
inclined to regard all this as
significant.
It will be well, however, to be
patient and avoid being drawn
into purchases on the rise. The
market is not at all likely to run
away on the basis of any factors
yet in sight. Even if you are
convinced that any carefully Sc
lected and appraised stocks are
good as a hedge against dollar
depreciation, the purchase may
better be made on weakness.
That is almost always the way to
get stocks cheap. Know the stu
alton, and then buy when others
don't want the stock.
This is essentially bargain
hunters market. Unless infla-
ton takes hold sooner than now
seems likely, there is no hurry.
We must remember that
there are so many serious OBJ
StacleS to sustained recovery
that no runaway market is to
be feared. Congress has not
yet adjourned. The labor sit
nation is still menacing, and
the Wagner bill may be pushed.
The drought is extremely bear
iSh, fundamentally.
Increased Government spend
ing for drought relief" will not
relieve the crop and livestock
damage. It will merely make the
balancing of the budget more
remote, and increase the proba-
bility of eventual currency infla-
ton and further dollar devalua-
ton. It greatly decreases the
possibility of the credit initiation
and use of excess bank reserves
by business men.
Perhaps this is the significance
Of the fact that metals and gold
mining issues have been so strong
of late.
This is q critical time for
the New Dealers. Their hand
is being forced by drought and
labor disturbances. The one
tests their financial policies,
and tends toward initiation. The
other tests their social policies,
and may yet lead them to
swing left if they figure more
votes that way.
The good news lies in the set
tlement of some strikes, and the
passage of stock exchange bill
which may be workable. Some
evidences of a desire on the part
Of the Administration to cling to
sound methods Of financing and
to recognize the Importance of
business profits, may be discerned.
But steel production has squirt
ed on strike fears. Farm pur-
chasing power, based on earnings,
is low and declining. The foreign
situation and the outlook for
foreign trade are much disturbed.
The chief hope of increased earn
ings for business seems to lie in
increased spending and debt for
the nation.
One must conclude that, bar
ring initiation, there is little basis
for any large bull move, in
stocks. Indeed, good many
leaders are too high, judged by
earnings prospects.
1t seems to me that the maxi
mum gain to be hoped for here
would be rise to the May 3
level, or "A points, depending
on the average" used. Probably,
however, increased resistance is
to be expected short of that
level. Considerable Support
stock" was taken on May I, and
this does not seem to have been
worked off entirely. Perhaps IL
points over Tuesdays level will
be enough for the present.
In short, I would be prepared
either for a series of dips and
rallies within the range of a few
points Gas in October, 1892, or
a final sell off Gas in October,
1933)-the latter only if unexI
pected bad news should come. It
is just as well to go slow in these
uncertain times, and let the mar
ket amply demonstrate ability to
60 through on the up side before
abandoning the policy of buying
only on weakness.
Nom S5OO mn Teeuo