The Washington times., 1934-10-01


q little ground on Friday and
Saturday.
Judging solely by the markets
own action, we can say that the
upward trend has been checked,
If not reversed, and that definite
resistance level" has be
reached. Thus U. S. Steel sticks
at 3412, American Can at SO, Du-
pont at 81, Atchison at So, Tobac-
co B at 77-771a, and Telephone is
plainly for sale whenever it ap-
proaches ia.
This resistance may yet be pene-
trated, but it is the wise thing
for the small trader to stay out
now until selling pressure at this
level is withdrawn or good buying
is resumed, so that leading stocks
can "go through" and close
higher.
The rally that began Septem-
her Is was based on reduced
business fears and an improved
technical position which caused
selling pressure to tighten. The
rebound was due more to with
drawal of liquidation than to
important operations for a rise.
Now doubts have increased again
and the technical position has
been weakened, so that buying
has tended to dry up.
Pre8it-taking was evident on
Tuesday, Wednesday and Thurs.
day. Now the big fellows are
waiting. Unless there is some
outside stimulus Gas from Roose-
velt's TALK. the ordinary expec-
tation would be little sag in
the averages of "a points.
At this writing I do not know
what the President will say. He
can put the market up or down.
Judging by the past, however,
it will be found that when his
remarks are digested they will
leave plenty of doubts. These
fireside markets get warm on
only one side.
I find that the opinions of
Large traders are very much
mixed and divided and this fact
tends to confirm my own pre-
vious opinion that the market is
likely to remain in a trading
range for some time yet.
Only if the President shows q
sincere and statesmanlike recog-
milton that his experiments have
thus far failed to bring real bust
ness recovery and promises now
that he will proceed to increase
factory employment by making
it profitable for factories to en-
ploy more labor, can q sustained
rise in stocks begin from these
levels-unless further inflationary
tactics are resorted to. In this
connection, note that actions
speak louder than words.
On the bull side, we can men,
ton a better tone" in business
news and less selling pressure
in the market. The charts do
not look exactly like a top or
peak. The most active issues
have held up we'll. Some OBJ
servers report fair bids under
the market.
On the bear side we note the
following points: Lost momen-
tum on the rise, with last
weeks volume down and stocks
making little progress. Com.
moditieS continue weak and so
do Government bonds. There
Is little evidence of strength
In basic industries, and what
there is traces back to Govern.
ment spending. Railway earn
1ngs are very poor. The oil in
0ustry and the copper industry
are in bad shape with their
artificial price-fixing policies.
An important point to keep in
mind is that the market has been
trying to ride two horses at once.
These are initiation and the
'swing-to-the-right" idea. If there
is o swing to the right at Wash
1ngton, how can the initiation
stocks be strong? And if the in
tlation stocks turn weak, can the
general market rise much?
All this suggests caution in
making new commitments, though
diversified positions in sound
stocks, which would benefit both
by initiation and by sound bust
ness recovery, may we'll be re.
tanned for the present.
TT ar