The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1934-11-05


Among the most active stocks,
declines were registered in a
speculative rail, a decadent motor
and a food stock which reported
reduced earnings. But activity
was mostly in stocks which
gained, including a stock bene-
fitted by the governments hous-
ing drive, a distiller, a couple OF
speculative issues affected by
news" designed tu be bullish.
One should be cautious at
this time about following up
"moves" based on plans an
nounced and reports Of buying
by operators. Gillette and Budd
Mfg. may benefit by new pro.
ducts, but their competitors will
have something to say about
that. It Is to be noted that
there is an issue of McCrOry 512
per cent bonds which on Satur-
day sold off to 85-nOt . very
high rating.
I can see little reason to ex'
pect much Of general move IN
either direction. On the bull
side, most Of the argument
comes down to Initiation" either
in bank credit or in fiat cur
rency, with Government spending
as the motive force. On the bear
side, there are labor troubles,
disappointing industrial activity,
declining earnings, and the threat
Of more Government in business.
Some earnings statements are
good, but the majority have been
either absolutely low, as low rela'
lively to preceding periods, thus
showing no tendency toward IRE
covery."
From a chart standpoint, the
market shows considerable re.
Semblance to two past periods,
namely early July this year and
late January, 1888. In each of
these cases. there was a long ir-
regular decline following an arti-
ficially stimulated markup. This
eliminated in an extremely mar
row trading range. with great
dullness.
In both of the earlier cases,
this condition terminated in a
final period of liquidation.
The analogy, however, is not
perfect, and this time a renewed
outburst Of Government spending
may in various ways sustain the
market. But there is much un-
certainty and lack Of spontan.
eouS activity in the heavy in
dustrieS. Caution is therefore
warranted.
can see little probability of
heavy liquidation. There is too
much reason for holding on to
hedges against initiation, and too
little chance to invest idle funds
probably, to allow great selling
pressure on stocks.
The elections should be fairly
well discounted, as Republicans
do not expect a victory. But as
soon as the returns are in, people
will begin to worry about the next
Congress.
So as likely a guess as any
seems to be that any reaction
will be held to moderate pro-
portions, and that q period Of
narrow swings lies ahead.
Hedging against currency depre.
citation, and selective invest.
ment buying, together with
speculative short covering,
should prevent large declines.
General uncertainty and fears
of Government control and
labor trouble, should prevent
large advances.
Additional purchases should
preferably be made when the mar
ket Is weak. They should be linn
tied to industrial" stocks, pre-
ferably to companies which pro-
duce or deal in necesSaries. which
are not likely to have much labor
trouble, which are showing good
earnings, and which are not
deeply involved in Government
control. In my opinion, further
initiation is a strong probability,
and hedges against it are war
ranted.