Detroit evening times. (Detroit, Mich) 1921-1958, 1941-10-20
Hdney Analyses
Stocks and Sees
Slight Decline
By LEWIS HANEY

Professor Of Economics, n. n. University
The present position of the stock
market should be analysed as fol-
lows:
O. Significance OF the amount
Of the decline. Under this head,
il now seems futile TO argue
about the loss of any percent
age of the preceding rise. The
question now is one of the pre-
ceding bottom levels. These APP
pear TO be little lower than
the market has yet gone, and
suggest some further reaction.
2-The markets recent action
and technical position. These
considerations give indecisive re-
suits. but suggest nothing more
bullish than a small technical
rally. Little buoyancy has de-
veloped on the rebound. The
margin calls, however, do not
appear to be any more of fac
tor than the short covering and
scale-downs buying.
3-The outlook for news"
The probability seems 10 be that
while much bad news has been
discounted. there is enough more
in the offing TO keep the market
disturbed and irregular.
4-Fundamental investment
considerations such as earnings
and yields. These h We been
specifically favorable for a
long while, including large avail
able liquid funds. At present.
there is sufficient doubt as to
taxes and government socialism.
to make it questionable whether
any real investment" program
is possible. Money" itself now
means little more than New
Deal policy.
Thus the general position sug-
gests no probability of any sus-
tanned rise from the present posi-
ton, and indicates the possibility
of a little lower average.
The main arguments of a bullish
and bearish character, follow:
1t is fairly clear that the mar
ket already discounts much OF the
bad news. The more militant
japanese attitude, and our active
participation in the shooting, are
evidently allowed for. So is most
of the possibility of a Russian COL
lapse. This explains why the
New York market has been weaker
than London, since these things af-
feet US particularly
The most active stocks rose with
the averages on Friday. Both
rallied in the face of continued
bad foreign news.
The volume of selling indicates a
strengthened technical position,
as there had been little
preceding excess in the way of
extended speculative buying.
Asked prices turned relatively
firm on Friday. and some stocks
Re. e. United States SteeD seem
TO be near bedrock levels.
The politicians are sure to make
q iiiCss VI tIililSS, dllu we VIII oil
get tired of them by the time the
war is over.
On the bear side, it can be said
that. judging by the past few years,
similar periods have been followed
by similar liquidation.
The averages have broken
through intermediate resistance
levels, but have not yet reached
bottom" levels.
Many new lows for the year
have been touched by individual
stocks.
Margin calls have begun.
Foreign news is threatening.
The trend toward collectivism Is
still strong. as seen in the poll
ticians' schemes to have "the gov
eminent" deal with postwar UNI
employment" and the tendency Of
business leaders" to fall for il.
The rally looks like temporary
affair. helped by administration
manipulation. l advise a policy
of cautious scale-down accumula-
ton of high-grade equities,