Detroit evening times. (Detroit, Mich) 1921-1958, 1942-01-26
Stock Market
Sentiment Hints
Rally Likely
BY LEWIS HANEY


The level of stock market
prices was little changed last
week. and at the end market
sentiment showed improvement.
Such facts of course have little
bearing on fundamentals.
But in view of the numerous
fears and the penetration of the
10 level by the Dow-Jones
industrials, the ability TO hold
may have somewhat more than
ordinary meaning.
In fact. at the end Of the
week, most Of the usual short
term indicators suggested that
at least a little rally would be
likely TO occur before any re-
action.
1t seems quite possible that
the recent reaction has thus far
been nothing worse than an
ordinary and normal readjust-
ment required 10 correct the
squirt at the turn of the year.
Furthermore. the obvious dull
ness Of the market as the week
drew 10 an end suggests that
base" may have been formed
where further declining tenden-
cies may be resisted.
In view OF the high yields and
low price-earning ratios. and
considering the tlook for
growing initiation. one may well
give more weight 10 such symp-
toms and suggest ions than would
ordinarily be Warranted.
One question which deserves
attention of market followers
is, did the averages penetrate
the preceding low OF January
10? Some leading industrial
issues did. and the widely-fol 4
lowed Dow-Jones average wa
thus dragged down below 10
But an average Of 100 stocks
Of all kinds went only 10 about
the same level as January 10.
and the rails have done much
better.
Thus. one may conclude that
the question remains without
definite answer but that the in
dications arc that no decisive
penetration has yet been made.
and that this leaves open the
possibility Of further rally.
On the other hand. certain
unfavorable signs and symptoms
have 10 be considered. Some
leading issues haze done
rather poorly including such as
international Business Machines,
l.. S. Rubber. United Aircraft.
Bethlehem Steel Chrysler and
}. c. Penney.
The chemicals have been a
drag on the market Probably.
too such little rebound as has
come IN this type Of stock IS due
10 short-coverlng rather than
Investment buying
The stocks just, referred 10
suggest that tax fears are an
important bearish factor. since
most OF them are thought 10
have an unfavorable position as
10 the proposed basis Of profits
taxes.
Then, too the recent outbreak
in Congress OF criticism OF war
profits Is a serious considera-
ton, especially now that the
only hope OF many companies
lies IN producing war goods.
But al tho moment. the i'm
medlately favorable signs are
more numerous. The Is most
active stocks have been point
ing up. The volume OF trading
has rcceded during the reaction&
and has spurted little only
when advances occur, as az the
close Friday
a majority Of stocks traded
have risen.
The rails have resumed their
gains. with several making new
highs The corporation bond
market has also risen.
Commodity prices continue IN
rise, and the price bill promises
little check to imitation.
Some sort Of labor peace"
seems assured.
Probably the Latin American
agreement is on the whole
favorable news. and conducive
TO strengthen in many equities.
Certainly it will not lessen in
flationary tendencies resulting
from government spending.
Buy n Bomber