Detroit evening times. (Detroit, Mich) 1921-1958, 1944-06-06
Stocks Still
Look Good
By LEWIS HANEY

Professor q Eoonculies. n. Y. University
Obviously the reaction Thurs
day and Friday last week sug'
gested technical weakness. Evil
IDENTIFY the speculative demand fol
stocks weakened as former highs
were reached. while the tendency
TO take trading profits increased
On Thursday the market aver.
ages, after a brief run-up, turned
around and sagged at the end
closing near the low for the day
Volume OF trading increased tenn
porarily. Evidently the cover
ing" OF short sales made during
the invasion filters stage had been
sufficiently completed. This, to-
gether with profit-taking, explains
the setback.
But nothing more than a minor
reaction seems to be In the offing
A reaction that is entirely due 10
technical conditions Is not going
TO be very serious.
One question that may be asked
. by any market operator is: Is
this the top OF an "intermediate
move" that is, a considerable but
minor move which does not
change the broad underlying
trend OF the market? Such an
intermediate reaction would, | be-
lieve. not carry below 1856 Dow
Jones. or about 2 points on the
composite average OF a hundred
stocks. II IL develops here, it
would be constructive. and prob
ably clear up the technical posi-
ton 80 that q more sustained rise
through July. 1913. top could
occur.
REACTION TEMPORARY
Thus. while nobody can be too
sure that even such q reaction
will actually occur, I do feel sure
that II would neither violate the
upward trend Of April and May,
nor break the bull market.
The averages are between hay
and grass: The Dow-Jones hav-
ing touched 1929. which is be-
tween the March high of about
141 and the 1943 high of 145.8.
The little reaction on Thursday
last suggests that either a dip to
around 1873, or q period Of irregu-
lar sideways movement, Is the
probability. Reaction to 137 is
possible.
And in any of these cases II Is
possible that further attempts to
run up to las may still be made.
If so, Il seems to me that further
profit taking and liquidation will
come out on the bulges.
RESISTANCE INDICATOR
One bit OF analysis that may
help some Is this: II the Dow
Jones industrials were to push up
to 145-146. and then stop and
move sideways. II would indicate
a very strong upper resistance
and possibly even q double top
that might mean the end of the
bull market. do not consider
this likely. But 1t is a bare posi-
bility, and should be kept In the
back of your mind as an important
signal.
One thing Is pretty clear,
namely, that II will take larger
volume and some good news (espe-
cially on the home 'front.' to put
the average through 146 in a
straightaway sustained move.
MOSTLY FAVORABLE
Analysis of last weeks perform
ance- shows a preponderance of
favorable symptoms. The indus
trial average went through the
141 upper resistance nicely, and
even above the September high.
On the reaction the volume of
trading soon fell and Friday saw
a stable reduction. This again
shows lack of liquidation. Even
on Thursday. moreover, there were
So new highs for the year. with
only two new lows. And II can be
added that the standard invest
ment issues have been well repre-
sented. Second grade rail bonds
have done well. The corporation
bond market has been quite Arm.
On the whole. too. I would say
that the recent rise has been mod
crate and free from any great
speculative excuses. so that no
great correction" should be re-
quired.
So. while the next government
bond-selling drive comes soon. and
uncertainty concerning the No
vember election and the invasion
prevails. I am inclined to favor
buying on the reaction.
- Fighting sth IL Coming -