Three Down, One to Go

The stockmarket was in an interesting condition again. For the fourth time since 1946's big drop, a bull market was struggling to be born. Last week, the frequency and violence of labor pains were encouraging, notably to the Dow theorists.

The Dow-Jones railroad average hit 55.30, its highest close since August 1946. In rising 1.34 points in a week, the rails had "penetrated" (passed) the high mark (54.17) of their highest previous rally. To Dow theorists, this was highly significant. If the industrial average should also break through its previous high mark (187.66), it would be statistical proof that a bull market is already here. (Both averages have to "penetrate," or it doesn't count.) In the last 22 months of the so-called bear market, both averages have broken through, but not at the same time. Last July, the industrials went past their former top but the rails did not. In October's rally, they both failed. Then, in January, the laggard rails finally broke through. This time the industrials failed. The question now: will the industrials break through?

There had been some auspicious signs, although many traders think the rise is a mere rally in a bear market. For nine consecutive full trading days (Saturday is a short session) the market had been busy and rising; each day more than 1,000,000 shares had changed hands. (The Curb and Stock Exchanges' clerks and messengers were still on strike but business was back to normal.) Oil stocks were already in a little bull market of their own. The ten oil stocks in the New York Herald Tribune's index last week reached their highest point since the index was started 25 years ago.

At last week's close the Dow-Jones industrials were at 179.48, still eight points short of their July 1947 high. But in nine weeks they had made an impressive 14-point climb, and held it in the face of heavy selling caused by profit-taking. Bullish news (the Marshall Plan, income tax slashes, talk of rearmament) had helped. Last week, Wall Street optimists thought another dose of good news might give the industrials another push. But pessimists, who had been right three times before, kept their fingers crossed.

This file is automatically generated by a robot program, so reader's discretion is required.