What Goes Up ...

In the long weeks of the roaring bull market, Wall Streeters had almost forgotten the old saw: what goes up must come down. Last week, they remembered it. The reminder began shortly before noon on Thursday. For no apparent reason, stocks began to slip, were soon tumbling under a flood of selling orders. Twice the ticker fell behind sales.

By the time the New York Stock Exchange closed, 2,940,000 shares had been I ought & sold, the largest day's business in about five years. The break was the worst in 26 months (according to the New York Times Averages), in three and a half months (.by the Dow-Jones Industrial Averages). Next day, the market fell again, but more slowly.

By week's end, stocks were picking up, and the Dow-Jones Industrial Averages had edged up to 165.29. But they were still down almost four points.

As usual, brokers had many and conflicting explanations for the breaks: the Federal Reserve Board might boost margin requirements to 100%; the war with Japan might end, etc., etc. But the plain fact seemed to be that the market had long been riding for a fall--and at last it fell.

Lesson for Pan Am. Actually, the rise in stocks, notably those of the airlines & aircraft builders, caught many an expert flatfooted. For example, when Pan American Airways Corp. planned new stock issues last December, it thought it safer and cheaper to make a deal with Floyd Odium's Atlas Corp. to buy any unsold stock, up to $25,000.000. For its financing, Atlas received an option on 500,000 shares of Pan Am at $18 (TIME, Dec. 18). Last week, Pan Am canceled the deal. Reason: Pan Am's stock was up to 28, higher than even Pan Am's smart Juan Trippe had expected. Atlas will buy 100,000 shares at $16, under the escape clause of its Pan Am agreement, and thereby net a profit of $1,200,000. This is the price Pan Am pays for its lesson in bull markets. But Atlas loses its option--and a possible profit of $2,400,000. In the present market, Pan Am thought itself well out of the deal.

Up or Down? In the face of these unpredictable ups & downs, Wall Streeters were less sure than usual where the bull market will go from here.

Those who still cling to the Dow-Jones theory thought that last week's break was a warning: the market is going down temporarily. But they were a minority. The bulk of the brokers were still sure that, as long as the U.S. has so much cash and comparatively little to buy but stocks, the market has no place to go but up.

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