Market Standoff

Not since a dark week in 1933 had the stock market been stormed by such an army of buyers and sellers--but this time without catastrophic results. Time and again throughout the week, the Dow-Jones tape fell well behind the flood of transactions ; on one occasion it was running 18 minutes late. In the confusion, the Dow-Jones News Service was reduced to asking brokers on the floor what was happening. The surprising answer: not much. Despite the heaviest volume (5,830,000 shares on one day) since the Eisenhower heart attack of 1955, the averages did not budge more than a few points a day. At week's end, by gradual steps, the Dow-Jones industrials had edged up 15.97 points to close the week at 671.57, highest in 14 months.

Usually, a late tape and such tremendous volume mean that the market has suffered a shock--as in the case of Eisenhower's heart attack--and is falling. This time, it merely showed that the market was divided between buyers and sellers to an unusually even degree. The investors' views about the durability of a Kennedy bull market were divided almost as narrowly as their voting in the presidential election. Both sides agree that the market is too high on the basis of current and expected earnings. But the buyers believe that the recovery from the current recession will be quick, count on long life for the Kennedy market. The sellers believe that the recession will drag on for some months and that the stock market may be due for a correction rather than a sustained advance.

The bulls got more encouragement last week when the industrials broke through their previous recovery high of 656.42 scored on June 9 last year. This was one of the two signals that when combined, would prove to the Dow theorists that stocks have been in a bull market since their lows last fall. According to the Dow theory the recent bear market began on July 8, 1959, the last time that the industrials and rails joined in breaking through their previous highs. Though the Dow theory has only comparatively few followers on the Street, many non-theory chartists carefully watch such previous highs and lows for signs of the market's future course.

During the week, traders and brokers waited suspensefully for the rail average, the other important signal to Dow theorists, to confirm a bull market trend by piercing its previous high of 146.56 reached last March. The rails came tantalizingly close to doing just that-only to fall back to 144.84 at week's end. If the rails do not go through, then the Dow theorists argue that the market is in for trouble. As for the utilities, which are not included in the Dow theory, they have been rising steadily for months under the buying of cautious investors seeking the safest stocks.

Despite the laggard rails, the general feel ing of traders on Wall Street is that the Dow-Jones industrials will soon have an other try at topping their all-time high of 685.47.

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