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Stock Trading

CHAPTER 6: Market Technique

Page 2

ON Saturday morning, February 27, 1909, the market opened slightly higher than the previous night's close. Reading was the most active stock. After touching 123 1/2 it slid off to 122 1/2, at which point it invited short sales. This indication was emphasized at 122, at 121 1/2 and again at 121. The downward trend was strongly marked until it struck 119 7/8, then it followed a quick rally of 1 1/8 points.

This was a vicious three-point jab into a market that was only just recovering from a decline in early February. What was its effect on the other principal stocks? Union Pacific declined only 3/4, Southern Pacific 5/8 and Steel 5/8. This proved that they were technically strong; that is, they were in hands which could view with equanimity a three-point break in a leading issue. Had this drive occurred when Reading was around 145 and Union 185 the effect upon the others would probably have been very different.

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