For Technical Reasons

By long-standing tradition, traders on the floor of the New York Stock Exchange break into cheers whenever stocks move sharply upward. Last week stocks were again moving upward, but the cheering had a nervous ring. "I'm afraid of this rally," said one Wall Street expert. "It lacks conviction."

By week's end, the caution proved well-founded. After registering substantial gains for six successive trading days, the market faltered on Friday, July 6, and fell eight points, to close at 576.17 on the Dow-Jones industrial average, a country mile away from the high point of 734.91 last Dec. 13. For the week as a whole, the average picked up 15 points, but Friday's performance confirmed the suspicion of many analysts that the market was not beginning a major rally but only making a "technical adjustment"-a term that Wall Streeters use to describe a change in price levels which is caused not by visible political or economic events but rather by day-to-day traders responding almost mechanically to market conditions.

Last week's technical adjustment was helped by short sellers who earlier had borrowed stock and sold it, betting that they could replace it later at lower cost. Fortnight ago. when purchases by bargain-hunting professional investors began to pull the market up slightly from its June 26 low, the short sellers started buying to cover their commitments at levels that would still give them a profit. That sent the market up further--but as prices rose, the bargain hunters began to cut back on their buying, with the result that trading on the New York Stock Exchange declined to a listless 3,110,000 shares on Friday.

Most analysts see no dramatic upturn in stock prices in the immediate future. Wall Street opinion expects the market to wait for autumn and a clearer reading on the health of the U.S. economy before any significant trend develops.

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