Bear Trap

In twelve months of advance, Wall Street's bull market had not once experienced a real shakeout. This had caused some cautious traders to keep their fingers crossed, and wait to see how the market would withstand such a test. For a little while last week they thought the test had come.

Half an hour after the New York Stock Exchange opened, a flurry of selling began. There was no patent reason for the selling except some profit taking and perhaps some nervousness over the market's long climb. By 11 a.m., the scramble to sell was so great that the Exchange's high-speed ticker fell four minutes behind the actual trading. In two hours the Dow-Jones industrial average, which had opened at 222.30, plunged to 218.66, wiping out all the gains of the past four weeks.

Then, as suddenly as it had started, the selling ebbed. Orders to buy trickled, then flooded into the market--mainly for General Motors, which had announced its proposed two-for-one stock split the night before. G.M. took off on a climb from 89-5/8, its low for the day, to 91---a gain of more than 7 points (and far above its 1929 high of 91 3/4. The demand spread to other blue-chip stocks. By day's end the Dow-Jones industrials had regained all their losses and then some.

Next day, Wall Street's bears began running for the tall timber. As they started covering their short sales, the market rose. Not only did the Dow-Jones industrial average hit a new high of 225.17, but the New York Times index of 50 stocks, which up to then had not broken through its 1946 high mark of 148.50 (TIME, June 5), shot up to 148.53. This new breakthrough started a new rush to buy. By week's end the Times index had risen to 150.35. This week the rising Dow-Jones industrials hit 228.38, the highest mark the bull market has yet reached.

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