Slumping 21 points, the Dow Jones average closed yesterday at 2,865.38. With P/E ratios and interest rates high, investors fled to cash on heavy volume. But, when stocks opened today, the DJ index stood exactly 500 points above its 12-month low reached in October 1990.
WALL STREET WATCH: "The market will go significantly higher over the next three months. Dow 3,000 is not unreasonable." (The Chartist) . . . "Bias remains to the upside and once the consolidation is complete, averages should advance 10-12 percent." (Ladenburg, Thalmann) . . . "Dow industrials surged to new highs, but it wasn't a pretty sight. Divergences set in, our model issued a 'sell' and we took to the safety of cash." (Professional Timing Service) . . . "Our technical indicators show that the upcoming correction could be deeper than the one we saw during March. Institutional cash is very low; it is now best to step aside." (Wellington Letter) . . . "The market's base is steadily deteriorating. Stock price gains have outpaced earnings and dividend growth." (Mutual Fund Forecaster)
BALTIMORE BEAT: Tomorrow night, locally produced "Wall Street Week with Louis Rukeyser" spotlights Steven Einhorn, of Goldman, Sachs & Co., on "The Case for Stocks." . . . Investment Counselors of Maryland says, "If the economy staggers on at close to zero growth, or if the recession deepens further, we would see increasing monetary ease but stocks would be vulnerable. The 'earnings-based' phase of this market cannot be deferred indefinitely. Earnings will arrive, probably in the second half" . . . Robert Smelkinson, CEO of Smelkinson Sysco Food Services, Jessup, writes, "Restaurants, which reflect disposable income, are a prime gauge of general conditions and for your readers' information our April sales were very strong and May, so far, is running well ahead of April."
MARYLAND MEMO: If you think you must be rich to buy tax-free municipal bonds, note that Maryland will issue new tax-free "mini bonds" on May 27. Some features: You may buy them for as little as $500 . . . Their interest is free of Federal and Maryland income taxes . . . Applications are available in state offices, the Motor Vehicle Administration and by dialing 1-800-535-6464 . . . If held to maturity, five-year bonds will pay 5.6 percent interest, ten-year bonds 6.1 percent . . . The bonds are rated triple-A . . . Buyers will pay $500 for each bond and receive the original investment plus compounded interest when bonds mature.
BALTIMORE & BEYOND: Alex. Brown announces that its Flag Investors Quality Growth Fund just received a CDA Investment Technologies Inc. '1' rating on a scale of 1 to 99 . . . Barron's, dated May 13, on sale this week, includes its quarterly mutual-fund supplement with data on 2,443 funds, including best, worst, etc. (Best for five years: Delaware Delcap, Financial Health Portfolio) . . . Potomac Electric Power is listed under "Group 1-High Quality" in Argus's May Electric Utility Rankings; BG&E and Delmarva Power & Light fall under "Group 2-Good Quality." . . . Phone Harry B. Gorfine Co. (539-5474) for "Selling Your Principal Residence at or After Age 55" and "Protecting Your Business Automobile Deductions." ("Whatever method you use, you must keep good records to insure deductibility.") . . . Business Week, May 20, runs a good story on Morris Smith, Peter Lynch's successor at Fidelity Magellan Fund. ("He upholds Lynch's record of superior performance. His favorites include Fannie Mae, Bristol Myers Squibb, General Electric, IBM, etc.") . . . Changing Times magazine changes its name to Kiplinger's Personal Finance Magazine, beginning in July . . . Kiplinger Washington Letter, May 10, feels that the recession will probably end within a few months, but that a widespread recovery probably won't arrive until late summer or autumn . . . "It's not the world that's got so much worse, but the news coverage that's got so much better." (G. K. Chesterton)