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Fresh surge in the market falters at 900 on the Dow

If the stock market missile is about to take off again, as some think it is, the launch pad will be No. 900. In the meantime, getting to the pad seems to be the hardest part.

The market spent much of last week trying to push the Dow Jones industrial average over the 900 mark, and even succeeded for a short time Wednesday before falling back to close out the week up 2.22 points at 891.13. Trading was active.

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Since mid-april, the Dow has gone up about 140 points.

Some analysts hold that once the average passes 900, the market will be on its way to a run-up that could push the indicator over 1,000 by election day in November.

If this happens, much of the buying is expected to come, as it has in recent weeks, from institutions, whose money managers have been rapidly cutting their cash reserves and putting them into into the equity markets. This bying has been helped in part by rapidly declining interest rates, which have made stocks more attractive. the lastest drop in interest rates came Friday when Citibank, the nation's second larges bank, dropped its prime rate a quarter point to 11 1/ 4 percent.

The degree of institutions' interest in the stock market was shown in a study released last week by Merrill Lynch, Pierce, Fenner & Smith Inc. It surveyed 119 institutions, including insurance companies, banks, mutual funds, pension funds, investment advisers, and retirement funds. Nearly 60 percent of the money managers surveyed said they planned to increase their stock holdings in the near future. Only about 10 percent said they intended to cut holdings.

Additional statistics, as reported by the Wall Street Journal, showed as much as 35 percent of the volume was being done in blocks of 10,000 shares or more on some days in recent weeks Many of these purchases were done at prices above preceding sales, further evidence of heavy institutional buying.

The bullish attitude of the money managers got some acking from Charles L. Booth, executive vice-president and senior investment officer of the Bank of New York:

"The major 'upside breakout' in the market has not yet come," Mr. Booth said. "Of course, temporary near-term setbacks are a fact of life. We must live with them. However, looking forward, we continue to believe a market breakout will come, that it will be on the upside, and that the potential could prove 'open ended' in nature."

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He recommends that equity investment managers maintain a "close to fully invested position."

The bank bases this recommendation on its feeling that:

* Government policy is moving away from short-term results and more toward long-term solutions.

* The probability of legislative tax reform is rising. This could ultimately benefit business and investments.

* Inflation seems to be peaking and the "downturn may be sharper and greater than current general expectations."

* Finally, savings rates are picking up again and this could fuel the next economic upswing.

But for those who would rather listen to those who "know something I don't know," there was some not-so-optimistic news last week.

It came in the form of another study, this by the Stock Research Corporation, which looked at "insider" trading as shown in documents filed with the Securities and Exchange Commission. this study found that insiders -- corporate officers, directors, attorneys, or accountants -- have been selling their stocks.

The insiders' sell-buy ration has gone from 1.59-to-1 to 3.27-to-1 in just the last few months, the study showed.

The decline in interest rates has been felt in more than the stock market. The Federal Home Loan Bank Board reported that mortgage rates fell a record 2.24 poitns from May to June, putting the average rate at about 13.46 percent.

The sale of single-family homes rose 39 percent in May from April, reducing the inventory of unsold homes from a 12.5-month supply to 8.8 months.

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