Subject: Winter Rally of Small Stocks Continues
Date: Published: 12/18/87 77 lines
Source:  WALL STREET JOURNAL. Copyright Dow Jones & Co. Inc. 

    OTC Focus:  
    Winter Rally of Small Stocks Continues,
    With Heavy Buying in Local Bank Issues
    ---
    By Priscilla Ann Smith
    Staff Reporter of The Wall Street Journal

    Speculators refused to stop their over-the-counter buying
 spree yesterday, as the winter rally in small stocks
 continued into its fourth day.  As a result, OTC prices veered
 sharply from those of the exchange-listed blue chips, which
 tumbled.
    Heavy buying of smaller issues, particularly local bank
 and thrift stocks, pushed the Nasdaq composite index to
 319.5, up 0.25 points, as the Dow Jones Industrials slid 50
 points yesterday.  Stocks with advancing prices on Nasdaq beat
 declining issues 5 to 4.  Volume on the National Market
 System, where most of the speculation is taking place,
 swelled to 126 million shares, the rally's second post-crash
 record.  Total volume on the National Association of
 Securities Dealers automated quotation service yesterday was
 167 million shares, also a post-crash record.
    Prices among the giant technology issues favored by the
 largest institutions fell yesterday in line with prices of
 big exchange-listed issues.  Microsoft was off 2 1/4 to 52,
 Lotus dropped 1 1/4 to 28 1/2, and Sun Microsystems fell 1
 5/8 to 30 7/8.  Apple Computer was unchanged at 39 1/4.
    The biggest Nasdaq retail and consumer issues slid
 yesterday as well.  Liz Claiborne was off 1/2 to 15 1/4;
 Nordstrom fell 1 to 20.
    Among smaller stocks, however, a different story unfolded
 yesterday.
    Asset managers, concerned that the early winter rally
 might prevent the OTC market from going lower any time soon,
 started buying selected medium-sized issues, traders said.
 Often these professionals wait until year-end to buy their
 carefully-selected OTC stocks, when prices usually hit
 rock-bottom as other investors do tax-related selling.
    Thus, yesterday, Shorewood Packaging rose 7/8 to 10 1/2.
 The company has strong earnings growth and is already up in
 price about 90% for the year.  Similarly, Dyatron, a software
 issue, rose 1 1/4 to 11 3/4; K Tron International was up 1 to
 9 1/8; Commercial Shearing, an industrial issue, rose 2 to 13
 7/8.  Associated Communications Class B was up 3 to 21, on
 announcement of strong earnings gains.
    But most of yesterday's heavy buying was among depressed
 medium-sized and smaller stocks with prices down 30% to 60%
 for the year.  Yesterday's most popular issues covered an
 expanding range of sizes -- from about $15 million in market
 value all the way to about $150 million.
    Among technology issues, Teredata, a computer stock, rose
 1 3/4 to 14 1/2; Lancer rose 1 1/4 to 7; Davox was up 3/4 to
 5 5/8.  Among health-service issues Healthcare Compare rose 1
 5/8 to 9 5/8; HMSS Inc. was up 1 1/8 to 13 1/2.  Among drug
 and biotechnology stocks, Marsam Pharmaceuticals rose 1 to 9
 1/4; Alpha 1 Biomedicals -- which announced a joint agreement
 to market its AIDS vaccine -- rose 1 to 9.  Centrafarm Group
 said it might go private, sending its stock price up 2 1/2 to
 10.
    As for smaller bank and thrift stocks, American Savings
 Financial of Tacoma, Wash., said it was approved for FDIC
 insurance, and its price rose 3 to 12; Commonwealth Savings &
 Loan of Florida rose 1 1/4 to 7 1/4, and Starpointe Savings
 Bank of Plainfield, N. J., rose 2 1/2 to 14 1/2.  The Nasdaq
 bank index, which largely reflects prices of savings banks,
 rose 4.01 points, or 1.1%, to 379.07, outperforming all of
 the other Nasdaq indexes.

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