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Posts Tagged ‘Plunge Protection Team’

The Fed and “Plunge Protection Team”: Are They Manipulating Stocks?

The Fed and "Plunge Protection Team": Are They Manipulating Stocks? 
Rumors are, the U.S. government "is propping up the stock market." 

By Elliott Wave International

You will find many intriguing Q&As at EWI’s Message Board. We offer it as a free way for our Club EWI members and subscribers to interact with EWI and the Socionomics Institute’s experts. We strive to answer every Message Board reader, and publicly post the best Q&As. 

By far, the most frequent question we’ve been asked recently is:

"What is your take on the persistent internet chatter that the Federal Reserve is holding up the stock market via QE2, POMO, etc.? How can stocks ever decline again if the Fed is in control?"

We have several active Message Board posts that touch on "market manipulation." But here is an eye-opening chart that will help shed more light on this issue.

EWI President Robert Prechter published this chart in his October 2008 Elliott Wave Theorist. Review this chart carefully. For too many investors, the crash of 2007-2009 is becoming a hazy memory. And almost no one in the mainstream financial media talks about the utter panic in the markets in September-October 2008, the worst part of the crash.

If you think back to that time, you may remember that the Federal Reserve and U.S. government took many aggressive steps to help stop the collapse. Every time they would announce a new intervention, the market would cheer. Result? Prechter’s chart gives an unequivocal answer:

Buying on Bullish News in a Bear Market

[+] CLICK TO ENLARGE

As you can see, announcements of bailouts, unlimited credit, bans on short sales, etc., were powerless against the biggest stock market collapse in 76 years. The DJIA kept sliding. It didn’t stop until March 6, 2009 — after it had slipped below 6,500.

So: Is the Fed and the "Plunge Protection Team" engaged in market manipulation? You can browse EWI’s Message Board for some answers, but one thing is clear: When stocks were crashing two years ago, few dared to suggest that the Fed was in the saddle. Bob Prechter puts it best:

"When markets go up, the Fed seems to be in control; when they go down, it seems out of control. But the control aspect is an illusion."

Get the 33-page Market Myths Exposed eBook for
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The Fed and “Plunge Protection Team”: Are They Manipulating Stocks?

The Fed and "Plunge Protection Team": Are They Manipulating Stocks? 
Rumors are, the U.S. government "is propping up the stock market." 

By Elliott Wave International

You will find many intriguing Q&As at EWI’s Message Board. We offer it as a free way for our Club EWI members and subscribers to interact with EWI and the Socionomics Institute’s experts. We strive to answer every Message Board reader, and publicly post the best Q&As. 

By far, the most frequent question we’ve been asked recently is:

"What is your take on the persistent internet chatter that the Federal Reserve is holding up the stock market via QE2, POMO, etc.? How can stocks ever decline again if the Fed is in control?"

We have several active Message Board posts that touch on "market manipulation." But here is an eye-opening chart that will help shed more light on this issue.

EWI President Robert Prechter published this chart in his October 2008 Elliott Wave Theorist. Review this chart carefully. For too many investors, the crash of 2007-2009 is becoming a hazy memory. And almost no one in the mainstream financial media talks about the utter panic in the markets in September-October 2008, the worst part of the crash.

If you think back to that time, you may remember that the Federal Reserve and U.S. government took many aggressive steps to help stop the collapse. Every time they would announce a new intervention, the market would cheer. Result? Prechter’s chart gives an unequivocal answer:

Buying on Bullish News in a Bear Market

[+] CLICK TO ENLARGE

As you can see, announcements of bailouts, unlimited credit, bans on short sales, etc., were powerless against the biggest stock market collapse in 76 years. The DJIA kept sliding. It didn’t stop until March 6, 2009 — after it had slipped below 6,500.

So: Is the Fed and the "Plunge Protection Team" engaged in market manipulation? You can browse EWI’s Message Board for some answers, but one thing is clear: When stocks were crashing two years ago, few dared to suggest that the Fed was in the saddle. Bob Prechter puts it best:

"When markets go up, the Fed seems to be in control; when they go down, it seems out of control. But the control aspect is an illusion."

Get the 33-page Market Myths Exposed eBook
continue reading


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Meet The Latest Member Of The Plunge Protection Team: The European Central Bank

Courtesy of Tyler Durden

The long-debated topic of whether the ECB intervenes on behalf of the euro can now be put to rest. 120 pip move in a minute is not a short cover. It is, and always has been, forced central bank intervention. Bernanke is so happy Trichet is doing his work for him for the time being. Be very wary of buying stocks on this intervention, as Central Bank involvement now at best leads to a 12 hour temporary "fix" to the market that Bernanke et al want to sustain.

 


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DOES THE GOVERNMENT MANIPULATE STOCK PRICES?

Excellent article by Pragcap – I highly recommend reading. – Ilene 

DOES THE GOVERNMENT MANIPULATE STOCK PRICES?

Courtesy of The Pragmatic Capitalist

Hand in Rubber Glove

There has been a lot of chatter over the last year about the government’s involvement in the equity markets. Yesterday’s market action was certainly odd.  Several large institutions were active buyers of enormous blocks of the S&P on no news.  The volume shot through the roof from out of nowhere.  It was not an unusual occurrence.  We have seen it repeatedly over the course of the last 12 months (see here for more).  Of course, this whole discussion has a very conspiratorial aspect to it, but I think it’s less nefarious than many presume (depending on your definition of nefarious when it come to pseudo-government intervention in markets).

The usual argument with regards to government intervention in the equity markets is pretty simple.  The government, or the “President’s Working Group” (aka, the Plunge Protection Team) purchases securities in big blocks and jams prices higher.  Jamming, gunning, carpet bombing (whatever you want to call it) is quite simple.  In any market there are down times in terms of volume.  If you have the firepower (the capital) and the desire you can knock out just about every asking price on the board.  Have a look at just about any Russell 2,000 stock at around noon as the volume slows to a drizzle and ask yourself what you could do with $10,000,000?  Of course, the same goes for the downside.  You can hit the bids and literally knock them off the board in an illiquid market (exactly what we saw in Fall of 2008 with fund redemptions).

Anyone who has ever traded in size has seen this in action.  It’s like taking a machine gun to a medieval battle or sending the U.S. Army to Baghdad (not that anyone would ever do such a thing).  The point is, you can slice through prices like a hot knife through butter, create a certain sentiment in the market that actually generates attention (liquidity) and then get out on the other side of the trade by selling (or covering) to the crowd you’ve attracted.  Of course, if you’re someone who has a longer time horizon than a few minutes…
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Is the Fed Juicing the Stock Market?

Is the Fed Juicing the Stock Market?

Courtesy of Mike Whitney writing at Global Research

Purple stack of money with stock quotes behind

Is the Fed manipulating the stock market?  TrimTabs CEO Charles Biderman seems to think so, and he makes a strong case for his theory in an article at zerohedge.com.

Biderman focuses his attention on the mystery surrounding the stock market’s 9-month rally and asks, "Where is the money coming from?"  After all, the market cap has increased by more than $6 trillion since March 9. That amount of money should be fairly easy to trace; right?

Wrong.

Biderman: "The most positive economic development in 2009 was the stock market rally. (But) We cannot identify the source of the new money that pushed stock prices up so far so fast.  For the most part, the money did not from the traditional players that provided money in the past."

Huh?  So, this vast infusion of liquidity--which helped the banks to avoid painful deleveraging--did not come from the usual suspects?

That’s right. According to Biderman, the money did not come from (a) companies ("which were a huge net seller") (b) retail investor funds,  (c) retail investors, (d) foreign investors, or (e) pension funds.

What about the hedge funds?

Biderman:  "We have no way to track in real time what hedge funds do, and they may well have shifted some assets into U.S. equities.  But we doubt their buying power was enormous because they posted an outflow of $12 billion from April through November."

Okay; so we’re back to Square One. Where did the money come from?

Biderman again:  "As far as we know, it is not illegal for the Federal Reserve or the U.S. Treasury to buy S&P 500 futures.  Moreover, several officials have suggested the government should support stock prices.  For example, former Fed board member Robert Heller opined in the Wall Street Journal in 1989, “Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole.”  In a Financial Times article in 2002, an unidentified Fed official was quoted as acknowledging that policymakers had considered buying U.S. equities directly, not just futures.  The official mentioned that the Fed could “theoretically buy anything to pump money into the system.”

Biderman…
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Manipulation: How Markets Really Work

Click here to sign up for a free subscription to the PSW Report.  It’s easy!  – Ilene

Don’t miss reading this enlightening article. "Thank yous" to author Stephen Lendman ("we need a mass public awakening determined to change a very ugly system"), and Tyler Durden for finding.

Manipulation: How Markets Really Work

By Stephen Lendman, posted at Steve Lendman’s Blog and at the Baltimore Chronicle

Wall Street’s mantra is that markets move randomly and reflect the collective wisdom of investors. The truth is quite opposite. The government’s visible hand and insiders control markets and manipulate them up or down for profit – all of them, including stocks, bonds, commodities and currencies.

It’s financial fraud or what former high-level Wall Street insider and former Assistant HUD Secretary Catherine Austin Fitts calls "pump and dump," defined as "artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price," then profit more on the downside by short-selling. "This practice is illegal under securities law, yet it is particularly common," and in today’s volatile markets likely ongoing daily.

Why? Because the profits are enormous, in good and bad times, and when carried to extremes like now, Fitts calls it "pump(ing) and dump(ing) of the entire American economy," duping the public, fleecing trillions from them, and it’s more than just "a process designed to wipe out the middle class. This is genocide (by other means) – a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."

Why? Because the profits are enormous, in good and bad times, and when carried to extremes like now, Fitts calls it "pump(ing) and dump(ing) of the entire American economy," duping the public, fleecing trillions from them, and it’s more than just "a process designed to wipe out the middle class. This is genocide (by other means) – a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."

Fitts explains that much more than market manipulation goes on. She describes a "financial coup d’etat, including fraudulent housing (and other bubbles), pump and dump schemes, naked short selling, precious metals price suppression, and active intervention in the markets by the government and central bank" along with insiders. It’s a government-business partnership for enormous profits through "legislation, contracts, regulation (or lack…
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Daniel Shaffer Notices the “Invisible Hand” aka Plunge Protection Team

 

Daniel Shaffer Notices the "Invisible Hand" aka Plunge Protection Team

I am glad I am not the only one who notices these things…. I am only speaking as someone who has watched the market since mid 90s and have never seen the behavior I see now. Whenever a key technical average is threatened a magical flood of futures buying comes in. Almost every morning the past 10 weeks pre market futures are green (apparently there is not enough time to buy stocks between 9:30 AM and 4:00 PM). The last 30 minutes has magical reversals – we saw it just last Thursday at a key moving average. [May 21: Bookkeeping - Covering Index Shorts Around 3:30 - 3:45 PM]

There can only be one entity who has the buying power to do this… and with Goldman Sachs as the 4th arm of government you can use them behind closed doors. But I am sure we’ll never know the truth… and I hate to sound like a grassy knoll type but the market just does not act like it used to if you really watch closely. The S&P now regularly jumps in 4-5 point increments in a matter of 60-120 seconds late in the day. In my humble opinion the government knows so many quant and program trades now are tied to the indexes that it is easy to manipulate this market… you lead, they will follow automatically (by their programming). So for a relatively low cost you can move things where they "should be", and the momentum performance chasing computers will support your case. And Goldman Sachs can pile up trading wins since somewhere in their bowels, in the cigar smoke… cheers of victory cry out. From late April via ZeroHedge

Clearly in a ‘free market’ system it would look embarrassing for this type of behavior to be out in the open. But heck Japan was tossing around


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Zero Hedge

The REAL Looting Is Happening On Wall Street ... Not In Ferguson

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

Images by William Banzai ... OBVIOUSLY!  

The looting in Ferguson, Missouri is bad.    The looters are giving the peaceful protesters against the shooting of Michael Brown ...



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Chart School

Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is a preview of the monthly moving averages I track after the close of the last business day of the month. All three S&P 500 strategies are now signaling "invested" -- unchanged from last month. Two of the five of the Ivy Portfolio ETFs, the Vanguard FTSE All-World ex-US ETF (VEU) and the PowerShares DB Commodity Index Tracking (DBC, are signal "cash" -- also unchanged from last month.

If a position is less than 2% from a signal, it is highlighted in yellow.


Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give a general sense of how US equities are behaving. However, ...



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Insider Scoop

Benzinga's M&A Chatter for Tuesday November 25, 2014

Courtesy of Benzinga.

The following are the M&A deals, rumors and chatter circulating on Wall Street for Tuesday November 25, 2014:

Visteon Confirms Discussions with Hahn & Co. Regarding Potential Sale of Halla Visteon Climate Control Corp Stake

The Talks:
Visteon Corporation (NYSE: VC) confirmed Tuesday, it is currently engaged in discussions with Korea's Hahn & Company regarding a potential sale of Visteon's ownership interest in Halla Visteon Climate Control Corp.

to the private equity firm. Reuters reported on Sunday, that Visteon was preparing to sell its 69.99% stake in Halla Viste...



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Phil's Favorites

Merkel Will Blink First, Not Putin

Courtesy of Mish.

The cold war took another twist last week when a Senior German Politician Endorsed Russian Takeover of Crimea.
Former state premier Matthias Platzeck, chairman of the German-Russian Forum business lobby and erstwhile Social Democrat (SPD) chief, is the first high-ranking German to say the West should endorse the annexation as a way to help resolve the Ukraine crisis.

Platzeck, 60, told the Passauer Neue Presse newspaper: "A wise man changes his mind - a fool never will... The annexation of Crimea must be retroactively arranged under international law so that it's acceptable for everyone."

Platzeck, Brandenburg's popular state premier from 2002 to 2013, struck a nerve in eastern Germany where there is far less support for sa...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Sabrient

Sector Detector: Holiday fever takes hold of stock investors, but a pullback is needed

Courtesy of Sabrient Systems and Gradient Analytics

With warmer weather arriving to melt the early snowfall across much of the country, investors seem to be catching a severe case of holiday fever and positioning themselves for the seasonally bullish time of the year. And to give an added boost, both Europe and Asia provided more fuel for the bull’s fire last week with stimulus announcements, particularly China’s interest rate cut. Yes, all systems are go for U.S. equities as there really is no other game in town. But nothing goes up in a straight line, not even during the holidays, so a near-term market pullback would be a healthy way to prevent a steeper correction in January.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based Sector...



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Digital Currencies

Bitcoin Mining

Bitcoin Mining

Courtesy of Global Economic Intersection

By Rod Garratt and Rosa Hayes - Liberty Street Economics, Federal Reserve Bank of New York

In June 2014, the mining pool Ghash.IO briefly controlled more than half of all mining power in the Bitcoin network, awakening fears that it might attempt to manipulate the blockchain, the public record of all Bitcoin transactions. Alarming headlines splattered the blogosphere. But should members of the Bitcoin community be worried?

Miners are members of the Bitcoin community who engage in a proce...



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OpTrader

Swing trading portfolio - week of November 25th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the Happy Thanksgiving Edition of Stock World Weekly!

Click on this link and sign in with your PSW user name and password. 

Picture via Pixabay.

...

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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Option Review

Yamana Gold call options sink

Yamana Gold call options sink

By Andrew Wilkinson at Interactive Brokers

A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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