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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

U.S. Healthcare And The Tragedy Of The Commons

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

When the system is set up to encourage maximizing self-interest, accountability for the whole is lost.

  The lessons drawn from the U.S. healthcare system's failures can be fruitfully applied to a variety of large-scale problems around the world. Let's start with an insightful look at the fixes that have largely failed to rein in costs and improve actual care/patient health.

Dile...



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Phil's Favorites

When do we decide that Europe must restructure much of its debt?

When do we decide that Europe must restructure much of its debt? Courtesy of Michael Pettis 

It is hard to watch the Greek drama unfold without a sense of foreboding. If it is possible for the Greek economy partially to revive in spite of its tremendous debt burden, with a lot of hard work and even more good luck we can posit scenarios that don’t involve a painful social and political breakdown, but I am pretty convinced that the Greek balance sheet itself makes growth all but impossible for many more years.

The history is, to me pretty convincing. Countries with this level of debt and this level of uncertainty associated with the resolution of the debt are never able too grow out of t...



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Chart School

Second Day of Quiet Action

Courtesy of Declan.

The S&P lost a little, the Nasdaq gained a little, but there was no change in the larger picture.  The S&P registered a distribution day, of sorts: volume climbed, but as the index finished with a doji it doesn't really qualify as a heavy sell off day. The selling volume was enough to generate a 'sell' trigger in On-Balance-Volume too, but the whipsaw risk is high.


The Nasdaq did the opposite. It added nearly 0,5% on higher volume accumulation. It's brushing the 10% envelope relative to the 200-day MA, which is not a particularly strong sell signal, but a warning sign for a possible slow down in the advance.

...

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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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Market Shadows

Kimble Charts: Coal

Kimble Charts: Coal

By Ilene 

Chris Kimble's chart for KOL shows a recently beaten down ETF struggling to pull itself up from the ashes. As the chart shows, KOL has recently drifted down to levels not seen since the financial crisis of 2008-9.

Bouncing or recovering with energy in general, coal prices appear to have stabilized in the short-term. Reflecting coal prices, KOL has traded between $13.45 and $19.75 during the past year. Bouncing from lows, KOL traded around 2% higher yesterday from $14.26 to $14.48 on high volume. It traded another 3.6% higher in after hours to $15, possibly related to ...



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OpTrader

Swing trading portfolio - week of February 23rd, 2015

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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Sabrient

Sector Detector: Sector rankings stay neutral with few bullish catalysts on horizon

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

Courtesy of Sabrient Systems and Gradient Analytics

Stocks are hitting new highs across the board, even though earnings reports have been somewhat disappointing. Actually, to be more precise, Q4 results have been pretty good, but it is forward guidance that has been cautious and/or cloudy as sales into overseas markets are expected to suffer due to strength in the US dollar. Healthcare and Telecom have put in the best results overall, while of course Energy has been the weakling. Still, overall year-over-year earnings growth for the S&P 500 during 2015 is expected to be about +8%.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 cha...



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Digital Currencies

MyCoin Exchange Disappears with Up To $387 Million, Reports Claim

Follow up from yesterday's Just the latest Bitcoin scam.

Hong Kong's MyCoin Disappears With Up To $387 Million, Reports Claim By  

Reports are emerging from Hong Kong that local bitcoin exchange MyCoin has shut its doors, taking with it possibly as much as HK$3bn ($386.9m) in investor funds.

If true, the supposed losses are a staggering amount, although this estimate is based on the company's own earlier claims that it served 3,000 clients who had invested HK$1m ($129,000) each.

...



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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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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 this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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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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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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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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