Daniel Shaffer Notices the “Invisible Hand” aka Plunge Protection Team

May 28, 2009

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Courtesy of TraderMark at Fund My Mutual Fund

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

This is getting surreal. Goldman principal program trading is now well over 5x compared to its customer and agency trades and a 150 million share pick up compared to last week. For yet another week, Goldman’s principal trading represents more than half of all NYSE member firm principal transactions.

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 buying stock in the open market to support prices; if we are down this same path let’s admit it. Oh wait, "we’re not Japan". (we just follow all the same policies) I am sure there is a clear explanation why Goldman Sachs only lost money 8 days the entire first quarter from their trading activity (again this is like a baseball hitter hitting .600 or .700 for 3 months) and 20% of all volume now goes through their desk. All happenstance…

The Plunge Protection team is no urban myth [Jan 9, 2008: An Amazing Blunt Commentary on the Plunge Protection Team] – I just believe their actions in the past year or so have become a lot more easy to track, even for someone who does not sit in front of a Bloomberg terminal… simply by watching how patterns now versus hwo it "used" to work. Even Cramer voiced some commentary in this direction last summer. [Jul 14, 2008: Our Gospel is Spreading – Jim Cramer References "The Hand"] Keep in mind we have gaping holes in state pension plans, and people are peeved at what has happened to their 401ks. What better way to solve one problem, and increase confidance in the "ownership" society.