Courtesy of Pam Martens
What we need today is a real life character like Vinny Gambini in the movie My Cousin Vinny to take over the questioning for the U.S. Senate Banking Committee – like Ferdinand Pecora did in the early 1930s to root out the systemic frauds in the stock market of that era. Gambini would haul the heads of equities trading for each of the major Wall Street banks and their Dark Pools to a hearing, put them under oath, and grill them about the highly suspicious trading activity that is going on in today’s markets.
Let’s start with what happened yesterday. In the face of punk earnings forecasts for the rest of this year and a growing global economic slowdown, the Dow Jones Industrial Average hit a historic milestone, closing above 27,000 for the first time. But the rising tide didn’t lift all boats: eight of the Dow’s 30 stock components closed in the red. Those stocks were Chevron, Verizon, McDonald’s, Apple, Travelers, Johnson and Johnson, Pfizer, and Merck.
There was something else that raises suspicious red flags to veteran chart watchers. A big spurt in some of the Dow stock components magically occurred in the final 15 minutes of trading, like some mystical, invisible hand had decided to levitate these share prices before the closing bell.
To the thinking of Wall Street veterans who are still capable of human intelligence, as opposed to relying solely on algorithms and artificial intelligence software, when there is an unnatural spike in prices toward the end of the day and it occurs on abnormal trading volume, it’s not likely an intervention by the Gods of the market but far more likely that someone (or a cartel that we see so frequently these days) is painting the tape.
Here’s how Investopedia defines “Painting the Tape”:
“Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and selling it among themselves to create the appearance of substantial trading activity…Manipulators may paint the tape near the market’s close in an attempt to boost a stock’s price substantially at market close. Closing prices are widely reported in the media and are closely watched by investors.”
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