Wednesday, August 8, 2007

More Manipulation in Stocks

The US equity markets are beginning to take on theater of the absurd qualities, and Wednesday's trading patterns were possibly even more ridiculous than any of the preceding week.

Looking solely at the Dow Jones Industrial Average, here's how the day went. Stocks were higher right out of the gate and continued in an orderly climb until peaking, up 190 points, just prior to 2:30 pm. Then, without warning and without any notable news event, the index retreated to break even at just before 3:30.

A drop of 190 points in an hour? Well, we've seen gains of that magnitude in the same time frame, so why not?

Alarmed, the government meddlers from the PPT (Plunge Protection Team, aka, the President's Working Group on Financial Markets) quickly swung into action, sending the index soaring to a close 153 points higher. Sweet. Brilliant. Bravo. Bulls**t.

This market is now being so openly gamed that the players aren't even trying to disguise their moves. The whole operation is designed to keep the public in the dark and avoid panic selling in the face of a serious credit squeeze and the imminent collapse of certain financial institutions. What we are not seeing behind the scenes - and probably will be covered up neatly in SEC filings (yes, they will lie), are billions of dollars being lost, wasted, fondled and otherwise misused in derivative markets, forex trades, futures and other odd-ball, shadowy "investment" vehicles. We may never know exactly what is occurring.

Dow 13,657.86 +153.56; NASDAQ 2,612.98 +51.38; S&P 500 1,497.49 +20.78; NYSE Composite 9,746.20 +140.13

What we do know, beyond any doubt, is that the markets are being pulled, kicking and screaming, to the upside by agents of the government, acting "in our best interest" on our (formerly) free, open market exchange.

Investors should be at the height of outrage, but this kind of thing has happened before and will happen again. Most casual observers will never even look at a one day chart of the Dow, the NASDAQ or any other index for that matter. Most don't even look at charts of the stocks they own, whether they be in mutual funds or owned individually.

The general public is being taken as fools and rightfully so. They are.

It's barely worth commenting on anything in this rigged market, since fundamentals, reports and sound investment strategies no longer matter. The markets are going to continue to rise until the next election, Democrats and honest investors be dammed. All is well. Look away now.

The spectacular gains of the past three days (465 points on the Dow) are all the more disturbing in the face of the slumping housing market, though the National Association of Realtors (NAR) announced today that median home prices would fall less sharply than previously expected (1.2% instead of 1.4%). Tell that to sellers in Ventura, California or Vero Beach, Florida. The NAR is interested in keeping prices higher, so their credibility should also be called into questioned.

Advancers trounced decliners for a change, by a 9-2 margin, but new lows were again well above new highs, 636-358. The "players" made a lot of money going long today, though they still were unable to lift all of the sinking ships.

Speaking of rigging, oil lost 27 cents in futures trading, closing at $72.15. Gold was up $4.00 and silver added 8 cents to 13.17. There's still time to buy the metals!

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