Wednesday, January 23, 2008

PPT Rallies Markets, Raises False Hopes

I've mentioned the Plunge Protection Team (PPT) on this blog more than just a few times. While some people think that the President's Working Group on Financial Markets is some kind of chimera that I and other tin-hat conspiracy nuts have created out of whole cloth, there's more than enough evidence - including today's mythic 631-point rally - to prove that the PPT does indeed exist and now operates almost in plain sight.

Here are just three articles concerning the PPT from fairly credible sources:

THE TRAGEDY OF THE US STOCKMARKET Part 2 - PPT failing, panic in Washington...

Gold will rise, US Dollar would burn

Plunge Protection Team Now Official

There are many more which can be found using any search engine, but try this Google News search for links to current articles on the PPT.

After the absurd move today, rallying the Dow from a low of 11,644.81 to a high of 12,276.67, there should be no doubt that the US economy is in the midst of a serious crisis. The problem is that 95% of Americans don't know this because they will see the stock market rebounded today. Half will not know that the Dow was down more than 300 points. The other half will see that but simply not care.

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Economic reporters never mention the PPT, and always assign turnaround movements in the middle of market collapses as either bargain hunting, program trading or tied to the price of oil. So, the average Joe or Jane with money in their 401k thinks everything is OK. All the while the US dollar continues to sink into a black hole on the PPT's profligate spending in US equity markets.

All of this PPT-induced buying began at 12:45, when the markets bottomed out for the second straight day and it continued without interruption right through to the close.

Dow 12,270.17 +298.98; NASDAQ 2,316.41 +24.14; S&P 500 1,338.60 +28.10; NYSE Composite 8,805.68 +144.51

I have seen many a strange event on the markets, but today's takes the cake, the ice cream, plate, fork and napkin. Yesterday, I called the market rally the biggest fraud ever perpetrated in financial markets. I was wrong. Today's action takes that prize, hands down.

Let me be clear. Small investors in America are neither sophisticated or very smart. They get the majority of their information from television (CNBC) or paid shills, invest mostly in mutual funds which they barely comprehend and probably spend less than two hours per week analyzing market trends, individual stocks or financial events.

On the other hand, Americans still trust their federal government which is a major mistake. Here's a short list of non-credible functions, offices and people in the highest positions of power in the United States:

  • The president and his administration and cabinet

  • Congress: both houses are equally inept and unworthy of trust

  • The Federal Reserve, the Chairman (Ben Bernanke) and the Board of Governors

  • Treasury Secretary Henry Paulson

  • Mainstream Media, especially ABC, NBC, CBS, FOX (lapdogs of the government)

  • The SEC

  • CEOs of any major corporation and all of the Dow companies

Thus, the not-so-clandestine operatives of the PPT get to manipulate markets without impunity, resulting in erratic and unexplainable movements like today. This inspires hope in the little people, even though that hope is based on nothing more than a government printing press spitting out $100 bills as fast as it can and operatives in the stock markets buying everything in sight with both hands.

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Market internals show just exactly how ridiculous today's 300-point gain on the Dow really is. Volume was the highest in a long time, surpassing yesterday's highest of 2008. That makes sense, since the PPT had to buy a lot of stocks while people were busy selling them and then covering their short positions as the fraudulent rise overwhelmed everything.

Advancers finally got a leg up on decliners, 4234-2198, but new lows were again dramatically ahead of new highs, 864-60.

Oil slipped by $2.22 to $86.99. Gold closed at $883.10, -7.20, while silver fell by 14 cents to $15.97.

Unless there's any doubt, nobody should be trading stocks unless they have a solid understanding of economics and the workings of the PPT, as the former is fundamental and the latter is a market dynamic which cannot be understated.

Stocks will eventually fall again, retracing the lows of today and yesterday. Within months, if not weeks, the indices should be well below today's levels, though due to the activity of the PPT, the timing of the collapse is difficult to discern.

If you are long stocks or call options, you should not be playing in this market. It's a very dangerous playground and some of the kids carry knives. If you're short or in puts - the advisable position - keep your stops fairly tight and a sharp eye on radical movements like today's. 600-point gains can drastically alter your profits.

NYSE Volume 6,765,203,000
NASDAQ Volume 3,585,647,750

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