Friday, January 25, 2008

Sellers Resume Bearish Ways

It didn't take long for investors to continue their selling once the Fed and their internal, clandestine agents were through pumping the markets on the buy side.

Naturally, with news of the federal government handing out money to citizens percolating all over mainstream media, the index pre-market futures were goosed and the morning shows all headlined the "stimulus package."

On Good Morning America this morning, Diane Sawyer asked a real estate expert, "are we nearing the end of this recession?" This and similar false hope nonsense was being spouted all over the airwaves. Obviously, Ms. Sawyer, like most of her viewing public hasn't a clue as to the depth and seriousness of the economic crisis underway.

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Fortunately, the expert was clear, explaining that home prices probably wouldn't settle out until late 2008.

Over the past three sessions, the Dow, after bottoming out at 11,508.74 on Tuesday morning, rose an incredible 1014 points (8%) to 12, 522 on Thursday afternoon before pulling back somewhat to close at 12, 378.61.

Dow 12,207.17 -171.44; NASDAQ 2,326.20 -34.72; S&P 500 1,330.61 -21.46; NYSE Composite 8,827.48 -114.77

On Friday, the Dow gapped higher by another 108 points, reaching the high of the day (12,486.89) just 5 minutes into the session. From there, however, it was all downhill.

At 10:30 am, the 12,400 mark was breached, and as it turned out, for the day. Between 1:00 and 1:30 pm, the index sputtered around the 12,300 level, broke through that and headed still lower. Approaching 2:00 pm, the Dow had hit 12,200, down 178 points.

That 12,200 level would prove to be the battleground between the bulls and bears. Absent active participation by the PPT, the market was allowed to drift lower without the overt influence demonstrated over the past three sessions. At least until 3:00 pm, that is.

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Considering that the Fed is almost certainly going to cut rates by another 50 basis points next Wednesday, they need some kind of negative influence to make their move plausible, thus negating the immediate need for Plunge Protection. Still,with the markets down considerably for the day, the manipulators felt a need to pare back some of the losses. In a 10-minute span from 3:10 to 3:20, the Dow cut its losses in half. The other indices experienced similar moves.

Finally, in the closing 15 minutes, the PPT apparently stood down and the selling continued in a fierce manner, lopping off 100 points in a matter of minutes. When it was all said and done, the bears won again, though, for the week, the Dow gained a negligible 108 points. The S&P and NASDAQ closed the week with minor losses.

Internals were more pronounced. Declining issues took the lead over advancers, 3565-2812, and new lows continued to dominate new highs, 194-62.

Oil gained another $1.30 to $90.71. Gold and silver continued to forge ahead, with gold up $4.90 ($910.70) and silver ahead 16 cents ($16.49).

The protracted interference from the PPT continues to make trading difficult, especially for those playing the market short. The direction is clearly to the downside, but the PPT insists on preventing the markets from busting, which they eventually will. The distortions are evident to anyone trading and until the funds of the Fed and Treasury are exhausted, we are forced to live with this blatantly unethical condition.

Of course, market forces are more powerful than the machinations of a few madmen masquerading as government officials. The fear is that the influence of underhanded trades (and associated derivatives in the options market) is making conditions worse rather than better.

NYSE Volume 4,528,555,500
NASDAQ Volume 2,598,300,250

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