Friday, August 22, 2008

Playing or Being Played?

August has been a month of ups-and-downs with plenty of money sitting on the sidelines. Considering the absurdly low level of participation, via trading volume, one might be under the impression that many professionals have taken the month off.

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While that may explain the low volume to some degree, it also suggests something more sinister: that sparsely-traded markets are more easily manipulated. For instance, regulators, the little pea-brains that they are, already concluded that the overgrown gains in the price of oil earlier this year were simply the result of ordinary supply-and-demand forces. Of course, they came to that conclusion before it was revealed that a few speculators dominate the oil futures trading markets.

To get an idea about how ordinary, individual investors feel about manipulation and the lack of regulation, check out this fairly lame article with excellent reader comments on Yahoo's Tech Ticker.

I make mention of the dubious art of market manipulation from time to time because it is not only plausible in today's mega-billion-dollar environment but also probable and proven to have occurred, especially in the case of the President's Working Group on Financial Markets, a/k/a the Plunge Protection Team (PPT).

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Dow 11,628.06 +197.85; NASDAQ 2,414.71 +34.33; S&P 500 1,292.19 +14.47; NYSE Composite 8,373.55 +59.41

Lest we forget, the week began with two consecutive days of declines, but it ended with 3 straight gains. Remember, I said yesterday that the week would be of little consequence.

For the week, the Dow Jones Industrials lost a whopping .... wait for it... 31 points. So, we're just about even. It's all good! Crown me genius!

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(Just a side note: yesterday, oil was up $5 and change and the culprit was the dastardly nation of Russia, causing tensions with the US and its allies over Georgia. Today, oil was down a similar amount, and, what a coincidence, the Russians are leaving. Would nations and traders collude to have little wars and occupations just to move the price of oil? Count on it.)

On the day, advancing issues overwhelmed decliners, 4421-1773. New lows defeated new highs, 153-59.

Oil dropped $6.59, to end the week at $114.59. Gold lost $5.50, to $833.50. Silver fell 25 cents to $13.59. Everything seemed to go absolutely nowhere this week.

Volume on the equity markets was the lowest of a very low volume week.

So, are you playing or being played?

NYSE Volume 888,139,000
NASDAQ Volume 1,395,867,000

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