Plunge Protection Team at Work

There is evidence of the Federal Reserve, in conjunction with the Treasury and major brokerages, rigging the market to the upside. Friday's activity was more evidence of the President's Working Group on Financial Markets (otherwise known as the Plunge Protection Team or PPT) helping US equity markets from slipping into the red.

There were, in fact, two separate events. On the Dow, this was manifested as one 100-point move from 11:30 to 12:15, and another roughly 90-point move from 3:40 pm into the close. It's a safe bet to assume that the Dow and other indices would have finished lower yet again without the pumping from our benefactors inside the shadowy world of high finance.

Dow 13,176.79 +66.74; NASDAQ 2,637.24 +18.73; S&P 500 1,458.74 +7.59; NYSE Composite 9,701.38 +48.86

What did these chump-change gains look like from inside the market? Declining issues checked in ahead of advancers, 3416-2899 and new lows slaughtered new highs, 628-89. In other words, much of the market is sick and minuscule gains like today are akin to spitting from the beach into the Pacific. There has been fundamental damage done to stocks, and generally speaking,

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what fixes markets like this is exactly what is happening. Stocks need to fall to reasonable valuations before investors can feel comfortable throwing money at them.

With earnings hitting the skids and the general economy on a rocky road, now is not the time to dive into equities. I have reiterated this sentiment over and over the past three months. Technical factors aside, the markets are in a corrective phase and may be entering an outright bear market. We'll know more over the remainder of the year as the holiday season and tax-selling ensues.

The price of crude oil continues to be a thorny issue as the per barrel price jumped another $1.67 to close at $95.10 on Friday. Gold was down marginally and silver gained 2 cents.

Volume was particularly strong on the NYSE and has been for over a week. Technology stocks are still somewhat of a safe bet and defensive plays would include consumer staples, mining and energy.

The coming week will be short with Thanksgiving on Thursday. Traditionally, the Wednesday and half-day Friday sessions are usually not volatile. It may serve as the calm before the storm.

NYSE Volume 4,129,085,250
NASDAQ Volume 2,515,753,750