I hate to keep harping on this subject but now that some prominent people are calling out the PPT for what they are doing, let's look at the last couple of weeks and discuss exactly what they have done. Above is a intraday chart of the SP 500 futures with green arrows displayed in the last hour every time a significant upward move has occurred. It is tough to see without enlarging the chart, but in every one of the last 9 days there has been a significant upward move in the last hour of trading. I am sure there are plenty of statisticians out there that could give us odds on this happening in a world of randomness. You do not need to be a brain surgeon to conclude that something odd is happening here.
It is frustrating for me, they have cost me probably 100k last year alone in profits they took away from me by doing this. You could argue that if you know the government will buy futures in the last hour to manipulate the stock market why not just go with it and quit complaining? Certainly seeing it the last 9 consecutive days, it is hard to argue that. However, I follow strict rules when in trades for exits. I do deviate from them occasionally, but try not to.When we have setups on daily charts that should be good for a 3 to 7 day run, it is not a good idea to exit trades that are working correctly after just a few hours just because I think the government is going to do this. I ensure that when the first move gets away from them, I will miss a big win. Make no mistake about it, a huge win on the short side is out there this year, and I do not want to miss it. The other thing that is unknown is exactly what triggers their trading programs and what their real objective is. As a result, even though we see this happen 9 days in a row, they could very easily pull the plug on this to make a political statement. I do expect them to do this soon in relation to the health care debate, especially if for some reason it does not pass.
They are jawboning about the stock market strength as evidence of this great recovery in the economy. Think about this. Would you still feel we have a great recovery going if everything else were exactly the same except the DOW was at 6000 instead of 10700? I doubt it.
I was discussing yesterday with a fellow trader who was also short the indexes like I am what to do when noon came around. We both knew a PPT upward move was coming, and the debate was should we take our money now in front of it. Below is the chart and the way it looked at that time.
You can see a clear sell signal was there for another move down to new lows. It was 10:57 PST when I did the image capture of this chart. In a free market world this would have been a high probability short trade, we do not live in a free market anymore. Typically these trend days just go right to the close with very little reaction to the trends. All the retracements are typically winning trades. Yes there are some divergences on the chart, but they often occur against trends and are usually to be ignored in a situation like this. My feeling at this point was that even though I had quite a bit of profit on this trade here in multiple accounts, it was a trade that should last several days so I was not going to get too cute with it just because the PPT was likely to elevate the market into the close. Of course in the back of my mind I was hoping they would finally let one go.
What a dumb idea that last hope was.
As you can see in the last hour they once again struck and this is where in my opinion they are being very smart about what they are doing. Only for the discerning observer is this obvious market manipulation. They took the DOW from - 150 to - 100 so they still "allowed" a down close. Had they completely reversed this whole day in the face of now congressman calling this out, it would have been way too obvious. They kept this day in check relatively speaking, mission accomplished. Note the 2 inverse head and shoulders patterns here and of course there is one big difference between what appear to be 2 similar patterns. One sparked a rally and the other did not. The difference is the time of day. When the first one occurred there was still plenty of time for the market to work things out on it's own, the second time was running out and the PPT did not want a 200 point down day on a Friday especially with the Holiday coming.
For those who might argue this is consipiracy theory, I would like you to provide me with the statistical odds of this happening 9 consecutive days in a market that is essentially historically close to a 50/50 distribution of up vs down closes. It will be very interesting to see when the truth ultimately comes out about this, how the public reacts. After all the average person has benefitted greatly in their 401k accounts by this manipulation so is there really any harm in this? My argument is in the long run artificially manipulating anything is ultimately very harmful. Just look at real estate and what has happened there. The same thing will happen here it is just a question of when not if.
I think had we had some pullbacks to provide support points on retracements, the structure of this market would be much more natural and stronger. We just have a huge air pocket that is likely to keep going for now, I do not know what the trigger will be to reverse this or when it will happen. Now it appears the one cycle I was looking at which is Mid Feb and was indicated as a low is inverting and it will be a possible high point. That date ties in to Astrological models like Bradley so maybe that is when we might see a reversal.