Tuesday 24 January 2012

Market Manipulation 101

ES closes the last four days as follows:
1310.50, 1310.75, 1311 and today 1310.50
Does anybody still think that there is no market manipulation? As usual, volume was almost non-existent and well below average.

Given that we are being set up nicely, where the retail is encouraged to buy buy buy by various talking heads of CNBC and other MSM, this itself should raise the red flag that there is cliff ahead.

Everything is screaming for a reversal but the money flowing in from Europe is keeping the US stock markets alive. Some of the reversal patterns are so rare that they happen once in a while and yet we are hanging on. Can the market defy gravity forever?  Unless there is more free money infused by the Fed, it cannot. So may be one more day we will have to bear the agony. In the mean time, gold down, silver down, oil down, copper down and equities barely moved!

Today we had a 3rd consecutive doji  or tri star pattern in SPX. It can be a good reversal pattern but given the fact that so many reversal patterns have not yet delivered, let us not be too excited about this one either.  When the reversal comes, it will be short and swift because I think there are unfinished businesses on the upside. 

AUD retraced back some of its earlier losses and is now testing the 1.05 level. Aussie economic data will be out tonight. The technical outlook suggests that AUD may have put an interim top. The ATR (Average True Range) suggests that the topside breach may be a head fake.

Another carry trade favourite pair AUD/JPY  also seems to hot the resistance.

Apple blew past the top line and bottom line projection. But there should be no surprise there.  After market it is trading at $ 452.50 after reaching a high of $460. This was the only thing left to convince the retail to join the buy express and buy the dip.  IFM on the other hand came out with their dire projection of the world growth and no deal has yet been reached on the Greece debt.  So neither technically nor fundamentally, I am able to convince myself that the bull market is here. May be after some 50-75 points correction, it will be nicer bait but at this moment, it is not that inviting.

But it seems to be working at some level. During the “buying stampede” which typically last between 17 to 25 trading sessions, even the weak stocks have been bid.  You can see for yourself where we are at this point of time. With the bullish sentiment at extreme high level, it is just a matter of time.
Tomorrow morning is going to be interesting. With the huge up from APPL and expectations of more free money, the markets may open higher. But when everyone is agreed that the market will move up, it has a tendency to do the opposite.  

Thank you for reading my not so cheerful thoughts at http://bbfinance.blogspot.com/ and following me at Twitter. (@BBFinanceblog). I am looking forward to write something more interesting in the coming days and weeks and not be stuck at the anticipation of correction.


  1. Hi".
    Go and take care of you're flu, this Is occurring often after grueling travel half around the world. Take care of it as lot of folks need to read your excellent posts.
    I am currently out of the country, in the last years I have seen every thing go up except my revenues. From gasoline, to milk to name it has gone up....my interest of my banking account as gone down. For every $100'000 my dear Bankster pay the humongous rate of 2 per cent on a 5 year lock rate.

    Now how can we have a bull run to the moon according to all the bias expert appearing on Cnbs. God help us all as we will need it. A country his not been build with debt only. I am so tired of repeating this as market kept going up and up.

    But life in main street is not all rosy. This market is a huge machine which has been flooded with free money which in turn as given more wealth to the 1 per cent. But where they all making a mistake it is the 99 per cent which have been flushed down the drain by the Elite. They the Elite are making a huge mistake as they did in the dirty 1930. Once the mass is broke and cut severely on buying and once Obama has exhausted all revenues from Joe Six pack taxes revenues beyond repair. The machine will derail and break. A reset will have to be done to restaure sanity and fair wealth to all. Take care I am still holding my entry under Hxd which is getting back close to my entry point. Only .30 under was .60 a day ago cheers and take care of tha nasty flu. A fellow canuck

  2. I don't listen to CNBC, just read the news online and blogs. My issue is that I rarely follow the crowd. Maybe I should start listening in to see what the crowd is actually seeing which may be encouraging them to buy!

    Manipulation..dunno, I generally don't believe in such things too much.

  3. QE-Europe is the only thing that seems to be propelling this market. And that, in no uncertain terms, is manipulation. Question is - when does the steam run out?

  4. If the liquidity in Europe which is invested into US equities is the reason for this steady run (as I also believe) couldn't one make a rough estimate on the expected move of the s&p, based on the estimated of the amount of this liquidity?

  5. Could you please explain in a bit more detail what the last plot is showing (the 60 day % deviation)? Or is it just the deviation (in %) of the stock prive from the 60d sma? Thanks!

  6. Thank you for your posts which I find very insightful. However, I think that we may see ES 1325 or thereabouts before we see ES 1240-1250.

  7. You thought there was manipulation BEFORE Ben promised cheap money forever! Today was a true helium ballon. My shorts are screaming in agony.

  8. Thanks Guys. Sometimes we commit ourselves before time. Then we suffer in agony. The purpose of this trap is to squeeze the shorts and bring in new suckers. We have seen this before. But with negative divergences all over, the momentum is almost gone.