Posted on 06/10/2016 8:53:05 AM PDT by Lorianne
By making the stock market the only game in town, the Powers That Be can no longer afford to let it decline for any reason.
Market technicians have long observed that the holes in charts left when markets gap up or down at the open of trading almost inevitably get filled later on. When the market gaps down, it will eventually rise to fill that gap. When the market gaps up, it will eventually decline to fill that open gap.
Since there are open gaps galore lurking in the lower depths of the S&P 500's chart, that would typically suggest stocks must--gasp!--fall to fill those open gaps. The prospect that stocks might not drift higher forever without interruption is deeply disturbing, and so the Powers That Be have issued a new edict: unfilled gaps below must never be allowed to fill.
This new rule simplifies trading, confidence and sentiment: Bulls can now relax, knowing that the market will never be allowed to decline. Sentiment can stay pegged at "extreme greed" forever, and there is no longer any need to hedge long positions because markets will only move higher.
Volatility will drift lower because any decline will be mere signal noise, only of interest to high-frequency trading (HFT) machines skimming pennies.
Too much is riding on stocks to let them drift lower. The stock market is not only the critical signaling device that tells the world all is well and everything is getting better every day, in every way, it's also the collateral for all sorts of highly profitable schemes, and the financial foundation of the institutions that are supposed to fund pensions and fulfill insurance redemptions.
And even more important, the stock market is the money machine that are supposed to fund pensions and fulfill insurance redemptions.
And even more important, the stock market is the money machine that enables CEOs and top management to push their stocks higher with buy-backs and then cash out their personal stock options for glorious millions.
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Until they do.
Banana republic and a completely corrupt country and govt..I think history tells us what is going to happen soon
All schemes fail eventually, as they are unsustainable in the long term.
Much of this is true, but it was true in 2007. It’s kinda dangerous presenting legitimate complaints about the lack of moral risk as investment advice. Of course, the stock market DID rebound after HUGE government investment, proving the point, but doing so in ways that the casual reader may not recognize. How many such readers can afford the patience to ride out such storms?
Gaps almost always get filled.
It may take years - or months.
It is a deadly game. We are in a season that most of us over 50 something don’t recognize. For those younger all this is normal.
Instant gratification for young couples under 40 to buy the house of their dreams and then some with ultra cheap money but it is accompanied by ultra high taxes.
Interest rates are 1/3 what they were 20 years ago. Inflation is nil and so is growth for everything but taxes and health care which seem to increase by double digits.
How do we adjust to this new reality? It is not made for retirement and living off of savings but only for working and borrowing.
It is a house of cards but it must not be allowed to fail, it is the only game in town, Equities.
“it’s also the collateral for all sorts of highly profitable schemes, and the financial foundation of the institutions that are supposed to fund pensions and fulfill insurance redemptions”
Trying to control the market to prevent a downtrend will inevitably result in the Mother of all Crashes.
With super computers selling and buying stocks in microseconds since the 1990s, the private Joe has had zero control over the market.
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