Market's late rebound may revive manipulation rumors

San Diego Union Tribune ^ | Don Bauder

[eno_]

Read the Wash Post article. It gives examples of the kinds of goodies the government can provide to big brokerages just on a regulator's say so. Nothing overtly illegal or unethical. You suggest a level of independence that does not exist in such a tightly regulated industry.

Why do you think there is such a big gulf between the lamestream media and citizen-media on the Internet? No conspiracy needed: just the fact that a concentrated media is easier to influence.

[jiggyboy]

Presumably these "bargain hunters" independently decided that every stock on the board had fallen to its optimal "bargain price" at the same instant, so they all started to buy every stock on the board in the same five-minute period.

"Program trading" is prohibited when the major indices rise or fall a certain amount. That level is roughly 1%, so the markets were well past it at the time of the mass epiphany. The buying was done "by hand".

[Poohbah]

The amount of goodies would have to exceed the prospective losses to be incurred by brokerages being that stupid--and that is a LOT of goodies, more than a regulator can give on just his say-so. And the government would have to reliably deliver said goodies--which they probably wouldn't.

[discostu]

Like so many conspiracy this one revolves around an constructed oxymoron. In order for this PPT thing to exist within the available evidence we have to have a group so powerful that they can move the DOW hundreds of points in a matter of hours, but so weak they haven't been able to do anything about the steady unwind of the market in 2002.

[spoiler2]

The Plunge Protection Team is a GOOD thing, because like a shock absorber, it helps cushion the lemming-like panic selling of the intra-day and gives investors an overnight period to adjust.

If the market still wants to go down the following day for rational reasons, it will, but it does so from less of a panicked opening bell.

[Dog Gone]

The steady unwind of this market is probably a healthy thing. Share values were based on pure speculation, not intrinsic values.

The question is how to unwind it without overly harming the economy.

[Sacajaweau]

"Playing" the market is nothing new. The impression from the Dems is that all you little guys should take your money and run 'cause we're going to dig up so much dirt on the "opposing" party, you just won't believe it.

Like no big Dems have any interest in the market or sit as CEOs or on Boards of major companies or receive any money from these companies. The bottom line is you have trouble raising money among the majors but you DO get money from all these companies and you'd take all you could get.

So you set the stage for the "herd" to vote for you, the poor and ignorant who have nothing to lose and are continuously fed a diet of "bad Republicans".

But beware...Middle America has realized the mistake of putting their eggs all in one basket. Many of them will now "learn" to diversify....something they have known all along. Many of them may even read the company reports or do a little research.

Some local Xerox employees have been saying for years that the company was slowly diminishing. Did they roll over their money? Nope! Are they crying? Yes!

They didn't even listen to themselves. Geez

Sac

[ken5050]

Correct..and this is actually the type of "yo-yo" actio that we need to see before ther bottom is reached...there's still a lot of cash sitting on the sidelines, and there's still a lots of irrational exuberence floating around...and both have to be flushed from the system..so program trading kicks in..gooses tghe market up, folks pile in, and get wiped out the next day..they need a few more smacks upside the head....

[ThinkingMan]

Count me as one of those greedy investors! The market was full of bargains yesterday.

[discostu]

While I agree share values were spiked that doesn't mean there has to be an unwind. Not if there's a group of conspirators working behind the curtain to prop things up. If we have a group of conspirators that can move the Dow 350 points in just a couple of hours then in theory they should be able to push the market back up over peak in less than a week. At the very least they should have been able to prop things up for modest gains/ losses during this whole time. There's no reason why share values have to represent anything logical. So why allow any unwind? If you've got that group of conspirators to prop things up then things should be propped up.

IMHO this odd ball porpoising we're seeing is because of 24/7 news and the internet. Back in the "good old" days you'd see the same cycle drawn out over the course of a week as people didn't know what was going on in the market until they got home. So your drops were slower (most of the time) and your bargain hunter bounce didn't hit until wednesday or thursday, often with a massive continuation of the drop on friday (almost every crash has been on friday). Now everybody with money in the market probably has a job where they can track the market in pretty close to real time during various breaks at work, panicked dumping spreads faster, you hit the bargain hunter bounce faster, then the next day the pug ugly starts all over.

[Jay W]

Like so many conspiracy this one revolves around an constructed oxymoron. In order for this PPT thing to exist within the available evidence we have to have a group so powerful that they can move the DOW hundreds of points in a matter of hours, but so weak they haven't been able to do anything about the steady unwind of the market in 2002.

You miss the point about the PPT.

1. It is not a conspiracy theory.

2. The PPT's job isn't to hold off the overall decline, which it cannot do, but to make a given day's decline tolerable and manageable, so as to hold off widespread panic. It can't stop the collapse of the market. Nothing can stop that. What it can do is lessen the damage for any given day's "plunge." The Dow still went down yesterday, but not as bad as it was heading for.

3. It is a Plunge Protection Team, not a Decline Protection Team.

4. Stop wasting time with accusations about "conspiracy theories." It ain't healthy.

[discostu]

It is a conspiracy theory, there are people theorizing that there is a conspiracy, the infamous Post article proves nothing, it only talks about tools in place openly (temporary market shut downs) and theorizes other possible abilities.

If you're going to go through all the trouble to make a PPT to make declines "smooth", why not make a DPT that keeps the declines away all together? If you're going to give a group the power to manipulate the market why reign them in, go whole hog, let's spike this baby up to 20,000 and let the good times roll.

I'm not making accusations, I'm pointing out why this idea doesn't hold water. I personally believe in the definite probability of a number of conspiracies, what I've learned over the years though is certain really good ways to spot unrealistic conpiracy ideas. The oxymoron. If the popular theory requires the conspirators to be both incredibly powerful (or smart) and amazingly weak (or dumb) then it just doesn't hold. You can't have things on both ends of the spectrum. If you've got people capable of making the Dow swing 350 points in just a couple of hours then you've got people capable of never having let it drop like a stone in the first place, and never letting it have serious or long term declines. It's simple logic.

[Dales]

Richard Russell of La Jolla's Dow Theory Letters says, "Maybe you can't call it manipulation," but a lot of mutual funds, some huge, jumped in and did buying.

Yes, and they bought what was on the indexes. But if you look at the earnings yield for the components of the indexes, you find that they are looking pretty good. For example, the composite earnings yield of the S&P was about 1.5 points higher than the yield on long term government bonds. If the yield is higher in stocks than in bonds, there is going to be institutional money moving towards stocks in general.

I think that the bottom has been reached.

But if there were manipulation going on, would you be opposed to intervention by those who can to prevent further meltdown and loss of wealth for them and for others?

[Dales]

Now, if it was Heather Graham behind a shower curtain, then I would pay attention.

[spoiler2]

"let's spike this baby up to 20,000"

Since the PPT is working with our tax dollars, I'm glad they do nothing more than thay are at the present.

Can you imagine how many dollars it takes to move the Dow just one point, let alone the multiples you speak of?

[eno_]

The market is not like a pothole. If the market were a pothole, it would be like a pothole that could move or stretch to confound any "shock absorber." Which is why figuring out and arbitraging market intervention is so lucrative, vide Soros's Quantum Fund.

[Wolfstar]

Don't forget foreign investors who might want to help bring down GWB. Arabs – and there are plenty of ultra wealthy Arabs (OBL to name one) – unhappy with his stand on Arafat and the Palestinians and/or with his proposal to go after Sadddam. Leftist Euro-weenies unhappy with a whole range of GWB's policies, from Kyoto to the ICC, that reaffirm American sovereignty and right to act in our own interests. There are whole hosts of anti-American interests, both here and abroad, who think they would benefit from a weakened GWB and a strengthened Dem (Leftist) Party here. We also have too many people on the right here who seem congenitally incapable of grasping the big picture.

[It'salmosttolate]

"Another"Conspiracy Theory"?Did You Ever Hear Of "Bargain-Hunters"??"

How much did you buy?

[eno_]

Actually the Post article spells out explicitly how bank regulators can stretch the liquidity of brokerages (or deny this favor). That is a very concrete intervention tool, completely informal, and need not be disclosed at all. Are you suggesting that this tool, and ones like it, stay in the drawer because our government is staffed with saints who would never do such a thing? Also, brokerages that are incentivized (strong-armed) into providing plunge protection are doing it with - literally - our money, if it is mutual fund buying that is supporting a market.

[eno_]

They don't need no stinking tax dollars. They have your 401k.