Posted on 10/30/2014 1:19:32 AM PDT by dennisw
But times change and so does thinking. In recent weeks, we’ve discovered that the CME Group, the exchange in Chicago, has an incentive program under which foreign central banks could buy stock market derivatives like the S&P contracts at a discount.
It’s not that these foreign banks need a break on the price of their trading. But it does show that there is a back-door way — through foreign emissaries — for the Fed and the US government to prop up stocks like Heller suggested, and — maybe — not get caught.
But let me explain about the unknown forces in the market these days. Call it by a nickname — the Plunge Protection Team. Or call it the President’s Working Group on Financial Markets, the official name given to the group when it was formed by President Ronald Reagan after the market turbulence of 1989.
These forces may be working from a script in the “Doomsday Book,” which the US government recently fought to keep secret when it was brought up last week during the AIG trial in Washington.
Here’s the bottom line: Someone tried to rescue the market last Wednesday. And it’s becoming a regular occurrence.
The details of last Wednesday morning are these: At the same time the Dow was off 350 points, the S&P index was down 43.80 points, That was an enormous decline in just 11 minutes of trading and it was an indication that Wall Street was not having a good day.
Then, someone (or something) started buying S&P futures contracts en masse. Twenty-one minutes later, the S&P index had regained 30 of those lost points and was back at 1,861.
(Excerpt) Read more at nypost.com ...
That’s a good and valid question, but irrelevant to the one I asked.
After the crash, yes.
It can create an arbitrage opportunity . Sell the derivatives and hedge by buying the etf(spy). Buying the spy then leads to rising individual stocks on the same principle.
Or the reality: the market continues to be super-strong.
So surf the bubble and don’t forget to get out before the suckers. And by all means don’t get played for being one by forces that will steamroll over you 10ft before the exit door
I told my fellow FReepers to buy like mad in Fed 2009. Check the history. AAPL, BIDU, homebuilders, some others I can't recall now. Again 2 years later after a big dip. I have been a bull all this time and don't see the end yet. 20k dow perhaps. We'll see how it weather the end of QE.
Good call in Feb 2009. The earliest person credible person I saw call this thaw was James Grant in March 2009. The others I could dismiss as cheerleaders and Federal Reserve groupies.
How did Grant know? Why did Warren Buffet lend Goldman Sacks 10 billion? My opinion is the powers that be layed out to them and others like them how much the Federal Reserve was going to juice the economy. IOW they had insider knowledge of a sort. IOW Buffet made a sure bet. He had the information to make that sure thing bet.
Besides The Fed pushing out torrents of fiat money the only other factor helping the economy in comparison to 2008 is the fracking revolution. I cannot think of any other sector that is doing better than 2007-2008 pre-crash. Meanwhile mountains of debt have been added everywhere to get to where we are today.
I was using Tradestation at the time and after a huge downside overreaction I checked the stock history and found that such moves corresponded with large upmoves. I thought it might be a short term up-play (6mos - 1yr), but it hasn't stopped. I did NOT predict this long term move.
BFLR
Yesterday was some sort of turnaround record in the last hour or so of trading since 2011.
Here ya go....yesterday’s PPT defined!
http://www.investopedia.com/terms/p/plunge-protection-team.asp
DEFINITION of ‘Plunge Protection Team - PPT’
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