Let's call it the 'Bernanke Boost'. As head of the PPT, the Fed Chairman now has extraordinary powers. The stock market has been tying to go down and purge all the excesses of the Greenspan years out of the system. But then, all the people that thought they knew stocks in the late tech bubble and all the people that thought they knew real estate in the late real estate bubble will figure out that they didn't know 'jack'. The market carried most investors but most investors have been egotistical enough to assume market gains were generated with their own vast knowledge of investing and economics. It was all a bubble. It was a sham. Now it is trying to burst.
Can the PPT allow people to lose money in the stock market? Apparently, the PPT has a great fear of this very scenario playing out on a large scale. So, they now intervene as necessary. It happens when the stock market needs a little 'goosing' - a little help - a little nudge - a little 'intervention' - a little 'manipulation' - a little 'stimulus'. Okay, it needs a boost because apparently, the stock market cannot stand on its own. It also can't be allowed to fail because it takes our economy down with it. So, when the market is failing, it now seems to get these strange and suspicious power rallies that last less than an hour and generally occur at the end of the day. I think we need to confine the qualification of a 'Bernanke Boost' to something like 200 Dow points an hour. And, they have to be straight up. If these miraculous 'spikes' were normal, don't you think we would see some to the downside as well as to the upside? But no, they are all to the upside.
To be fair, to acknowledge that something exists, like the PPT, we must consider other explanations of phenomena. Let's assume the PPT is in our imagination. Well, they are real as the committee was signed into law. They meet but what do they do if they don't manipulate the stock market? So, if they don't really engage themselves in market manipulation, I decided to list a few explanations of the charts that you will view below.
In the 'new era':
1) Sellers of equities go home at 3pm.
2) Buyers of equities sleep late and don't get the day started until 3pm.
3) Buyers of equities are now geniuses since they can accurately gauge the very bottom of every trading range.
4) Since every index on the planet Earth bursts higher at exactly the same moment by exactly the same percentage, valuations and risk for all investments are now equal and therefore become attractive buys at exactly the same time.
5) Investors are no longer paralyzed with fear during down trends but instead, are emboldened with perfect recognition of true values.
6) Bear markets are a thing of the past; bull markets last forever.
7) Buyers of equities will always have an endless source of money.
8) Selling is not allowed in the final hour of trading.
Otherwise, I have to assume that the PPT is busier these days than a buffet server at a Fat Camp. Listed below is a chronological chart history of suspicious days of trading that I propose we add to the 'Bernanke Boost' days.
10-minute interval of the Dow on 3/4/08 - note the 95 point 10-minute rally at exactly 3pm (no doubt anticipating the arrival of Superman!) - chart courtesy StockCharts.com)
10-minute interval of the Dow on 3/3/08 (the 'rally' was only 90 points but the obvious desperation of the PPT and the timing of the rally leads me to include it) - chart courtesy StockCharts.com)
On February 22, 2008, the markets were in yet another decline with the Dow descending towards the 12,000 mark. Normally, Friday afternoons just 'fizzle' out as traders and investors alike mosey into the weekend. Not this day. A 'bail out' package was announced to be in the works for mortgage bond insurer AMBAC and suddenly the Dow burst higher. From around 3:30pm, the Dow shot higher by 220 points or 2%. Likewise, so too did the Nasdaq. So too did China; so too did Germany; so too did Italy, Mexico, Brazil, and every other index in the world as evidenced by the following bench marked ETFs. So, the AMBAC company has about 100 million shares of stock outstanding and was trading for about $8.50 per share when the news broke. The share price jumped to about $10.75 in the final 30 minutes of trading apparently causing an avalanche of buying of every equity on the planet. Coincidence? On a Friday afternoon? Oh, please!! The Plunge Protection Team rides to the rescue again!
The AMBAC chart on 02/22/08 (6 months of crud suddenly turns market fertilizer! - chart courtesy StockCharts.com)
The Dow on 02/22/08 (10-minute daily chart courtesy StockCharts.com)
The German ETF on 02/22/08 (10-minute daily chart courtesy StockCharts.com)
The Chinese ETF on 02/22/08 (10-minute daily chart courtesy StockCharts.com)
The Mexican ETF on 02/22/08 (10-minute daily chart courtesy StockCharts.com)
The Global Energy ETF on 02/22/08 - Oops, the PPT drives everything up together!(10-minute daily chart courtesy StockCharts.com)
The Commodities ETF on 02/22/08 - If it trades, it moves higher! (10-minute daily chart courtesy StockCharts.com)
The Gold ETF on 02/22/08 - even Gold! (10-minute daily chart courtesy StockCharts.com)
The Homebuilders ETF on 02/22/08 - Yes, even garbage goes up when the Fed wants it to!(10-minute daily chart courtesy StockCharts.com)
The Antarctica ETF on 02/22/08 (Okay, I am just kidding here. There really isn't an Antarctica ETF but if there was, it too would have looked like this!)
Let's look at similar 'Bernanke Boost' days:
Three days of the Dow in January, 2008 - notice the spurts higher at the beginning of trade. Chart courtesy StockCharts.com
The Dow on 8/16/07 - Chart courtesy StockCharts.com
The Dow on 8/1/07 - Chart courtesy BigCharts.com
Have you noticed a similar pattern yet?
...to be continued as PPT intervention continues.
