Paging Jerry Fletcher!
There is a marked difference between, say, fiscal and monetary stimuli that squeeze the market higher versus some grand, sweeping conspiracy theory.
"I have no medical evidence to back me up, but something happened during the operation that staved off that infection. Something beyond science. Something perhaps from above..." --Seinfeld
I have been doing this for about as long as most of you guys (with a lesser degree of success--long story) but the plus TICK readings you guys have been mentioning seem crazy to me, with Tuesday being an especially "unnatural" example of the market being repeatedly "saved." I am currently highly leveraged short so I fear my positioning is making me even more agitated by the seeming manipulation, but as I try to be objective it just still seems so, well, unnatural.
Maybe you guys could discuss this in a little further depth. Do those writers taking note of this have any specific theories as to what is driving this? A lot of conspiratorial allusions are made, but maybe this odd phenomenon could be discussed more directly. I would like to hear comments from those writers (especially the bulls) who haven't chimed in. As I type there goes another +1000 out of the clear blue as the S&P heads toward flat.
Thanks for all the insight.
Thanks for the note. I want to share it with the Minyanship for several reasons. First and foremost is that we're a community of forthright thinkers and we're all in this together. This isn't the first time that the notion of "unnatural" buying has come up. In fact, it seems to be recurring banter under the seemingly calm market surface. The mainstream media won't touch this topic with a ten foot pole, but in the 'Ville? We're only too happy to scratch the itch of our collective curiosity.
Professor Succo, who is the most seasoned financial professional I've ever met, has alluded to the artificial forces in play. Jeff Saut touched on it too. And Minyan Michael Santoli, who is one of the more balanced and pragmatic thinkers on the Street, recently offered a cogent view from the other side of the fence. So, as always, there are two sides to this trade. The question, of course, is whether they're mutually independent streams of consciousness.
At our Minyans in the Mountains Ojai conference in 2005, I offered that the only difference between intervention and manipulation is communication. That's an incredibly important distinction for purposes of this discussion.
There is a marked difference between, say, fiscal and monetary stimuli that squeeze the market higher versus some grand, sweeping conspiracy theory. I battled the bulls in 2003 and my losses manifested as a function of my underestimating the power of a coordinated agenda. While the Federal Reserve chose to pour the drunk and dependent market another drink (with hopes that a legitimate economic expansion took root), that was a function of desperation rather than overt dereliction.
The question, I suppose, is whether the government has become more proactive in their practices. There have been published reports that detail the alleged actions of "the invisible hand" and, speaking to folks who are plugged into the Beltway, I'm told that there is, in fact, an off-the-radar agency that continually monitors the action of the asset classes. As we know that the stock market is the world's largest thermometer, we can't help but wonder if communication---the distinction between intervention and manipulation--has been lost in muddied translation.
Obviously, I don't "know" anything and further understand that my credibility will be called into question for even provoking these thoughts. I feel strongly however, after sixteen years of watching these flickering ticks, that there are indeed forces in play that haven't been communicated to us. Maybe those in power believe that this process, if it does in fact exist, is in the best interest of our nation and rationalize their actions in kind. Perhaps they "see" what we do, a grand experiment that has gone terribly awry. Maybe, just maybe, there really is no other alternative.
I often shake my head at the masterful moxie of the Federal Reserve and the Bureau of Labor Statistics. The newswires are constantly being sprinkled with rhetoric and assurances aimed at crafting the collective psychology and they've achieved their desired result. The widespread acceptance of their stated agenda, as evidenced by the market moxie, continues to concern me as the mindset of the masses has built a perceived immunity to an unavoidable reality.
I may be amiss in my perceptions and jaded in my assimilation and remain humble enough to know that I know very little. But when I hear of upcoming government contracts targeted at tech---$125 billion dollars that will pad the bottom line of corporate America--I can't help but think that the game is very much alive. I learned playing poker that if you can't tell the fool sitting at the table, it's likely time to sit a few hands out. In some ways, I actually feel worse because I've seen this dynamic unfold and consciously chose not to close my eyes and climb aboard.
Before I flip lids and juggle my struggle, I want to address one last point from your email. You mentioned that you're "highly leveraged short" and, as such, in an agitated state. John Maynard Keynes once wrote that "the market can stay irrational longer than you can stay solvent." The onus is on us to allow for all possible scenarios, remove emotion and define our risk.
For if we one day discover that there are, in fact, unnatural influences in the marketplace, it'll be of little benefit if you're not there to collect on your bet.
Good luck today and, as always, thanks for the Minyanship.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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