The Deadly Art Of Stock Manipulation

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HOT STOCKS

CONFIDENTIAL ESSAY

 

By George Chelekis

 

NOTE: I believe this may be one of the most important essays on the financial markets which you will ever read. This essay will be

the lead article in Hot Stocks Review, (Part Two). Up until recently, I knew that I was missing something, but I could not

quite put my finger on it. Now I know what it is. The data which follows is only as good as you can actually use it. These are the cold, savage and ruthless facts of market manipulation. I have not made these up, but have dug them up out of out-dated, generally unavailable books on Canadian market manipulations, and pieced the rest together from observations, personal experiences and conversations with market professionals and insiders. While the books are out of date, the manipulations have been passed down from one generation to another. The only thing missing was someone to supply you with what those tricks were so you can become a more educated speculator. Many thanks to Robert Short and Vern Flannery, of Market News Publishing, for finding and sending me a copy of the book, "The Story Behind Canadian Mining Speculation" by T. H. Mitchell, first published in 1957 by George J. McLeod Limited; also Ivan Shaffer's book, "The Stock Promotion Game." I have been told that many of these tricks are now illegal. If so, would someone please tell that to the market manipulators.

 

THE DEADLY ART OF STOCK MANIPULATION....

 

In every profession, there are probably a dozen or two major rules. Knowing them cold is what separates the professional from the

amateur. Not knowing them at all? Well, let's put it this way: How safe would you feel if you suddenly found yourself piloting (solo) a Boeing 747 as it were landing on an airstrip? Unless you are a professional pilot, you would probably be frightened out of your wits and would soil your underwear. Hold that thought as you read this essay because I will explain to you how market manipulation works.

 

In order to successfully speculate, one should presume the following: THE SMALL CAP STOCK MARKETS PRIMARILY EXIST TO FLEECE YOU! I'm talking about Vancouver, Alberta, the Canadian Dealing Network and the US Over-the Counter markets (Pink Sheets, Bulletin Board, etc.). One could also stretch this, with many stocks, to include the world's senior stock markets, including Toronto, New York, NASDAQ, London, etc. The average investor or speculator is not very likely to have much success in the small cap crapshoots. I guess that is what attracted ME to these markets. I have been trying, for quite some time, to answer this question, "How come?" Now, I know. And you should, too!

 

By the way, the premise of these books is uniformly: "While these speculative companies do not actually make any money, one can profit by speculating in these companies." THAT is the premise on how these markets are run, by both the stock promoters, insiders, brokers, analysts and others in this industry. That logic is flawed in that it presumes "someone else" is going to end up holding the dirty bag. Follow this premise all the way through and you will realize the insane conclusion: For these markets to continue along that route, new suckers have to continue coming into the marketplace. The conclusion is insane in that such mad activity can only be short-lived. I disagree with this premise and propose another solution (see my earlier essay: A Modest Proposal) at the end of this essay.

 

What the professionals and the securities regulators know and understand, which the rest of us do not, is this.

 

"RULE NUMBER ONE: ALL SHARP PRICE MOVEMENTS -- WHETHER UP OR DOWN -- ARE THE RESULT OF ONE OR MORE (USUALLY A GROUP OF) PROFESSIONALS MANIPULATING THE SHARE PRICE."

 

This should explain why a mining company finds something good and "nothing happens" or the stock goes down. At the same

time, for NO apparent reason, a stock suddenly takes off for the sky! On little volume! Someone is manipulating that stock, often with an unfounded rumor.

 

In order to make these market manipulations work, the professionals assume: (a) The Public is STUPID and (b) The Public

will mainly buy at the HIGH and © The Public will sell at the LOW.

Therefore, as long as the market manipulator can run crowd control, he can be successful.

 

Let's face it: The reason you speculate in such markets is that you are greedy AND optimistic. You believe in a better tomorrow and NEED to make money quickly. It is this sentiment which is exploited by the market manipulator. He controls YOUR greed and fear about a particular stock. If he wants you to buy, the company's prospects look like the next Microsoft. If the manipulator wants you to desert the sinking ship, he suddenly becomes very guarded in his remarks about the company, isn't around to glowingly answer questions about the company and/or GETS issued very bad news about the company. Which brings us to the next important rule.

 

"RULE NUMBER TWO: IF THE MARKET MANIPULATOR WANTS TO DISTRIBUTE (DUMP) HIS SHARES, HE WILL START A GOOD NEWS PROMOTIONAL CAMPAIGN."

 

Ever wonder why a particular company is made to look like the greatest thing since sliced bread? That sentiment is manufactured.

Newsletter writers are hired -- either secretly or not -- to cheerlead a stock. PR firms are hired and let loose upon an unsuspecting public. Contracts to appear on radio talk shows are signed and implemented. Stockbrokers get "cheap" stock to recommend the company to their "book" (that means YOU, the client in his book). An advertising campaign is rolled out (television ads, newspaper ads, card deck mailings). The company signs up to exhibit at "investment conferences" and "gold shows" (mainly so they can get a little "podium time" to hype you on their stock and tell you how "their company is really different" and "not a stock promotion.") Funny little "hype" messages are posted on Internet newsgroups by the same cast of usual suspects. The more, the merrier. And a little "juice" can go a long way toward running up the stock price.

 

The HYPE is on. The more clever a stock promoter, the better his knowledge of the advertising business. Little gimmicks like

"positioning" are used. Example: Make a completely unknown company look warm and fuzzy and appealing to you by comparing it

to a recent success story, Diamond Fields or Bre-X Minerals. That is the POSITIONING gospel, authored by Ries and Trout (famous for "Avis: We Want To Be #1" and "We Try Harder" and other such slogans). These advertising/PR executives must have stumbled onto this formula after losing their shirts speculating in a few Canadian stock promotions! The only reason you have been invited to this seemingly incredible banquet is that YOU are the main course. After the market manipulator has suckered you into "his investment," exchanging HIS paper for YOUR cash, the walls begin to close in on you. Why is that?

 

 

The Deadly Art Of Stock Manipulation Pt2

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"RULE NUMBER THREE: AS SOON AS THE MARKET MANIPULATOR HAS COMPLETED HIS DISTRIBUTION (DUMPING) OF SHARES, HE WILL START A BAD NEWS OR NO NEWS CAMPAIGN."

 

Your favorite home-run stock has just stalled or retreated a bit from its high. Suddenly, there is a news VACUUM. Either NO news or BAD rumors. I discovered this with quite a few stocks. I would get LOADS of information and "hot tips." All of a sudden, my pipeline was shut-off. Some companies would even issue a news release CONDEMNING me ("We don't need 'that kind of hype' referring to me!). Cute, huh? When the company wanted fantastic hype circulated hither and yon, there would be someone there to spoon-feed me. The second the distribution phase was DONE....ooops! Sorry, no more news. Or, "I'm sorry. He's not in the office." Or, "He won't be back until Monday."

 

The really slick market manipulators would even seed the Internet news groups or other journalists to plant negative stories

about that company. Or start a propaganda campaign of negative rumors on all available communication vehicles. Even hiring a

"contrarian" or "special PR firm" to drive down the price. Even hiring someone to attack the guy who had earlier written glowingly about the company. (This is not a game for the faint-hearted!)

 

You'll also see the stock drifting endlessly. You may even experience a helpless feeling, as if you were floating in outer space

without a lifeline. That is exactly HOW the market manipulator wants you to feel. See Rule Number Five below. He may also be doing this to avoid the severe disappointment of a "dry hole" or a "failed deal." You'll hear that oft-cried refrain, "Oh well, that's the junior minerals exploration business... very risky!" Or the oft-quoted statistic, "Nine out of 10 businesses fail each year and this IS a Venture Capital Startup stock exchange." Don't think it wasn't contrived. If a geologist at a junior mining company wasn't optimistic and rosy in his promise of exploration success, he would be replaced by someone who was! Ditto for the high-tech deal, in a world awash with PhD's.

 

So, how do you know when you are being taken? Look again at

Rule #1. Inside that rule, a few other rules unfold which explain how

a stock price is manipulated.

 

"RULE NUMBER FOUR: ANY STOCK THAT TRADES HUGE VOLUME AT HIGHER PRICES SIGNALS THE DISTRIBUTION PHASE."

 

When there was less volume, the price was lower. Professionals were accumulating. After the price runs, the volume increases. The professionals bought low and sold high. The amateurs bought high (and will soon enough sell low). In older books about market manipulation and stock promotion, which I've recently studied, the markup price referred to THREE times higher than the floor. The floor is the launchpad for the stock. For example, if one looks at the stock price and finds a steady flatline on the stock's chart of around 10 cents, then that range is the FLOOR. Basically, the markup phase can go as high as the market manipulator is capable of taking it. From my observations, a good markup should be able to run about five to ten times higher than the floor, with six to seven being common. The market manipulator will do everything in his power to keep you OUT OF THE STOCK until the share price has been marked up by at least two-three times, sometimes resorting to "shaking you out" until after he has accumulated enough shares. Once the markup has begun, the stock chart will show you one or more spikes in the

volume -- all at much higher prices (marked up by the manipulator, of course). That is DISTRIBUTION and nothing else.

 

Example: Look at Software Control Systems (Alberta:XVN), in which I purchased shares after it had been marked up five times.

There were eight days of 500,000 (plus) shares trading hands, with one day of 750,000 shares trading hands. Market manipulator(s) dumping shares into the volume at higher prices. WHENEVER you see HUGE volume after the stock has risen on a 75 degree angle, the distribution phase has started and you are likely to be buying in -- at or near the stock's peak price.

 

Example: Look at Diamond Fields (TSE FR), which never increased at a 75 degree angle and did not have abnormal volume

spikes, yet in less than two years ran from C$4 to C$160/share.

 

Example: Look at Bre-X Minerals (Alberta:BXM), which did not experience its first 75 degree angle, with huge volume until July

14th, 1995. The next two trading days, BXM went down and stayed around C$12/share for two weeks. The volume had been 60% higher nearly a month earlier, with only a slight price increase. Each high volume and spectacular increase in BXM's share price was met with a price retreat and leveling off. "Suddenly," BXM wasn't trading at C$2/share; it was at C$170/share.... up 8500% in less than a year!

 

In both of the above cases, major Canadian newspapers ran extremely negative stories about both companies, at one time or

another. In each instance, just before another share price run up, retail investors fled the stock! Just before both began yet another

run up! Successful short-term speculators generally exit any stock run up when the volume soars; amateurs get greedy and buy at those points.

 

"RULE NUMBER FIVE: THE MARKET MANIPULATOR WILL ALWAYS TRY TO GET YOU TO BUY AT THE HIGHEST, AND SELL AT THE LOWEST PRICE POSSIBLE."

Just as the manipulator will use every available means to invite you to "the party," he will savagely and brutally drive you away from "his stock" when he has fleeced you. The first falsehood you assume is that the stock promoter WANTS you to make a bundle by investing in his company. So begins a string of lies that run for as long as your stomach can take it.

 

You will get the first clue that "you have been had" when the stock stalls at the higher level. Somehow, it ran out of steam and you

are not sure why. Well, it ran out of steam because the market manipulator stopped running it up. It's over inflated and he can't

convince more people to buy. The volume dries up while the share price seems to stall. LOOK AT THE TRADING VOLUME, NOT THE SHARE PRICE! When earlier, there may have been 500,000 shares trading each day for eight out of 12 trading days (as in the case of Software Control Systems), now the volume has slipped to 100,000 shares (or so) daily. There are some buyers there, enough for the manipulator to continue dumping his paper, but only so long as he can enlist one or more individuals/services to bang his drum.

 

He may continue feeding the promo guys a string of "promises" and "good news down the road." (Believe me, this HAS happened to me!) But, when the news finally arrives, the stock price goes THUD! This is entirely orchestrated by a market manipulator. You'll see it in the trading volume, most of which is CONTRIVED. A market manipulator will have various brokers buying and selling the stock to give the APPEARANCE of increasing volume and price so that YOU do start chasing it higher.

 

At some point during the stall stage, investors get fed up with the non-performance of the stock. It drifts for a while, in a steady retreat, with perhaps a short-lived spike in price and volume (the final signal that the manipulator has finally offloaded ALL of his

paper). Then, the stock comes tumbling down -- having lost ALL of the earlier share appreciation.

 

Sometimes, with the more cruel manipulators, they will throw in a little false hope... giving you a little more rope so they can better

hang you. Just after a severe drop, there will be a "bottom fishing" announcement which sends the share price up a bit on high volume, rises a little more after that and then continues to drift. Meanwhile, you keep getting "shaken out" through a cruel drip-drip water torture of the share price's slow retreat. Again, virtually every movement is completely orchestrated.

 

 

The Deadly Art Of Stock Manipulation Pt3

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"RULE NUMBER SIX: IF THIS IS A REAL DEAL, THEN YOU ARE LIKELY TO BE THE LAST PERSON TO BE NOTIFIED OR WILL BE DRIVEN OUT AT THE LOWER PRICES."

 

Like Jesse Livermore wrote, "If there's some easy money lying around, no one is going to force it into your pocket." The same

concept can be more clearly understood by watching the tape. When a market manipulator wants you into his stock, you will hear LOUD noises of stock promotion and hype. If you are "in the loop," you will be bombarded from many directions. Similarly, if he wants you out of the stock, then there will be orchestrated rumors being circulated, rapid-fired at you again from many directions. Just as good news may come to you in waves, so will bad news.

 

You will see evidence of a VERY sharp drop in the share price with HUGE volume. That is you and your buddies running for the

exits. If the deal is really for real, the market manipulator wants to get ALL OF YOUR SHARES or as many as he can... and at the lowest price he can. Whereas before, he wanted you IN his market, so he could dump his shares to you at a higher price, NOW when he sees that this deal IS for real, he wants to pay as little as possible for those same shares... YOUR shares which he wants to you part with, as quickly as possible.

 

The market manipulator will shake you out by DRIVING the price as low as he can. Just as in the "accumulation" stage, he wants

to keep everything as quiet as possible so he can snap up as many of the shares for himself, he will NOW turn down, or even turn off, the volume so he can repeat the accumulation phase.

 

In the mining business, there seems to always be another "area play" around the corner. Just as Voisey's Bay drifted into oblivion,

during the fourth quarter of 1995 and early into 1996, the same Voisey Bay "wannabees" began striking deals in Indonesia. Some

even used new corporate entities. Same crooks, different shingles. The accumulation phase was TOP SECRET. The noise level was deadingly silent. As soon as the insiders accumulated all their shares, they let YOU in on the secret.

 

"RULE NUMBER SEVEN: CONVERSELY, YOU WILL OFTEN BE THE LAST TO KNOW WHEN THIS DEAL SHOWS SIGNS OF FAILURE."

 

Twenty-twenty hindsight will often show you that there was a "little stumble" in the share price, just as the "assays were delayed"

or the "deal didn't go through." Manipulators were peeling off their paper to START the downslide. And ACCELERATE it. The quick slide down makes it improbable for your getting out at more than what you originally paid for the stock... and gives you a better reason for holding onto it "a little longer" in case the price rebounds. Then, the drifting stage begins and fear takes over. And unless you have serves of steel and can afford to wait out the manipulator, you will more than likely end up selling out at a cheap price.

 

For the insider, marketmaker or underwriter is obliged to buy back all of your paper in order to keep his company alive and maintain control of it. The less he has to pay for your paper, the lower his cost will be to commence his stock promotion again... at some future date. Even if his company has no prospects AT ALL, his "shell" of a company has some value (only in that others might want to use that structure so they can run their own stock promotion). So, the manipulator WILL buy back his paper. He just wants to make sure that he pays as little for those shares as possible.

 

"RULE NUMBER EIGHT: THE MARKET MANIPULATOR WILL COMPEL YOU INTO THE STOCK SO THAT YOU DRIVE UP ITS PRICE SHARES."

 

Placing a Market Order or Pre-Market Order is an amateur's mistake, typifying the US investor -- one who assumes that thinly

traded issues are the same as blue chip stocks, to which they are accustomed. A market manipulator (traders included here) can jack up the share price during your market order and bring you back a confirmation at some preposterous level. The Market Manipulator will use the "tape" against you. He will keep buying up his own paper to keep you reaching for a higher price. He will get in line ahead of you to buy all the shares at the current price and force you to pay MORE for those shares. He will tease you and MAKE you reach for the higher price so you "won't miss out." Miss out on what? Getting your head chopped off, that's what!

 

One can avoid market manipulation by not buying during the huge price spikes and abnormal trading volumes, also known as

chasing the stock to a higher price.

 

"RULE NUMBER NINE: THE MARKET MANIPULATOR IS WELL AWARE OF THE EMOTIONS YOU ARE EXPERIENCING DURING A RUN UP AND A COLLAPSE AND WILL PLAY YOUR EMOTIONS LIKE A PIANO."

 

During the run up, you WILL have a rush of greed which compels you to run into the stock. During the collapse, you WILL

have a fear that you will lose everything... so you will rush to exit. See how simple it is and how clear a bell it strikes? Don't think this formula isn't tattooed inside the mind of every manipulator. The market manipulator will play you on the way up and play you on the way down. If he does it very well, he will make it look like someone else's fault that you lost money! Promise to fill up your wallet? You'll rush into the stock. Scare you into losing every penny you have in that stock? You'll run away screaming with horror! And vow to NEVER, ever speculate in such stocks again. But many of you still do.... The manipulator even knows how to bring you back for yet another play.

 

What actors! No wonder Vancouver is sometimes called

"Hollywood North."

"FINAL RULE: A NEW BATCH OF SUCKERS ARE BORN WITH EVERY NEW PLAY."

 

The Financial Markets are a Cruel, Unkind and Dangerous Playing Field, one place where the newest amateurs are generally

fleeced the most brutally.... usually by those who KNOW the above rules.

 

Just as I have a duty to ensure that each of you understand how this game is played, YOU now have that same duty to guarantee

that your fellow speculator understands these rules. Just as I would be a criminal for not making this data known to you, YOU would be just as criminal to keep it a secret. There will always be an unsuspecting, trusting fool whom the rabid dogs will tear to shreds, but it does NOT have to be this way.

 

IF every subscriber made this essay broadly known to his friends, acquaintances and family, and they passed it on to their

friends, word of mouth could cause many of these market manipulators to pause. IF this effort were done strenuously by many,

then perhaps the financial markets could weed out the crooked manipulators and the promoters could bring us more legitimate

plays.

 

The stock markets are a financing tool. The companies BORROW money from you, when you invest or speculate in their companies. They want their share price going higher so they can finance their deal with less dilution of their shares... if they are good guys. But, how would you feel about a friend or family member who kept borrowing money from you and never repaid it? That would be theft, plain and simple. So, a market manipulator is STEALING your money. Don't let him do it anymore. Insist that the company in which you invest be honest or straight... or find another company in which to

speculate. Your money talks in LOUDER volumes than any stock promotion scheme. ALWAYS refuse any deal which smells wrong.

 

Refuse to tolerate the scams prevalent in the financial markets. This can ONLY be accomplished by KNOWING and USING the above rules. Thoroughly COMPLETE your due diligence on a company before risking a dime. Dig up the Insider Reports to find out who is blowing out their paper, how often they are blowing out their paper and whatever happened to their "last play."

 

Begin to use this as YOUR rule of thumb: If the insider's paper is really worthless, then avoid it. Find another's whose paper DOES

hold promise and honest possibilities. In these small cap stock markets, you are investing more in the INDIVIDUAL behind the play, than the "possibility" of the play itself. Ask yourself before speculating: Could I lend this person $5,000 for a year and hope to

get it back? If not, then don't! Do it for your own good and the good of everyone else who is so foolish as to speculate in these financial markets!

 

The truly sane and only somewhat safe solution to all of this: FIND GOOD COMPANIES IN WHICH TO SPECULATE AND GET INTO THEM AT THE GROUND FLOOR LEVEL. Anything else is criminal or stupid. This is a case where there really isn't a gray area. It's either

Black or it's White. The company and its management are scamsters

or they really intend to bring value to their shareholders.

 

 

What is Circular Trading

 

Circular Trading is a fraudulent activity in the stock market involving two brokers or market players trading a stock back and forth to give the impression of huge trading volume.

 

In Circular Trading sell orders are entered by a broker who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have been or will be entered.

 

Circular trading is typically rampant in a market that is tending upwards. The problem is that retail investors trade on momentum. This means that these investors enter the market when volumes are high; for high volumes are perceived to mean higher market interest and therefore higher prices.

 

The trouble starts when the market players who engage in circular trading decide to offload their holdings, sending the stock into a tailspin. Should retail investors get stuck with such stocks, the total money flow into the market will reduce. And that could be some cause for concern for the economy as a whole. The reason is that vibrant markets can propel economic growth, if they sustain for a long while. It is to prevent circular trading and, perhaps, its consequences that the stock exchange has shifted certain stocks to the trade-for-trade segment.

 

What is Trade-for-trade?

 

Under the trade-for-trade segment, every transaction is individually settled. Suppose a trader buys 1,000 shares of a stock for Rs 45 per share in the morning and sells the same quantity of shares in the afternoon for Rs 50 per share. Under the rolling settlement system, the broker is permitted to net the buy and sell transactions, and pay Rs 5 per share less brokerage to the trader.

 

In the trade-for-trade segment, the trader will have to pay Rs 45,000 to take delivery of the 1,000 shares bought, and will have to make delivery for the shares sold. Since each transaction is treated separately, scope for circular trading is restricted. The reason is that trader ramping up the stock price will have to pay the amount to take delivery of the shares bought. And that would entail large outlays.

 

The trade-for-trade segment appears a good measure to lower the systemic risk due to circular trading. The stock exchanges should, hence, actively consider shifting stocks to this segment rather than slapping special margins on the stocks considered speculative.

 

Now the BSE routinely raises the special margin on stocks based on some undisclosed criteria to deter speculative trading. But it is not effective in a vibrant market because retail investors enter in droves in stocks based on momentum; and such speculative stocks carry high momentum.

 

That said, shifting stocks to the trade-for-trade segment would help contain systemic risk better if the stock exchanges are more transparent in their criteria for choosing such stocks.

 

Transparency: At present, neither the BSE nor the NSE states the criteria for shifting a stock to the trade-for-trade segment. Defining the basis for such a shift would provide a perspective for traders and retail investors of the quality of trading in each stock.

 

Suppose the exchanges state that they consider stocks with delivery-to-traded quantity ratio of less than 10 per cent, and price change of more than 50 per cent in a week for shifting to the trade-for-trade segment.

 

Traders and investors will keep hawk-eye on stocks that fit such a criteria (such an information can be obtained from the NSE Web site). This will prevent retail investors from getting trapped in stocks that are victims of circular trading. Such transparency is important because stocks may decline in value after they are shifted to the trade-for-trade segment because of a likely drop in volumes.

 

In short, the BSE and the NSE should actively consider shifting stocks to the trade-for-trade segment as a measure to curb circular trading. Importantly, the exchanges should be transparent in their criteria for choosing such stocks.

 

 

http://www.traderji.com/trading-psychology...lation-pt1.html

 

MORE: George Chelekis - Essays On Stock Market Manipulation

You know, it's a bull market

 

REMINISCENCES OF A STOCK OPERATOR by Eugene Lefevre

 

 

... there was one old chap who was not like the others. To

begin with, he was a much older man. Another thing was that he

never volunteered advice and never bragged of his winnings. He

was a great hand for listening very attentively to the others.

He did not seem very keen to get tips -- that is, he never asked

the talkers what they'd heard or what they knew. But when

somebody gave him one he always thanked the tipster very

politely. Sometimes he thanked the tipster again -- when the tip

turned out O.K. But if it went wrong he never whined, so that

nobody could tell whether he followed it or let it slide by. It

was a legend of the office that the old jigger was rich and

could swing quite a line. But he wasn't donating much to the

firm in the way of commissions; at least not that anyone could

see. His name was Partridge, but they nicknamed him Turkey

behind his back, because he was so thick-chested and had a habit

of strutting about the various rooms, with the point of his chin

resting on his breast.

The customers, who were all eager to be shoved and forced

into doing things so as to lay the blame for failure on others,

used to go to old Partridge and tell him what some friend of a

friend of an insider had advised them to do in a certain stock.

They would tell him what they had not done with the tip so he

would tell them what they ought to do. But whether the tip they

had was to buy or to sell, the old chap's answer was always the

same.

The customer would finish the tale of his perplexity and

then ask: "What do you think I ought to do?"

Old Turkey would cock his head to one side, contemplate his

fellow customer with a fatherly smile, and finally he would say

very impressively, "You know, it's a bull market!"

Time and again I heard him say, "Well, this is a bull market,

you know!" as though he were giving to you a priceless talisman

wrapped up in a million-dollar accident-insurance policy. And of

course I did not get his meaning.

One day a fellow named Elmer Harwood rushed into the

office, wrote out an order and gave it to the clerk. Then he

rushed over to where Mr. Partridge was listening politely to

John Fanning's story of the time he overheard Keene give an

order to one of his brokers and all that John made was a measly

three points on a hundred shares and of course the stock had to

go up twenty-four points in three days right after John sold

out. It was at least the fourth time that John had told him that

tale of woe, but old Turkey was smiling as sympathetically as if

it was the first time he heard it.

Well, Elmer made for the old man and, without a word of

apology to John Fanning, told Turkey, "Mr. Partridge, I have

just sold my Climax Motors. My people say the market is entitled

to a reaction and that I'll be able to buy it back cheaper. So

you'd better do likewise. That is, if you've still got yours."

Elmer looked suspiciously at the man to whom he had given the

original tip to buy. The amateur, or gratuitous, tipster always

thinks he owns the receiver of his tip body and soul, even

before he knows how the tip is going to turn out.

"Yes, Mr. Harwood, I still have it. Of course!" said Turkey

gratefully. It was nice of Elmer to think of the old chap.

"Well, now is the time to take your profit and get in again on

the next dip," said Elmer, as if he had just made out the

deposit slip for the old man. Failing to perceive enthusiastic

gratitude in the beneficiary's face Elmer went on: "I have just

sold every share I owned!"

From his voice and manner you would have conservatively

estimated it at ten thousand shares.

But Mr. Partridge shook his head regretfully and whined, "No!

No! I can't do that!"

:'What?" yelled Elmer.

"I simply can't!" said Mr. Partridge. He was in great

trouble.

"Didn't I give you the tip to buy it?"

"You did, Mr. Harwood, and I am very grateful to you.

Indeed, I am, sir. But --"

"Hold on! Let me talk! And didn't that stock go up seven

points in ten days? Didn't it?"

"It did, and I am much obliged to you, my dear boy. But I

couldn't think of selling that stock."

"You couldn't?" asked Elmer, beginning to look doubtful

himself. It is a habit with most tip givers to be tip takers.

"No, I couldn't."

"Why not?" And Elmer drew nearer.

"Why, this is a bull market!" The old fellow said it as

though he had given a long and detailed explanation.

"That's all right," said Elmer, looking angry because of

his disappointment. "I know this is a bull market as well as you

do. But you'd better slip them that stock of yours and buy it

back on the reaction. You might as well reduce the cost to

yourself."

"My dear boy," said old Partridge, in great distress "my

dear boy, if I sold that stock now I'd lose my position; and

then where would I be?"

Elmer Harwood threw up his hands, shook his head and walked

over to me to get sympathy: "Can you beat it?" he asked me in a

stage whisper. "I ask you!"

I didn't say anything. So he went on: "I give him a tip on

Climax Motors. He buys five hundred shares. He's got seven

points' profit and I advise him to get out and buy 'em back on

the reaction that's overdue even now. And what does he say when

I tell him? He says that if he sells he'll lose his job. What do

you know about that?"

"I beg your pardon, Mr. Harwood; I didn't say I'd lose my

job," cut in old Turkey. "I said I'd lose my position. And when

you are as old as I am and you've been through as many booms and

panics as I have, you'll know that to lose your position is

something nobody can afford; not even John D. Rockefeller. I

hope the stock reacts and that you will be able to repurchase

your line at a substantial concession, sir. But I myself can

only trade in accordance with the experience of many years. I

paid a high price for it and I don't feel like throwing away a

second tuition fee. But I am as much obliged to you as if I had

the money in the bank. It's a bull market, you know." And he

strutted away, leaving Elmer dazed.

Editat Martie 18, 200916 ani de tavi_star

Indicators and Dr. Joe

 

Thank you for the PMs on indicators and price action. Rather than answer individually, I will do it through this post, if I may.

 

I’m not here to fight with anyone over whether to use indicators or not for we have a larger fight with the market makers than amongst us little guys. I respect the traders who can make consistent profits with indicators as it is something I have tried and cannot do. If anyone has an indicator that produces CONSISTENT profits then, please, show us the way.

 

In the meantime, I will continue with what works for me: raw price action using price, volume, S&R, momentum, exhaustion, cycles, time, harmonic analysis, market sentiment with a splash of funny mentals thrown in.

 

With regard to my transition from having indicators up the ying yang on my charts to now with just volume and the 20ema and the 50sma, I need to share my experience with an old time trader, Dr. Joe, which will also show how stubborn I was.

 

Back in the early 90s when I was getting really serious with my trading, I was buying signals via fax. In those days there was no email and no computer trading and we had to either plot our own charts or buy them from a charting service. We then had to calculate our own indicators and then hand draw them on our charts. This really helped in understanding what indicators did (take the data from “n” days ago) and how they worked.

 

One time I faxed my questions back to the signal service and the reply I got back was that I had sent it to the wrong number. Also written on my fax was that I was wasting my money on signals and to contact Dr. Joe. After a few fax exchanges, he sent a handwritten fax saying something like “trading is easy, you don’t need nuthin fancy (he was a good old Texas boy) just buy when it’s going up and sell when it’s going down, that’s all there is to it”.

 

Dr. Joe used to work for NASA as a nuclear physicist on the Space Program and was a Professor, PhD with just about every physics and maths qualifications there are or you could think of. He got fed up of the bureaucracy and politics at NASA and as a part time investor in stocks , decided to go full time as, in his own words, “the price cycles are just some sort of fancy sine waves with decay and acceleration distorting them and should be real easy to plot and forecast.”

 

Well after over 5 years doing triple integrated, double differentiated Fourier transforms, harmonic frequency analysis, fractal filters and theorems and goodness knows what else that, although I have a PhD, just ran circles around me. He said he got so frustrated that although he could plan and predict space craft trajectories, orbits, landings etc, he could not forecast even one bar of prices into the future. Not one to quit, he decided that there was some external force that he was not taking into consideration and the only place it could be was on the trading floor where the action took place.

 

Through his connections, he eventually got an invitation to the Chicago Mercantile Exchange (CME) and was shown the futures or commodities pit (can’t remember which). His sole purpose of going there was as a spy or detective to find out exactly how things worked so that he could write it into his software. He told me he was “amazed and dumbfounded” at what he saw and heard which forever changed his life. (I had all this written up in my trading notes in my files but I can’t find them so I’m using this post to “replenish my notes”).

 

He arrived at the pit before opening time and saw all the floor traders congregated together in a meeting. He saw this as strange as he thought they were out and out competitors with each other.

 

What he saw in the first 15 to 30 minutes he would never have believed even if his best friend had told him. At the open, the overnight trades, which were long positions, were put through but he detected the traders entering them were giving signals to the other traders. After the orders were put through there was “nothing” – they just waited to see how the market reacted to those orders.

 

He then observed what he thought were illegal practices but later learned it to be what actually goes on each and every day. During this “dead” time, the floor traders were reviewing their orders in the pipeline and then on a given signal, a group started selling followed by another group. Then when a certain lower price had been reached, another signal was given and the same groups then bought back amongst themselves. He later learned this was called “Running the Stops” and what they had done was found out where all the orders were, which were below lows, swing lows and elsewhere, and just driven the price down to fill them and take them out so that they had a clean order sheet! Not satisfied with that, they then collectively took the price back to where it opened!

 

After this and now with the market moving, orders started to come in and when a large order came in from a bank, fund or other large institution, the trader with the order gave a signal before entering it. After entering it, the traders went quiet again. They were looking to see how the market reacted to that order. When they saw more buy orders coming in, they just bought more and more and kept on buying until a signal from a trader that he had a large sell order. Again the sell order was entered and the traders went quiet as they waited for a reaction from the market. He learned that the floor traders were waiting to see whether the sell order was going to be accepted as profit taking or full blown shorting. He said this went on all day long with the floor traders just “piggy-backing” on which ever way the market moved. He said he could see no skills or qualifications (other than being a whore – a very rich whore, he said) whatsoever in what the floor traders did.

 

On his way back to Houston, he thought about how to use what he witnessed to HIS advantage.

 

His first action was to throw out all his indicators, forecasts and technical analysis. He told me that there is no analysis, indicator or other program now or in the future, that can analyse or predict human behaviour and specifically, human emotions. He had seen for himself that there was nothing technical or logical in how the floor traders (now better known as Market Movers) traded and therefore any analysis or thinking from “off the floor” was an absolute waste of time.

 

His second action was how to beat “those whores” on the floor as he called them. He said he thought over just about every scenario imaginable and just as he was running out of ideas, it came to him. If you can’t beat, them join them although as a very devout and God fearing Christian, he didn’t think it was ethical. Unable to find another alternative, he decided he had no options left but to try and do, “off the floor” what they did on the floor.

 

From this came his very simple method:

Buy when it goes up and sell when it goes down.

 

He went on to make $millions doing this and I subsequently learned he passed away a very rich and contented man knowing that he had beaten the “whores” at their own game.

 

I learned all this in a few telephone conversations with him but he lost his patience with me when I still questioned his method. He wouldn’t answer my calls so I reverted back to faxes. Again, I can’t remember it word for word but I sent a simple fax saying:

 

“How do you know when to stop buying?”

 

On the same fax was his handwritten reply, “When it stops going up.”

 

So I wrote on it, “How do you know when it stops going up?”

 

His handwritten reply, “When it starts going down.”

 

So I wrote on it, “How do you know when it stops going up and starts going down?”

 

His handwritten reply, “When people start selling.”

 

After going round like this in riddles, I pleaded with him to “just give it to me straight”.

 

He sent a fax saying this would be his last communication with me and that if I didn’t understand how to buy when it goes up and sell when it goes down, I had no business trading.

 

His final paragraph was one which I ignored, like everything else he told me, until a couple of years ago when I realized what a dumb, stupid, arrogant, stubborn idiot I had been:

 

He said I would only be wrong twice using his simple method:

“Once when you buy at the top and once when you sell at the bottom.”

 

I just ignored this as a smart – ass answer but still tried to do what he said. Unfortunately, and as Sod’s law dictates, I tried to do it in a consolidation and lost on every trade which had me buying when I should have been selling etc.

 

I tried and lost again and then eventually lost my way in the quest for the Holy Grail in Indicator Land.

 

Now, with all my experience and thousands of lost $ behind me, the light came on!

 

My understanding of what he was telling me is this:

 

Buy when prices are moving up. Buy each retrace/dip. Keep buying until the last retrace becomes a trend change which is the one trade you lose on.

 

Sell when prices are moving down. Sell each retrace/rally. Keep selling until the last retrace becomes a trend change which is the second trade you lose on.

 

I have not traded like this as I have my own method/style now but on the look backs I have done it works very well. Obviously, the trendier the price, the better it works.

 

In my later communications with other floor traders, I told them about Dr. Joe and what he told me, and asked them if it was true. As you would expect, each and everyone vehemently rejected it as absolute rubbish.

 

Sometimes I wonder if old Dr. Joe was smoking something but then when I see those long legged neutral dojis before a significant move, I know he was right.

 

Thank you, Dr. Joe

 

 

Rock n Roll,

Strat

Editat Martie 18, 200916 ani de tavi_star

You know, it's a bull market

 

Pe dollar!!!!

Beat The Odds In Forex Trading - 2006.pdf, pag. 116

 

by Igor Toshchakov

 

 

The majority of traders in the market are always wrong, and the most

common and widespread opinions about the future market are (in the prevailing

majority of cases) incorrect. Conclusions and choices made by a

crowd are always wrong and lead to money losses in speculative trading

operations. To avoid possible disappointments, it will be useful for beginners

to remember the following three basic postulates:

 

1. Try to have no opinion concerning the future market’s behavior. Trade

only according to your trade system and only on signals that the market

itself gives you.

 

2. Try to avoid wishful thinking. If you have an open position, first of all

pay attention to the trading signals that contradict your point of view,

instead of those that confirm it.

 

3. Listen attentively to other traders’ opinions. Share your ideas with

colleagues on Internet forums and in personal dialogues. If half of

your colleagues-traders approve your idea, double your vigilance.

Check up and analyze the situation once again, looking for a possible

mistake. If you have found that the absolute majority of traders share

your point of view, immediately abandon your initial plan of trading

and make a new one. In the new plan, you should assume that the

market most likely would choose an opposite direction. The absolute

disagreement of the majority with your opinions on current events in

the market is additional and valuable confirmation of the correctness

of your position. Such confirmation should give you an additional reliance

on the correctness of your decision.

Editat Martie 18, 200916 ani de tavi_star

eurusd: 220 pipsi in 3 secunde. Oare pica America?

va bagatzi short pana la 13300?

 

Eu cred ca doar dupa ce se duce spre 1,38 urmatorul meu nivel Fibo. Asta pentru ca s-a apropiat si de SMA200 pe D1 pe care cred ca o va strapunge si apoi va merge in sus. E doar parerea mea.

Editat Martie 18, 200916 ani de msjohntm

asta este unul din cele mai simple si solide concepte ale "analizei tehnice"!!! mergi cu presupunerea ca trendul este intact pina la proba contrarie. toate pozitiile vor fi profitabile, cu exceptia ultimei... care va iesi eventual in pierdere. eventual. cu cit iti alegi trendul pe un timeframe mai mare, cu atit ai sanse mai multe sa iesi in profit.

fain post! nota zece, tavi!!!

 

Buy when prices are moving up. Buy each retrace/dip. Keep buying until the last retrace becomes a trend change which is the one trade you lose on.

 

Sell when prices are moving down. Sell each retrace/rally. Keep selling until the last retrace becomes a trend change which is the second trade you lose on.

MANIPULAREA LA STIRI

 

------------------------------------------------------------------------------

 

Mp -- News Trading For Newbs !

 

NEWS TRADING !

 

this may NOT happen every single time, USUALLY if there is multiple news from different countries being released, but if interested in the US market, watch for what direction the price is moving BEFORE THE NEWS is released, including the night before, and then understand that if the FINAL trade will be LONG, the banks are pushing the price DOWN so as to have the greatest runup possible and vice versa and they will continue to move the price down, even if the news is GOOD, until it hits the H1 support level ---- if the price is going up, it will continue going up to the H1 top resistance level, and then the banks will SHORT the danged thing all the way down !

 

Once you look for it, its pretty danged simple to see whats going on, and you can easily work the first position for at least 30 minutes and the second position for the rest of the day.

 

------------------------------------------------------------------------------

 

Mp --- More On Trading News, For Those Who Missed The Last One!

 

one more post of mine on a "trading news" thread that i thought of interest.

 

IT WORKS but you should try it a few times on a demo to get your finger reflexes down and to appease any squeemies you gots about doing this.

 

TRY THIS ! (on a demo or on paper)

 

understand that the banks have tons of analysts working on this every second, as well as some well placed "moles" (well, thats supposition, but i know i would do it if i ran a central bank) so they have a pretty danged good idea of what the news is, what effect it will have, and trade accordingly.

 

the action of the price before the news release will give away what will happen, and you only need WATCH a few times to confirm what i say.

 

if the news will be GOOD, the price DROPS during the night and definitely before the news and will continue dropping for the first half hour after the release with everyone scratching their heads because the news was GOOD.

 

What happens is THEN, once the H1 or H4 support is reached (usually around 10am est) THE MARKET REVERSES and UP SHE GOES, just as if it was all planned (cause IT WAS all planned)

 

reverse the situation for BAD news, and you can now see why i LOVE news, dont worry about slippage cause im already in the trade before the news release, take the REAL direction trade after the half hour, when things slow down, and set my tp points based on the visible support and resistance areas on the higher timeframes.

 

IF YOU WATCH, and take note of what happens and how the prices are moved, you will be AMAZED at how simple it is to trade news, but if you try to catch the moves, once theyre moving, you get the wide spreads, slippage and all the other stuff everyone complains about !

 

Before you try it, DEMO the sucker and see if you agree with me or want to throw stones ---- betcha there be NO stones !

Editat Martie 30, 200916 ani de tavi_star

The Hidden History of Money & New World Order Usury Secrets

 

by Alexander James

 

 

Free Download

 

 

History of how the current enslaving monetary system, in which Banklords get a credit monopoly (which gives them the power to create unlimited money from nothing at no liability to themselves because it is redeemable for goods or services produced by anyone forced to accept the private Federal Reserve dollar currency notes and cheques) and use our tax system to collect the fraudulent interest was brought about by the forces of banking family dynasties working to establish a tyrannical New World Order through a series of wars, depressions, deficits, propaganda and crimes in which good politicians are murdered or removed by the New World Order (NWO) mafias (CIA, Mossad, MI5/6, Vatican, Jesuits, CFR, Bilderbergers, Trilateral C., Knights, etc). How ancient pagan cults are elitist-made inventions designed to allow their priesthood (Pharisees) to con value out of the public and how they are leading everyone back towards feudal fascist enslavement.

Editat Aprilie 10, 200916 ani de tavi_star

Dr. Joe does electronic trading - Part I

 

I have promised this many people shortly after my first Dr. Joe post and started it a few times but could not get it finished because I couldn’t find all my notes, paperwork etc. The Easter recess has given me time to get some of my stuff together.

 

From Dr. Joe’s visit to CME, we know a little bit about what went on in the Futures/Commodities pits at CME in the early 90s. Before we move on to the crazy 21st Century world of trading with electronic wizardry and gadgetry, we need to understand how we worked with our brokers at that time.

 

In the late 80s and early 90s BC (Before Computers) when we were drawing our own charts, doing our own indicator calculations and drawing indicators ahead of charting packages, we had a similar mechanical order placing process. Once we had decided on a trade, we had to place our order with our broker. We would call our contact at the broker (or fax, in my case, when I was living and working overseas) and give him our trade. Even though the broker knew what we meant, we still had to speak “their lingo”, so we had to say something like “Account abc123, Long 1 March Deutschemark at 2.1020 or better”. The broker would then give us a ticket number which we recorded in our files.

 

The broker would then send our order, now with a ticket number, to either their “runner” at the exchange who in turn would give it to their assigned trader in the pit, or send direct to their trader in the pit depending on the size of the broker.

 

The pit trader would read the order and try and find a seller to take the other side of the trade. Remember, this is a ZERO SUM BUSINESS, someone wins and someone loses – always. The pit trader would find a seller with his “hue and cry” by screaming and shouting and waving his arms frantically until another pit trader screamed, shouted and waved back with a price. That price was then recorded on the ticket number and sent back to your broker. Now, depending on your broker and how big of an account you were at your broker, he would either call you back immediately with your “fill” or wait for later to do all his calls.

 

So then hours later, in my case, I would be notified of my “fill” against my ticket number which was duly recorded in my files. Sometimes I wouldn’t get my “fill” until a day later and after receiving the previous day’s data. Talk about “trading blind”

 

After receiving our “fill” we would then call the broker with our Stop Loss order. “Account abc123, Short 1 March Deutschemark at 2.0020 on a Stop.”

 

When it was time to get out of our position, we had to do the same thing again. Call the broker, “Account abc123, Short 1 March Deutschemark at the market.” In those days, and still with Futures and Commodities, you had to take the opposite of your original position to Close your order. The same routine then happened with the broker and their pit trader until eventually, they would get back to you with your “fill”. Because of all this “mechanical” delay, your fill would be nothing like you expected and often times when you were expecting a small profit or break even, your “fill” would be at a loss.

 

In those days, the “little trader” really got stuffed between the brokers and the pits because we were a “nuisance to them”. Our little “1 contracts” were a pain in the armpit to them and the pit trader would always put these “little” orders to the bottom of his pile while he focused on the huge orders from the “big boys”.

 

Instead of adding an extra “1 contract” to the big boys’ fills, which would have been at far better prices, the pit traders would wait while they had cleared all the orders and then start on ours. This meant that we would ALWAYS get the worst fills – our fill price would always be far away from our original price. Trying to use Limit Orders was a joke for exactly the same reason and they would never get filled.

 

We had to keep meticulous records because there were so many errors and mistakes in those days. Most of the errors would be on our part where we would have extra positions still open because we would have not closed our open positions correctly. This got real crazy when you were trading different currencies and commodities.

 

Now fast forward to the 21st Century AC (After Computers). I am indebted to this information from a Professional Trader of some 40 years trading vintage who visited the CME Exchange many times through his golf buddies who were either floor traders or in some way connected with the Exchange. I thought this information was from a couple of years ago but when I eventually found my notes, it was from 2005. How I wish my trading account grew as fast as my idea of a couple of years did!

 

His initial observation in visiting the Exchange was one of shock. He had seen the Exchanges and Pits on TV many times and thought he knew what to expect.

Like all of us, I guess, he envisaged a very busy open pit for futures trading but what he didn’t expect was the size of the Exchange Floor with hundreds of people each sat in front of a wall of computers!

 

On closer inspection, each Market Maker had 30 or 40 monitors on his “wall” all linked together so that he could access each individual screen with a touch of his mouse. He was just absolutely amazed that one person could follow what was happening on so many monitors as he personally, had difficulty following his 3 monitors and still retain his sanity!

 

What really surprised him was that there were very few charts, sometimes none at all, on the monitors. What was on just about every monitor was price, price activity, buying and selling pressure and other information related to price. “What were these guys doing with all that information?” he wanted to know. Well, 10 years or so later from Dr. Joe’s visit, with the latest computer hardware, software, electronic wizardry and gadgetry, these guys are not doing anything any different to what Dr. Joe observed. They are WATCHING and REACTING to PRICE.

 

The big difference now is technology. The data shown on each monitor is integrated and networked into other computers and their software which automatically responds to changes in volatility, bid and ask spreads, volume spikes and abnormalities, exceptional order quantities, institutional trades, Government Bank trades and everything and anything influencing price activity.

 

For example, if volatility changed on a particular instrument, the percentage increase or decrease was immediately reflected in the Market Makers bids and asks automatically without any human input whatsoever. Similarly, and at the same time, if there were bids and asks which were incorrectly matched or “discounts” based on their software, trades were instantly and automatically initiated by the software based on the programming and parameters set by the Market Maker.

 

The Market Makers have their plans programmed into their software so that when all the criteria are met, their software takes over and issues the trade. This then highlights the importance of the trading plan. Where ours is mechanical, theirs is fully automated.

 

So, the bottom line has not really changed, the Floor/Pit traders/Market Makers are still “piggybacking” on what the market does – buy when price goes up and sell when price goes down – it’s just that now, they have very sophisticated computers and software to give them advanced notice and automatically place their trades for them.

 

Understanding what we are up against, (the big boys with their sophisticated hardware and systems), confirms how difficult it is (not impossible) for the little trader and how important it is for us to thoroughly know and understand PRICE ACTION and trade WITH the big boys (not against them).

 

In Dr. Joe does electronic trading – Part II, we will discuss the role Brokers and Exchanges play in Forex.

cad[/acronym]=0"] Web of Debt

 

By Ellen Hodgson Brown

 

This book exposes important, often obscured truths about our money system and our economic past and future. Our money is not what we have been led to believe. The creation of money has been "privatized," or taken over by a private money cartel. It is all done by sleight of hand, concealed by economic double-speak. "Web of Debt" unravels the deception and presents a crystal clear picture of the financial abyss towards which we are heading, pointing out all the signposts. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation's, you should read this book.

 

 

Chapter 33

MAINTAINING THE ILLUSION: RIGGING FINANCIAL MARKETS

 

 

The Dow is a dead banana republic dictator in full military uniform

propped up in the castle window with a mechanical lever moving the

cadaver’s arm, waving to the Wall Street crowd.

– Michael Bolser, Midas (April 2004)1

While people, businesses and local and federal governments

are barreling toward bankruptcy, market bulls continue to

insist that all is well; and for evidence, they point to the robust stock

market. It’s uncanny really. Even when there is every reason to think

the market is about to crash, somehow it doesn’t. Bill Murphy, editor

of an informative investment website called Le Metropole Cafe,

described this phenomenon in an October 2005 newsletter using an

analogy from The Wizard of Oz:

Every time it looks like the stock market is on the verge of collapse,

it comes back with a vengeance. In May for example, there

were rumors of derivative problems and hedge fund problems,

which set up the monster rally into the summer. The London

bombings . . . same deal. Now we just saw Katrina and Rita

precipitate rallies. There must be some mechanism at work, like the

Wizard of Oz behind a curtain, pulling on strings and pushing

buttons.2

What sort of mechanism? John Crudele writes that the cat was let

out of the bag by George Stephanopoulos, President Clinton’s senior

adviser on policy and strategy, in the chaos following the World Trade

Center attacks. Stepanopoulos blurted out on “Good Morning

America” on September 17, 2001:

 

“[T]he Fed in 1989 created what is called the Plunge Protection

Team, which is the Federal Reserve, big major banks,

representatives of the New York Stock Exchange and the other

exchanges, and there – they have been meeting informally so

far, and they have kind of an informal agreement among major banks

to come in and start to buy stock if there appears to be a problem.

“They have, in the past, acted more formally.

“I don’t know if you remember, but in 1998, there was a crisis

called the Long Term Capital crisis. It was a major currency

trader and there was a global currency crisis. And they, at the

guidance of the Fed, all of the banks got together when that started

to collapse and propped up the currency markets. And they have

plans in place to consider that if the stock markets start to fall.”3

The Plunge Protection Team (PPT) is formally called the Working

Group on Financial Markets (WGFM). Created by President Reagan’s

Executive Order 12631 in 1988 in response to the October 1987 stock

market crash, the WGFM includes the President, the Secretary of the

Treasury, the Chairman of the Federal Reserve, the Chairman of the

Securities and Exchange Commission, and the Chairman of the Commodity

Futures Trading Commission. Its stated purpose is to enhance

“the integrity, efficiency, orderliness, and competitiveness of our

Nation’s financial markets and [maintain] investor confidence.” According

to the Order:

To the extent permitted by law and subject to the availability of

funds therefore, the Department of the Treasury shall provide

the Working Group with such administrative and support

services as may be necessary for the performance of its functions.4

In plain English, taxpayer money is being used to make the markets

look healthier than they are. Treasury funds are made available,

but the WGFM is not accountable to Congress and can act from behind

closed doors. It not only can but it must, since if investors were

to realize what was going on, they would not fall for the bait. “Maintaining

investor confidence” means keeping investors in the dark about

how shaky the market really is.

Crudele tracked the shady history of the PPT in his June 2006 New

York Post series:

Back during a stock market crisis in 1989, a guy named Robert

Heller – who had just left the Federal Reserve Board – suggested

that the government rig the stock market in times of dire

emergency. . . . He didn’t use the word “rig” but that’s what he

meant.

 

Proposed as an op-ed in the Wall Street Journal, it’s a seminal

argument that says when a crisis occurs on Wall Street “instead

of flooding the entire economy with liquidity, and thereby

increasing the danger of inflation, the Fed could support the

stock market directly by buying market averages in the futures

market, thus stabilizing the market as a whole.”

The stock market was to be the Roman circus of the twenty-first

century, distracting the masses with pretensions of prosperity. Instead

of fixing the problem in the economy, the PPT would just “fix”

the investment casino. Crudele wrote:

Over the next few years . . . whenever the stock market was in

trouble someone seemed to ride to the rescue. . . . Often it

appeared to be Goldman Sachs, which just happens to be where

[newly-appointed Treasury Secretary] Paulson and former

Clinton Treasury Secretary Robert Rubin worked.

For obvious reasons, the mechanism by which the PPT has ridden

to the rescue isn’t detailed on the Fed’s website; but some analysts

think they know. Michael Bolser, who belongs to an antitrust group

called GATA (the Gold Anti-Trust Action Committee), says that PPT

money is funneled through the Fed’s “primary dealers,” a group of

favored Wall Street brokerage firms and investment banks. The device

used is a form of loan called a “repurchase agreement” or “repo,”

which is a contract for the sale and future repurchase of Treasury

securities. Bolser explains:

It may sound odd, but the Fed occasionally gives money

[“permanent” repos] to its primary dealers (a list of about thirty

financial houses, Merrill Lynch, Morgan Stanley, etc). They never

have to pay this free money back; thus the primary dealers will

pretty much do whatever the Fed asks if they want to stay in the

primary dealers “club.”

The exact mechanism of repo use to support the DOW is

simple. The primary dealers get repos in the morning issuance

. . . and then buy DOW index futures (a market that is far smaller

than the open DOW trading volume). These futures prices then

drive the DOW itself because the larger population of investors

think the “insider” futures buyers have access to special

information and are “ahead” of the market. Of course they

don’t have special information . . . only special money in the form

of repos.

 

The money used to manipulate the market is “Monopoly” money,

funds created from nothing and given for nothing, just to prop up the

market. Not only is the Dow propped up but the gold market is held

down, since gold is considered a key indicator of inflation. If the gold

price were to soar, the Fed would have to increase interest rates to

tighten the money supply, collapsing the housing bubble and forcing

the government to raise inflation-adjusted payments for Social Security.

Most traders who see this manipulation going on don’t complain,

because they think the Fed is rigging the market to their advantage.

But gold investors have routinely been fleeced; and the PPT’s secret

manipulations have created a stock market bubble that will take

everyone’s savings down when it bursts, as bubbles invariably do.

Unwary investors are being induced to place risky bets on a nag on its

last legs. The people become complacent and accept bad leadership,

bad policies and bad laws, because they think it is all “working”

economically.

GATA’s findings were largely ignored until they were confirmed

in a carefully researched report released by John Embry of Sprott Asset

Management of Toronto in August 2004.6 An update of the report

published in The Asia Times in 2005 included an introductory comment

that warned, “the secrecy and growing involvement of privatesector

actors threatens to foster enormous moral hazards.” Moral hazard

is the risk that the existence of a contract will change the way the

parties act in the future; for example, a firm insured for fire may take

fewer fire precautions. In this case, the hazard is that banks are taking

undue investment and lending risks, believing they will be bailed

out from their folly because they always have been in the past. The

comment continued:

Major financial institutions may be acting as de facto agencies of the

state, and thus not competing on a level playing field. There are

signs that repeated intervention in recent years has corrupted the

system.7

In a June 2006 article titled “Plunge Protection or Enormous Hidden

Tax Revenues,” Chuck Augustin was more blunt, writing:

. . . Today the markets are, without doubt, manipulated on

a daily basis by the PPT. Government controlled “front

companies” such as Goldman-Sachs, JP Morgan and many others

collect incredible revenues through market manipulation. Much

of this money is probably returned to government coffers,

 

however, enormous sums of money are undoubtedly skimmed

by participating companies and individuals.

The operation is similar to the Mafia-controlled gambling

operations in Las Vegas during the 50’s and 60’s but much more

effective and beneficial to all involved. Unlike the Mafia, the

PPT has enormous advantages. The operation is immune to

investigation or prosecution, there [are] unlimited funds available

through the Treasury and Federal Reserve, it has the ultimate

insider trading advantages, and it fully incorporates the spin

and disinformation of government controlled media to sway

markets in the desired direction. . . . Any investor can imagine

the riches they could obtain if they knew what direction stocks,

commodities and currencies would move in a single day,

especially if they could obtain unlimited funds with which to

invest! . . . [T]he PPT not only cheats investors out of trillions of

dollars, it also eliminates competition that refuses to be “bought”

through mergers. Very soon now, only global companies and

corporations owned and controlled by the NWO elite will exist.

Editat Aprilie 23, 200916 ani de tavi_star