Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
Gold Setting Up For A Massive Upside Price Rally - 25th Feb 18
Heavy Police, SIA Security and Media Presence for Sheffield Tree Fellings Monday Meersbrook Park Road - 25th Feb 18
World Stock Market Indices: What Will Happen in 2020 – 2022 - 25th Feb 18
Will We See A Cryptocurrency Wipeout This 2018? - 25th Feb 18
Stock Market Volatility Attributed to 'Shenanigans' - 24th Feb 18
Reintroducing The Concept Of Stock Market Investing Risk - 24th Feb 18
How Global Growth and Infrastructure are Driving Commodities - 24th Feb 18
Tips to Get Financing for a New Business - 24th Feb 18
Heavy Police Presence at Resumption of Sheffield Street Tree Fellings Protests - 24th Feb 18
Why You Should NOT Sub4Sub Free Youtube Subscribers - YTpals, Subpals, SubmeNow Test Results - 23rd Feb 18
One Belt, One Road, One Direction for Precious Metals - 23rd Feb 18
Gold’s Curious Sentiment - 23rd Feb 18
Relationship Between Crude Oil and U.S. Dollar in February 2018 - 23rd Feb 18
Why The Next Oil Boom Will Be Fueled By Blockchain - 23rd Feb 18
Gold Bull and Bear Markets - 23rd Feb 18
Why Recent Lows Are Crucial for US Dollar - 23rd Feb 18
Will Bitcoin be Larger Than NEO in 2018? - 23rd Feb 18
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

What Is Stock Market Volatility Telling Us Now?

Stock-Markets / Stock Markets 2018 Feb 09, 2018 - 03:51 AM GMT

By: Barry_M_Ferguson

Stock-Markets

In my last article, ‘Plunge Protection Team Spotted Atop Mt. Everest’ - 02/02/18,  I warned readers that the Plunge Protection Team was again active. I posted the article on my blog www.bmfinvest.blogspot.com. This article was published as well on the site www.marketoracle.co.uk and almost nowhere else. Let me say ‘kudos’ to the marketoracle.co.uk publisher Nadeem Walayat for not only having the guts to publish the truth but also the expertise to understand what is happening. I start everyday with a thorough reading of the articles published on marketoracle.co.uk as it is one of the few sites where writers like myself are given a forum. Almost all the other supposed ‘investment’ sites are filled with powder puff CNBC kind of stuff. I can assure readers that if they are not reading articles posted on marketoracle.co.uk, they are not getting a complete idea of important information.


Funny, there has been a lot written this week on ‘what happened to volatility?’ Really? I thought I explained this a week ago. I presented a chart showing pretty clear PPT intervention in equity markets as early as a full week ago. Why are so many so late to the party? Now, a week later, some writers are ‘musing’ about the PPT and their interference in equity markets. I can assure readers that we have all seen this movie before. Whenever stock prices look ready to crumble, the PPT steps in to rig prices higher. One would have to be a complete ignoramus to believe we all live in freedom or that capitalism exists. 

Why is the activity of the PPT important? Because the PPT IS the ‘market’. The PPT IS the ultimate put option. Whenever they pop out, it tells us that index prices are failing. Why this week?

Fed Chair Yellen ended her term and Fed Chair Powell took over. As I have written over and over. whenever the Fed Chair is away from the ‘call option’ button at the New York Fed, stock prices fall. No doubt Mr. Powell spent Tuesday in orientation and stocks sure enough fell.

Of course, there are many reasons to sell stocks now. Valuations are ridiculous and sellers have not been allowed to sell for many years. Thus, we now live in a bubble. As President Trump said prior to election, “…one big, fat bubble”. The Fed has been pushing interest rates higher. Pop! A country $21 trillion in debt cannot afford higher interest rates.

At any rate, look at the chart below for a 3-day, 30-minute interval chart for Tuesday through Thursday of this week. Again, I circled the PPT activity as we can see several near-thousand point reversals from persistent selling nadirs. Also note the heavy volume associated with these powerful moves higher. I worked as an investment adviser for the past twenty years and I can assure readers that these sudden and violent reversals from selling to buying are not the work of investors. Whenever stock prices plunge, investors never call to say, ‘Things look cheap - let’s buy’. No body. No one. Never, ever, never. Not once. Ever. This is the work of the central bank. Why? The money they use is not theirs. They steal it from us. They have no risk.

Everyone wants to know. How do they do it. Call options. As anyone trying to trade on Tuesday morning will tell you, all systems were down to a crawl. TD Ameritrade in particular was quite impossible. What does this tell us? It tells us that somebody was pushing so many call options into the system that the little guys were locked out. High frequency trading allows the criminals to hijack the system with massive call orders, most of which they quickly cancel to hide their tracks, to jam prices higher. See the chart below. It speaks for itself for those who want to listen.

DJIA - 3-day, 30-minute interval 2/6/18 - 2/7/18
Chart courtesy StockCharts.com

Violent stock price movement is attributed to ‘volatility’. The ‘volatility’ index is known as the VIX. Actually, the value of the VIX is determined by the expense to own put options. As the next chart will show, stocks have been going straight up for some 15 months without even a single monthly loss. The VIX has set all-time lows. There has been no reason to own puts. Now there is. Now ‘volatility’ is moving higher.

So how did we get here? The next chart below is a 2-year monthly look at the Dow Jones Industrial average. I enclosed President Obama’s last year in blue and President Trump’s first year in red. Clearly we can see that stock prices were fading and getting ready to tank with the prospect of Criminal Clinton becoming president. Stock price performance in President Obama’s years was actually quite pathetic considering the Federal Reserve and the PPT unleashed bailout after bailout and QE after QE to boost prices. Political policies were not helpful.

DJIA - 2-year monthly
Chart courtesy StockCharts.com

Then, literally as soon as it was apparent that Mr. Trump had won the Presidency, stock prices vaulted higher. Given the monthly chart, stock indices have yet to experience but a single negative month in President Trump’s tenure thus far. Until now.

PPT and central bank intervention have been a world-wide phenomena for years now. Like steroids, interventions work. Like steroids, there can be adverse consequences. Bubbles eventually pop. Whenever we see evidence of PPT activity, we know the bubble is bursting. Readers have now been warned. Now take a look at the chart. Given that the Fed has apparently drawn a line in the sand at Dow 24000 or so, does anyone expect stock prices to continue to fall on Friday? I myself would be very surprised if we don’t see vociferous buying coming from the PPT.

Before I leave the second chart, I must admit Senator Shumer was right when he said the remarkable bull run in stock prices over the last year was not to be credited to President Trump but rather former President Obama. Senator Shumer was right. All Mr. Obama had to do was step down and get out of the way. And, most importantly for stock prices, Ms. Clinton was defeated in her bid for the presidency.

Without trying to be too lengthy, let me leave readers with an example of how corrupt the american system is.

Duke Energy is one of the largest energy providers in the US and they serve us here in the US Southern states. As we say down here, ‘American by birth and Southern by the grace of God!’ Anyway, Duke has recently been fined $102 million dollars for polluting ground water with coal ash. The company said they will clean things up and pass the cost on to customers. The little guy gets screwed and nobody cares.

Now, check this out next time readers want to cross their heart and praise the flag of the country that used to be America.

Several years ago Duke’s very own engineers suspected some of their pipes used to disburse the pollution were having problems. They requested $20k to inspect these pipes. The company turned down their request. The pipes burst and the pollution occurred. Duke even pled guilty in court admitting their fault. Get your barf bag handy.

In April of 2015, the company announced a $1.5 billion dollar stock buyback program. They would buy the stock from formally broke bankers Goldman Sachs and JP Morgan. Given that both banks were bankrupt ten years ago, where did they get money to acquire $1.5 billion dollars worth of Duke Energy stock? From us, fool!

It gets worse. The CEO of Duke makes $13.4 million per year and $9 million of that last year was Duke stock. The top five Duke execs make some $28 million per year. The company estimates if they have to clean up all their spills, it might cost some $10 billion. Given that the company pays enormous salaries to those who prevent inspections of potential pollution events, and given that the company can spend billions to buy back stock, paying hundreds of thousands in commissions to criminal banksters, just so they can drive the price of Duke stock up and get rich, and then stick the cost of higher stock prices and pollution clean up to their customers, one can conclude that all that matters in america is higher stock prices.

Thus, the PPT rides to the rescue of rich investors who only buy and never sell.

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory
barry@bmfinvest.com
www.bmfinvest.com
www.bmfinvest.blogspot.com

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

© 2018 Copyright BMF Investments, Inc. - All Rights Reserved
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules