Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

On the Stock Market the Federal Reserve Impersonates Dikembe Mutombo!

Stock-Markets / Stock Markets 2018 Apr 04, 2018 - 06:48 PM GMT

By: Barry_M_Ferguson

Stock-Markets

NBA fans will remember Dikembe Mutombo as the former defensive-minded center who carved his niche in the league by blocking shots. Upon swatting a shot away, Dikembe would shake his head ‘no’ and wag his forefinger back in forth at his opponent as admonishment for even attempting a shot near his presence.


See the first chart below.



 
DJIA - Daily since January 2018
Chart courtesy StockCharts.com

This basically shows us the winning, rising unabated pattern of the DJIA since President Trump was elected. With a steady rise in stock prices, the Fed and their PPT arm has been quite. No need for intervention. Besides, the Fed has been buying ‘assets’ (stocks) like all the other central banks. They announced an end to this policy at the end of 2017. Stock price enjoyed another bubblicious month in January and then there was a pin prick. The Fed raised the Fed Funds rate and promised more. The yield curve compressed more and investors sold down the stock indices. I have marked the ‘Dikembe Mutombo Line’ in green.

Well, the Fed let the selling go on until the Dow pierced the 24,000 level. Then, Fed Chief Powell jumped out and swatted the selloff snowball back up the hill. He wagged his finger at would-be sellers as if to say, “Don’t even try it!!”

February was a busy month for the Fed as another wave of selling hit the Dow. This time, the selloff did not even make it to the ‘Dikembe Mutombo Line’. The selling was abruptly blocked and back up went the Dow. The forefinger was again wagging.

You could almost hear them on Wall Street. “On Comet! On Cupid! On Donner and Blitzen!” Wait a minute, that was a different ‘Santa Claus’. The point is that everyone is so enamored with an ever-rising stock index value that no one seems to care that the Federal Reserve constantly forces stock prices higher at arbitrary levels. True capitalism cannot function with constant Fed meddling. True prices for anything cannot be discovered with constant Fed meddling. A fair economy cannot ever be realized with constant Fed meddling. Capitalism this is not!!

Yet, another bout of selling hit the Dow as the calendar turned to April. Another sign that the Fed is active in stock pricing is when a month is about to expire with steep losses, like February of 2018, the PPT instigates a massive ‘last day of the month rally’. Invariably, this leads to a beginning of the month, April, selloff.

See the next chart below. It is a picture of the Dow for the past two days (Monday 4/2/18 and Tuesday 4/3/18 in 5-minute bars).

DJIA - 4/2/18 - 4/3/18 5-minute bars
Chart courtesy StockCharts.com

This 2-day chart shows the PPT in action. Monday was the first day of the month following the PPT’s nice ‘end of the month rally’ in March. Naturally, stock prices plunged. Down 700 points or so with only a few hours left in the trading day, stock indices suddenly sprang to life! With so little time to work a miracle rally, the PPT did spur on a nice 300-point rally in the last 30 minutes of trading! Again, I have drawn the ‘Dikembe Mutombo Line’ in green along the Dow 24,000 level. This is the Fed’s target for setting stock prices.

Tuesday was very wild. There were a couple of intraday 200-point selloffs immediately followed by 300-point rallies culminating in the nice 300-point rally at 3 PM. That brought the Dow to what level again? Yes, 24,000. Dikembe was again wagging his finger. So, it only took the Fed’s PPT less than 6 hours of trading time to basically erase a 700-point selloff. Whew!

One quick point. With all that wild action, one would think a so-called ‘volatility index’ like the VIX would rise. It didn’t. It fell. So again, the VIX pricing has nothing whatsoever to do with rapidly rising or falling stock prices. It is priced from the value of put options. The Fed, the PPT, drives up stock prices using call options in massive waves thus killing the value of puts thus killing the VIX.

What’s so special about Dow 24,000? I have no idea. But this is the only thing investors need to know. The Fed runs everything. America does not have a stock ‘market’. America does not enjoy pure capitalism. The Federal Reserve is constantly setting prices. What investors have to look for is a sign from the Fed that they are impersonating Dikembe Mutombo to reject any selling attempt on the part of investors so that the Dow pricing will conform to the level the Fed feels comfortable. My guess is the Fed will always step in when selling looks poised to tank the derivative market. They steal tax money from the citizens, drive up stock prices, and their bankster friends get rich. Welcome to America!

A follow-up. I literally cannot write this fast enough. We all know that stock prices are at least ‘elevated’ (even in the Fed’s opinion). The country is fractured on many faults. US troops are in 75% of countries throughout the world killing and destroying everything in their path. For brevity, we could all agree that there are many reasons stock prices could legitimately fall. Yet, they will not be allowed to do so. On Wednesday, the Dow opened up down some 400 points below the Dikembe Mutombo Line. We all know what happens next. Enjoy the rally back above 24,000. Enjoy the american clown show!

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.


© 2005-2019 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