Tuesday, August 18, 2009

I thought I saw a PPT

August 18, 2009
Phillip Davis
Seeking Alpha

Anyway, so the after-hours markets were flat but the ubiquitous futures market took off as soon as all the retail traders had their trading accounts turned off for the night. You would have thought something huge was happening to watch the relentless, nonstop, 3-hour climb in the Dow, the Nasdaq, the S&P and even the Russell futures that led into the Asian open. Did this blatant manipulation of the indexes fool Asian investors? Of course it did! The Nikkei opened at 8pm EST and had gapped down to 10,200, exactly 4% off the high of 10,620 on Friday. As I said to members in yesterday’s chat, that 4% line is critical in the follow-through day on the 5% rule as it represents our expected bounce off 5%, so holding that line is still bullish.

Well, never let it be said that Mr. Stick doesn’t know how to paint a bullish picture. The Nikkei was rescued from failing that 4% line by the relentless futures buying between 8pm and 10:30, which coincided with 9am to 11:30 on the Nikkei, which just so happens to be when they close for lunch. What happened at 11:30 Tokyo time? Well, suddenly everyone lost interest in the US futures and they fell ALL THE WAY BACK to where they started, in just 60 minutes. Please, Congress, whatever you do, don’t look into this nonsense - better to just sit there in your little offices and say "the market forces are too complicated for me to understand" and let 12 people control the world, that’s what America’s all about, right?

So, where was I? Oh yes, manipulative BS! Of course, coming back from lunch and seeing that the US futures had nose-dived sent the Nikkei right back to 10,200, but there was another way to prop up the Nikkei and that would be a dollar rally against the Yen. The dollar had already been jacked up from 94.37 Yen at the Nikkei’s open to 94.75 at lunch but, at 12:31, the minute the Nikkei reopened, the Dollar began flying up all the way to 95.30, which rallied exporters and lifted the Nikkei 100 points into the close. After the Nikkei closed, the Dollar fell back to 94.9 Yen - mission accomplished, time to rest.

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