‘Plunge protection’ behind market’s sudden recovery
By John Crudele
October 20, 2014 | 11:08pm
Mysterious forces were trying their best, but they couldn’t keep the stock market from swooning Wednesday.
They failed in the morning, despite massive purchases of stock index futures contracts. Within minutes of the market’s opening, the Dow Jones industrial average was down 350 points. Later in the day — after a lot of shocking ebb and flow — the Dow bottomed out with a decline of 460 points.
It was only in the last hour of trading that the market saviors managed to trim the Dow loss to just 173 points. And they succeeded only after Janet Yellen’s private, upbeat remarks about the economy were leaked.
Welcome to a new kind of stock market — one that the average investor should refuse to be invested in.
Anyone whose investments tightly track the major indices is now losing money since the beginning of 2014. The Dow is down 1.1 percent on the year, with the S&P and Nasdaq up 3 percent for 2014.
https://nypost.com/2014/10/20/plunge-protection-behind-markets-sudden-recovery/
What is this man trying to sell?
Papers and books. If Crudele were a serious financial writer, he’d be working for someone other than the Post Over his long years there, he has repeatedly wrote about govt manipulation of markets and numbers especially the employment numbers. Mixes truth with sensationalism as people attuned to markets know about seasonal adjustments to numbers and the Fed’s direct hand influencing interest rates, bonds, currencies, credit and stocks . Circuit breakers exist so o be little surprise if Fed had a buying program in place to stabilizize stock prices in times of routs in an era of program trading. Many dont think the Fed should exist but that’s a long discussion for another day. Doomsday scenarios sell because there were the collapses. of 1929. 1987 and 2007 and they prey of fears– timing is everything in stocks
I’ve seen a few market cycles in my day. It seems to me that the market runs up, then the doomsayers call it a bubble and predict a correction. The correction doesn’t come. Sentiment improves, and then the first few bullbirds start chirping “Look, it’s a different market in this day and age. [insert prior crash here] couldn’t happen today because [insert reasons here].
And then, somehow, inevitably, the impossible happens and the market drops 20% over the course of a few weeks. I figure the Fed and ECB have limited options going forward, and their lip service will only go so far.
I’m usually not one to agree with the Post, but in this case, I am optimistically cautious. Probably to the tune of 80% cash.