If the Stock Market is Manipulated via HFT & PPT

[gunDriller]

There have been some really interesting articles at Zero-Hedge and other places recently about Nanex, the firm that captured the various robot algorithm trading patterns.

http://www.nanex.net/FlashCrash/CropCircles/DUG_081010.png

that pretty image is trading activity, one of many that was observed and are commented on in the article, "Crop Circle of the Day - Quote Stuffing and Strange Sequences"

http://www.nanex.net/FlashCrash/CCircleDay.html

long story short, companies like Goldman Sachs have the ability to run the market up and down just using high-frequency trading and algorithms that produce trading patterns like the one above.

in addition, we know about the "Working_Group_on_Financial_Markets", aka Plunge Protection Team.

http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets


so my question is - is today's down market engineered or are we seeing mostly free market forces at work ?

what is interesting is the reponse in Gold. keeping gold under $1200 (most of the day), less than 24 hours after a hyper-vague Fed meeting announcement, "US gov is using proceeds from sale of Mortgage-Backed Securities to purchase government bonds".

remember - the US government took on the securities because they were toxic, underwater, worth less than zero because of administration costs (owning millions of underwater homes is not a great big moneymaker these days.)


anyway, i can't help but wonder if today's stock market downtick was implemented to support the folks over at Crimex in their ongoing project to keep a lid on precious metal prices.

given that the financial industry has demonstrated the ability to run the market up and down at will, and from what we have found out about their precious metal manipulation via guys like London metal trader Andrew Maguire ... makes me wonder if today's Goal for the Cartel is to keep the US $ from devaluing too too much.

[Ares]

No need for humans, lets just let the computers trade against one another... :sarc:

[chad]

http://i38.tinypic.com/286048.jpg

[MNeagle]

No need for humans, lets just let the computers trade against one another... :sarc:


Thought for the most part, they already did. Oh yea, they need 'human capital'! Thanks GS...

[DMac]

You can thank Alan Greenspan for computer trading. He was one of the pioneers in the field making real people nearly irrelevant.

[gunDriller]

i have the impression that the trading floors of these companies are dominated with guys like the guy Chelsea Clinton just married - Mark Mezvinsky.

they went to Stanford together. i bet someone he's a Goldman alum. now he works for a hedge fund.

anyway, companies take smart young guys like that and let them write financial trading software. innovation and creativity is encouraged, especially if it makes the company money. i imagine that engineering environment is sort of a fusion of geekiness with Wall Street.

they don't give a fick about anything except their paycheck.

the old definition that was taught in business school 30 years ago, "the stock value is the present value of the future earnings stream of the company, divided by the number of shares."

that means you do all these boooring calculations about how much money the company will make, do some calculations that take into account interest rates, and arrive at a net present value. divide by # of shares, and you have the old version of the definition of stock value.

maybe some investment advisers do these calculations ... but there's an awful lot of players in the market that just want to goose it, have inside information, make money on that, etc.


if they were honest, gold might not be so attractive ... and we might not be here. :o

[Mouse]

NPV and dividend valuation are obsolete. I have a third order derivative structure that boxes that stock and insures against the downside risk that I would like to talk to you about. There's only a few slots left, so you better get in on it quick! The models are showing this is a winner sure bet!