The Dow is 35% above its March lows and has had the best quarter’s performance since 1998. Why is that? Because the recession is over and we are seeing the green shoots of economic recovery? This is what we are led to believe by Obama’s propaganda machine (aka, Bloomberg, CNBC, Barrons, WSJ, etc). No, its because the US government with the help of da boyz aka the plunge protection team (JPM, GS etc) are up to their old tricks again. Hey if they going to spend trillions of dollars trying to save the economy, why not use a few hundred billion to prop up the stock market. Its much easier to do than to fudge employment or home sales numbers. Anyone whose kept a pulse on the financial blogosphere (the only true source of information now) knows that there are a lot of people who realise the US stockmarket is being played like the monkey dancing to the beat of the organ grinder.

Yesterday came out with appalling consumer confidence numbers which last year would have knocked the Dow down by at leat 500 points. However the PPT came in and made a bad day not so bad. It is half year end and people need to get paid. As I write this, the ADP job stats are no better, but hey the Dow just jumped 100 points. Come on, isn’t it time to end all these games and let the (free) market find its own level? Propping up the stock market may have a temporary effect of boosting morale but it won’t get people who are still terrified of losing the jobs to start splurging again. And if you think the housing market will recover anytime soon, check out the chart below.(http://www.ritholtz.com/blog/2009/07/update-case-shiller-100-year-chart/) Scared?

case-shiller-updated

So my message to Obama and team is: Stop manipulating the stock market. It may boost confidence now but it won’t last. Like a drug addict has to go through withdrawal to kick the habit, the markets need to find their own level. The sooner this happens, the sooner we can start the journey to recovery.

In case you missed it, a few sound bites from people who suspect this market is rigged:

  • Um, “worse than expected”? I guess that sums it up today as Consumer Confidence data was terrible. Stock price declines today were milder than expected given the news. But, silly me, I forget that this is the quarter and mid-year end—there are bonuses to be had and bullish headlines to be written.Why did the market rise this quarter? An overwhelming amount of liquidity plus an equal amount of BS. Shorts have been vanquished and, frankly, many don’t trust this market as the integrity of honest market making has been compromised through crony capitalism and double-dealing at the highest levels.
  •  The trouble with manipulation is that after a while no-one knows anymore what is true and so what to do. That is maybe what the situation is now. Markets are going nowhere because there is no clear direction. Buy this rally and lose out when it reverses, or stay out and lose out when it continues? Even with real information, that’s always difficult, but market manipulation by Da Boyz and others – using our tax and savings dollars in many if not nearly all cases – makes it near impossible to take a view. All I’m certain of is that there’s a big correction looming, but when is the question? 
  • It’s good to hear someone I respect agree w/ me that we are in, and probably have been in, a manipulated mkt since mid-April at the latest – possibly since the end of March. Given any number of indicators with a high degree of correspondence with the direction of the averages, this mkt should have rolled over the second wk in April. But the heavy, and coordinated, buying of a handful of stocks can move indices regardless that the rank-and-file of stocks have been plummeting. Consider the normal drop in the COMPQ for any drop, X, in the percent of NASDAQ stocks above 50 SMA. Do the same for the normal drop for a given drop in the Bullish percent index. As for the handful of stocks: IBM represents 9% of the variance in the Dow. Four stocks dominate the NDX, which dominates the COMPQ. And many issues are listed on more than one index. IBM also figures in the S&P 500 & 100, for example. Ditto BAC. And both figure in their respective sector indices.