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Is Uncle Sam Manipulating the Equity Markets?

Posted by Larry Doyle on July 1, 2009 8:41 PM |

I have been increasingly suspicious of the price action in our equity markets over the last few months. I have highlighted how the markets are dominated by technical flows rather than fundamental analysis.

I have tried to highlight these themes in posts including “The Greater Fool Theory” and “What’s Driving the Market?”

My jaw dropped upon watching a Bloomberg interview yesterday in which Joe Saluzzi of Themis Trading left nothing to the imagination. Please take the time to watch this clip and ponder exactly what Mr. Saluzzi is sharing. The entire video is outstanding but it gets very interesting at the 4:20 mark. Compare his assertions with the points I have raised in my aforementioned posts. (Hat tip to Zero Hedge for locating the video.)

The risks of playing in these markets remain extraordinarily high.

LD

  • Larry –

    THANK YOU for voicing your suspiciouns and concerns on this topic. I completely share your suspicious view of the markets recently and how risky and dangerous they are right now. I inferred from Mr. Saluzzi that he foresees a major downward move in the markets in the near future, which wouldn’t surprise me at all. Thanks again for posting this Larry.

    Matt

  • TeakWoodKite

    “50 milliseconds is a dinosaur”. Yikes.

    What rebates is he talking about? I understand how the volume trading will provide “false” momentum and how the retail investor can be caught in an eddy of this volume trading current but how is this factor disclosed to the investor?

    What drives these volume trades and who has the “big blue” of trading? What are the algorithms?
    Bozo? LOL

  • Ben Simeone

    Hi Larry,Have you caught the Matt Taibbi article in Rolling Stone about Goldman Sachs? I was wondering your take on it,Ben

    • TeakWoodKite

      I was wondering as well.

      • Ben and TWK….I skimmed the article. My take on this article in general and all of Wall Street is the following:

        These are large convoluted firms which are truly in the epicenter of a wealth of information. Driven by the motivation of maximizing profits, transactions do not always adhere to the strictest of compliance principles. That said, there are plenty of situations that may appear to be conspiracy driven but are not.

        Add it all up, though, and you have a mixed bag.






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