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Let’s Revisit Whether the Market is Being Manipulated

Posted by Larry Doyle on March 22, 2010 9:52 AM |

Is the stock market being manipulated?

I can not count the number of times I have been asked that question over the last 9 months. Rather than my offering personal opinions which market pundits may view as sour grapes or worse, I want to revisit a ten-minute segment of my interview last evening with Phil Davis.

The segment runs from 29:45 until 40:00 (audio player provided below). If you do nothing else today, please listen to this dialogue between Phil and myself. Neither of us goes into this conversation with agendas or preconceived notions in an attempt to score points. I will offer an edited version here. I think you will find the information, thoughts, and opinions offered to be enlightening.

PD: It’s getting more and more likely that there’s going to be an event that takes the market down and that’s because of the nature of the market rally. The rally has been a very thinly traded, low participation rally.

LD: I want to pursue that….the idea that there could be or will be some sort of an event. Obviously, all of the governmental support that has come into the market, all of the quantitative easing, the easy money, the 0-.25% Fed Funds rate…all sorts of other backstops. Now they’re trying to figure out how to ease some of those supports out of the market while China and India have increased their rates. Are we overextended? Have we created a little bit of an asset bubble?

PD: I think we have created a ‘helluva’ asset bubble…..Let’s be honest. We were delusional in 2007. Those valuations were completely wrong….the earnings were fake and I want to emphasize again fake because they were fake. They were not only not real earnings but what were reported as earnings turned out to be tremendous losses. The financials were putting out fake numbers…it was all fake…..How did we get the market back to where it is then? How is this even possible?

LD: How much are we overvalued?

PD: Don’t forget the Dow is fake also. They took out GM and Citibank from the Dow. Those are two zeros and they put in Travelers and Cisco…that’s 640 Dow points that were added because they swapped GM and Citi for Travelers and Cisco. Now is that real?

LD: I look at the most actively traded stocks. Almost everyday the most actively traded stock in the market is Citi…this isn’t real…

PD: Whether Citi is real or not, I think you touch on something more important, though. The most active stock is Citi. The next most active stocks are Bank America, Wells Fargo…

LD: Also AIG.

PD: Those trades are 80% of all trades in the market and the total market volume is less than half of what it was back then. In other words, you’ve got half the market participation of what it was and of that half, 80% of it is concentrated in less than half a dozen financial firms.

LD: What does this say about the future of Wall Street?

PD: It says that the people who are running the system are in total control of the marketplace. There is no retail participation….on a relative basis.

LD: They don’t believe it.

PD:….it looks like a bunch of crooks….

So, is the market being manipulated? I would guess that depends on how one defines manipulation. That said, market volume and market depth tell us a lot. I thank Phil Davis for providing this ‘sense on cents.’

I strongly encourage you to take ten minutes and listen to this segment of No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Phil Davis. If time allows, listen to the entire show.

LD

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  • TML

    Wow. This info is powerful. I have NEVER heard these insights on any of the media outlets, print or television. VERY INTERESTING!!

    • Duke

      The media have a vested interest in not putting out this info about market volumes and market depth because what happens if people stop watching their shows and/or buying their periodicals…then, if viewership is down, advertising rates down, revenues down, profits down, bonuses down….OH NO, don’t go there!!

      • Rock

        Do you trust the games in Vegas? Why should this be any different? Do you really think that everybody playing craps or blackjack are playing with their own dough? Don’t you think they have ‘stooges’ playing just to get the game going and lure others into the action.

        Same drill right here….and been going on for a lot longer than just the last year. It just so happens that this time period has truly accentuated this ‘gamesmanship.’

  • Pat

    There are very rarely, if ever, any comments on market volume or market depth by analysts or pundits.

    Regrettably the hosts never drill them on these points either.

  • beth

    eye opener, it is!

  • Scott

    I found this site by searching “is the stock market being manipulated by the obama administration”

    I guess the answer is “Yes.”

    But why is no one talking about this on Fox/Drudge/WND?

    • LD

      Scott,

      Welcome to Sense on Cents.

      We have a lot to talk about!! Please visit often, bring your friends, and your questions.

      In regard to why the media outlets are not talking about this, well now perhaps you may be gaining a hint and an appreciation as to how and why information is being controlled in our nation.

      Glad you found my site.

      P.S. I started writing about this manipulation topic last July. To give credit where it is due, Joe Saluzzi of Themis Trading broached this topic initially. If you are interested in learning more of what Joe has to say, here is the link to all my work referencing Joe Saluzzi.

  • seo

    Hi there! I just wanted to ask if you ever have any issues with hackers? My last blog (wordpress) was hacked and I ended up losing months of hard work due to no backup. Do you have any solutions to prevent hackers?






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