Advertiser Disclosure: The credit card offers that appear on this site are from credit card companies from which receives compensation. The relief to mark to market gave even more juice to the market, and it was on its way from 6500 to 10000 and beyond. If you believe that the world can come out of the recession without the US consumer, then perhaps you will think that the market will go up and up. Anyway check out the article and know that the bond and stock markets are manipulated big time.
Knowing that the plunge protection team is involved in stock manipulation is no indication which way the market will go, as Bernanke also has to sell bonds. Linda Duessel also was quick to point out that when the money on the sidelines, ie, retail investor money starts coming back into the stock market, she would become more conservative. In other words, once this sucker rally takes money from average Joe, the smart money is going to get out of the stock market !
So, my argument at Seeking Alpha is that the Fed may want to crash the stock market to scare investors into fleeing stocks and buying bonds, which will also keep interest rates low, which is another Fed goal. The pumped stock market may go on for awhile, but it is a crap shoot for the little investor who does not have access to the information that the biggies have. I still say it would be better had the Fed not bailed out the banks, bought bonds, bought stocks, controlled the housing market. Hedge Funds had the power to take the market down as they sold good stocks in order to deleverage their positions. We must also realize that the California housing market could take down the entire US economy.
And they have the power to drive the market back up. Hedge funds have an interest in helping their counterparty buddies, the big banks. They have the ability to get out of the market on a moment’s notice if bad news is worse than anticipated. So far, the market is ignoring the ominous sign that commercial defaults are starting to pick up, also announced by Bloomberg on 4/1/2009. It is my opinion only that people with time or savings limitations be very careful in this market and don’t get greedy. The fear of deflation that comes from this California market is igniting the massive spending that is taking place.
Market manipulation is in full progress and the stimulus package probably gave the manipulators more clout. I think the stock market is overvalued right now considering the low economic recovery we are in. I’m not sure what investors are all excited considering that unemployment hit 10.2% the highest in 26 years. The growth of the stock market since its march low does not match the pace of our ‘economic recovery’. I think those banks bought as much stock as possible with the $700 billion they received from the US taxpayer. It is hard to have faith in the stock market, for some of the reasons you mentioned. This might be why the market traded so cautiously and on such light volume today.