Why doesn't the FED prosecute these stock market manipulators causing the whiplash in stock prices that gives them obscene profits while damaging world markets and confidence in free market economies? China does not allow this type of manipulation and had no sell-off.
The use of options as insurance is a way to guarantee that your hedge fund will under-perform. But buying millions of puts in the last month to dramatically profit from increasing volatility and pessimism is what we seem to be seeing now. Remember the surge in oil prices in 2008 could not be explained by demand and was blamed on buyers of oil futures. Options have a similar effect on stocks as futures have on commodities. Those who bought PUTs on specific stocks may be the very hedge funds dumping those stocks and willing to lose something to cash in on as the PUTs on their sold stocks skyrocket. Jim Cramer said he saw many sellers of PUTs bankrupted during the DOT-COM collapse. The sharper the decline the more obscene this type of stock manipulation becomes. Manipulators of commodity futures prices contributed to the massive equivalent energy tax the high oil cost levied on the world and probably contributed to the collapse of world economies in 2008.
Why doesn't the FED prosecute these stock market manipulators causing the whiplash in stock prices that gives them obscene profits while damaging world markets and confidence in the free market system? Options and futures were invented to stabilize prices not to manipulate and destabilize them for obscene profits and the destabilization of the market economies.
New reports came out the morning of Oct. 30 and the DOW fell almost 250 points and 2% for the month. The Chicago Purchasing Managers reported the Chicago Business Barometer recovered from the September stumble. But Consumer income & spending was down and Consumer Sentiment declined.
Then Ford Motor Co. unions have rejected contract concessions the automaker said it needed to remain competitive with its U.S. rivals. And all week Wall Street waited for CIT Group Inc., a 101-year-old commercial lender, to finally file for bankruptcy underwater by $10 billion. Market manipulators had pumped over 80% of the stocks to new 52 week highs on six months of Pollyanna news and now the manipulators own puts and are trying to depress the stock market as the manipulators succeeded last week.
This week has a very heavy business calendar of the same type of important potential market moving economic reports that have been roiling the market day-to-day in both directions over the last couple of weeks. Wall Street media is likely to describe a stabilizing advertising market after years of declines when they report third-quarter results next week. Viacom reports Tuesday followed a day later by Time Warner that owns the publisher of The Wall Street Journal. Broadcaster CBS Corp. reports Thursday.
Three major hedge-fund managers will post third-quarter results as their funds capture their high-water marks. Och-Ziff Capital Management LLC reports Tuesday, is likely to see improvement in all of its funds. Fortress Investment Group and Blackstone Group are expected to swing to the black when they report Friday.
Monday Nov 2
Economic reports out Monday are expected to show a small rise in pending home sales and a small decline in construction spending in September. The Institute for Supply Management reports on manufacturing activity Monday. The Institute for Supply Management reports on the service sector Wednesday.
Tuesday Nov. 3
The government will release data on September factory orders in the morning.
Officials gather for the meeting of the central bank's Federal Open Market Committee, which sets interest-rate policy, on Tuesday and Wednesday. The FOMC is not expected to move interest rates at this time.
Kraft is expected to post wider profit margins and possibly even exceed forecasts. The food company's earnings will be closely watched since its bid for Cadbury is in part in stock and it needs Cadbury shareholders to value its shares.
Wednesday Nov 4
Cisco reports Wednesday and is expected to post lower profit and sales but also affirm the anticipated comeback in corporate demand for high-tech products and services.
Jobs report AM
ISM index AM
FOMC PM
Thursday Nov 5 AM
Major retailers who will report same-store sales for October may benefit from the recovering economy as well as from cool weather that sparks sales of fall and winter clothing.
Unemployment claims AM
The government will release data on third-quarter productivity AM
Friday, Nov 6 AM
Investors will wait anxiously all week for a labor report to be released 8:30am Friday that will likely show U.S. unemployment topped 10% during October.
More insurers should report similar results to last week's reports saying business and rallying stock markets put an end to big investment losses. Hartford Financial Services Group reports Tuesday and Allstate which reports Wednesday are expected to swing to a profit, while Prudential Financial results Wednesday are expected to increase from a year earlier. Health insurers Humana and Cigna Corp. will report Monday and Thursday, respectively.
Market forces November 2
Profit taking continues to be advisable on advances and purchases should be made on declines each time we bottom. This last bottom was a little deeper and we appear to be entering a slower growth phase. The market appreciation rate this year could not be sustained. The new rate possibly will allow the bull market to last a little longer. We expect the market to rally again soon but if a new high is not established we expect a few months of declines.
Asian markets were mixed last night; China up 2.7%, Hong Kong down -0.6%, India down -1% again, Japan down -2.3%, and Seoul down -1.4%. China does not allow manipulation of stock prices with heavy options trading. Options and futures were invented to stabilize prices not to manipulate and destabilize them for obscene profits and the destabilization of the market economies.
European markets are up slightly with the average in a range from 0% to 0.3% this morning about half way through their day.
US pre-market futures are up 0.6% today at 7:00 AM EST with perhaps another buying opportunity before the market makes a new high. That depends on whether most the PUT buyers cashed in last Friday.
Some companies apparently are big enough to manipulate the market with options now. This could be as dangerous to the US economy as the mortgage derivative market was. Futures and Options are derivatives of their respective markets and if a company buys enough stock on dips they drive the price higher and causing volatility on the down side to subside. Then they can buy out-of-the-money PUTs at lower stock price levels and then quickly dump their stock and subsequently profit enormously by cashing in their skyrocketing PUTs.
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