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Friday, July 12, 2019

Market Update 7/12/2019 - Is The Market Rigged?

 Announcement: I've been booted from Twitter again. This time for calling someone a politically incorrect name (retard), after they trolled me yesterday morning. What can I say; I was having a bad day, on little sleep. Twitter is a poorly run platform, so I'm not sure when, or if, I'll get access to my account again. Took 2 weeks last time this happened, but a lot can happen in 2 weeks. In the meantime follow me here, and on LinkedIn. 

I'm thinking about moving to Gab, which is a less politically correct platform, geared to the alt-right. Alt right doesn't mean "racist", as has been widely reported by the fake news media. Alt right is a term used to describe the new right, who rejected the Bush/Clinton NeoCons, the rest of the corrupt political establishment in DC.

I've set up a Gab account, but not sure I like the platform. If you have a gab account you can find me at 3XTraders, but if we see any big market moves, I'll provide an intra-day update here, not that I'm expecting much, and especially on squeeze Friday.  

Short Term Market Update  

Markets continue to break out on light summer volume. When say "markets breakout", I actually mean certain indices... the most watched ones, such as the S&P 500, and the Dow.

To review yesterday's action - on the chart below you can see where the S&P pulled back, and continues to break higher this morning. Short term support becomes the breakout point. Resistance on this chart looks like 3015. If it breaks higher... the next major resistance I'm seeing is around the 3025 level.

Here's another short term view of the $SPX - a 10 min chart. Trend remains up, and will probably remain that way going into July OpEx.
from that point we could see a correction to the 2960, at my lower (hypothetical) channel line. As long as the $VIX continues to be hammered down, this rally can continue, but a word of caution...

The Rigging of Markets by the Banks and others

The New York Stock Exchange chart tells a different story. The $NYSE has not broken out to new all time highs - not by a long-shot - and this bothers me, because any hedge fund (s), with enough money can rig the most watched indices higher, using a handful of stocks, while hammering the $VIX down, and most retail investors won't know it.

If you don't understand how markets are rigged Max Keiser does a good job explaining it in the video (embedded) below. Think of the $VIX as your smoke alarm. As long as that alarm doesn't go off, nobody is alerted to a possible fire.

This rigging of the $VIX has been going on for nearly a decade, and most recently caused the implosion of the Leveraged $VIX bear fund the $SVIX, as I'm covered in previous blogs. Jim Cramer has written extensively about how he used to rig markets, and the banks have had been busted many times rigging markets.

In late 2017 day traders came in every day and bought the $SVXY, in order to hammer down the $VIX, as they squeezed the short sellers on light holiday trading volume, and the end result is plain to see on the chart below. The DOW lost 3000 points in 7 days. You can only manipulate a market for so long.      

The $VIXY is what most floor traders watch, and it's actually trading at an all time low. That would mean there's less fear in the market today, than we've seen since the crash of '08. It's obviously being sold, and this washout to a new low, scares me. I think no long term investor should be long the market at this point, because a sudden reversal in the $VIXY could result in another early 2018 scenario. or worse. 

As long as the $VIX continues to be hammered down this rally can continue, but money needs to come out of safe havens such as Bitcoin, Gold, US Treasuries, and global utilities. Those are your real fear indicators. I'll get more into that in a future update.   

The opening bell rings in 5 min.
Good luck, and have a great weekend.

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