Relax people! The Loch Ness monster is of course a figment of human imagination. I’m sure we have all seen that photo of some kind of serpent-looking animal rising from the surface a a deep lake in Scotland. The long neck and dinosaur-like head look rather menacing. But this isn’t about monsters. Rather, the new chart pattern injected by the Federal Reserve of the US. Investors might think they have an explanation as to why the Dow seems to rise everyday but unless they know the POMO, they don’t know the Dow from the Loch Ness Monster.
The Fed executes stock manipulation activities every single trading day through their branch in New York. The POMO (Permanent Open Market Operations) activities include the current ‘Operation Twist’ program in which the Fed buys US Treasuries with no doubt a heavy dose of PPT (Plunge Protection Team) stock involvement. Without this constant buying, the Dow would likely be far below the surface of Loch Lake drowned in sea of lies, manipulation, and gooberment chicanery. The little people might then understand their gooberment to be the corrupt, self-serving, mendacious, and nefarious lot that they are. But alas, a good con game can keep the masses fooled as long there is an occasional winner. That winner is the Dow Jones Industrials.
The Fed is kind enough to produce a schedule of their daily manipulative activities on their website along with the time of day of the orchestrated manipulation. Those activities begin about 10:30 AM to 11:00 AM each day. Thus, we have this ‘Loch Ness Monster’ kind of chart pattern epitomized by a sudden burst higher at about 11:00 AM each day. The Fed figures the oafs are either too stupid to notice or too greedy to care that the once ‘market’ is now a rigged carnival show. Perhaps they are right in their assertion.
Nevertheless, when the Fed is buying, the Dow suddenly rises from below the surface as if it were some monster raising its head to stalk its lunch. Then, unless the PPT intervenes in the afternoon, it re-submerges.
The chart below is a picture of the Dow from Friday, 3/16/2012. The Fed was selling and the Dow dropped. On Monday, 3/19/2012, the Fed was buying and the Dow rose. At least, it rose at the exact moment the Fed initiated its buy program. That’s all we need to know. Earnings are a farce. Capital is in the imagination. The economy is an illusion. However, the Fed is real and they want to extend the con. So, nearly everyday until the current operation concludes in June, we will likely see the Loch Ness pattern emerge on the scheduled Fed buying days. When this program concludes, we will likely see some kind of cataclysmic decline in all the world’s indices. Of course then, the Fed will embark on some other index saving action to extend the con. Heck, it’s not their money!
DJIA - 2 days, intraday, 1-minute bars, 03/16/12 - 03/19/12 (midday)
Chart courtesy StockCharts.com
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.