Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

"I am beginning to think of the PPT as a possible semipermanent fixture of the market."
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yankee...

I certainly hope you are wrong, as that would be a very bad development.

Like you, I cannot fathom the "why" behind their current involvement here, as it certainly seems to go well beyond their charter to maintain orderly markets, which I have understood to mean preventing meltdowns. One can only speculate as to reasons for them to propel the market as far as they have, but all the scenario's I can come up with are very unpleasant - the potential collapse of one or more financial institutions (JPM?) or one of the large funds, or something else that makes them think that the markets could get out of hand if allowed to develop some steam to the downside here.

When the market first bottomed from the intervention on 7/24, the subsequent rally fueled by short covering was much the same as previous interventions and soon burned itself out - they had done their job at a time when a meltdown was certainly a reasonable possibility. What happened next marked the first change in their method of operations, when the markets were hit with a succession of very bad economic news that sent the markets reeling toward new lows. For the first time, they not only came in to reverse the downtrend, but continued to ramp the market at every sign of selling, forcing the markets far higher than they would have gone on their own through short covering and mo-mo buying. The present rally has been an exact repeat of that ramp - an artificial bottom, followed by additional goosing at any sign of a selloff developing.

If we could just understand their reasoning here, we would have a better idea of how to play the market. The only thing I am reasonably sure of is that given the constant ramping on any and all bad news (and there has been plenty of bad news), and now the full half point rate cut, it seems evident that the Fed is running scared of something. I hope it is just that they see a strong move back into recession (which I also see), but there could be more to it than that.

mlsoft