Mailvox: PPT

DS writes of Wednesday: What’s your opinion? Today looked like a close well below 10,000 and the 200 day MA. Then off like a rocket. Hadn’t seen that pattern for a while. Perfect straight line. Almost like a computer was doing the buying.

Ah yes, one powerful sign that the rally has lost its steam is that the Plunge Protection Team begins to poke its nose into the markets. While their actions last summer were successful in prolonging new life into the rally – in coordination with the newly low rates – any activity on their part tends to be a nice set up for shorts as we saw on Thursday afternoon and Friday. There is no PPT, officially, but there is certainly a Working Group on Financial Markets. I don’t think they have any hope of staving off a decline, not now, but they can hope to let the air out in an orderly manner.

Mike Hartman of Financial Sense Online wrote: The Working Group on Financial Markets was created for a reason, and I believe we saw one of them yesterday. The Dow looked like it was headed for a 300-point meltdown day, but that couldn’t be allowed to happen for a few reasons. For one, it could have jeopardized our already fragile economic recovery. Second, we are in an election year and third, the U.S. Treasury was right in the middle of their three-day auction to get some badly needed cash to pay back old debt and to finance the growing federal deficit.