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Pastimes : All Clowns Must Be Destroyed
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To: pater tenebrarum who wrote (18086)3/16/2000 11:33:00 AM
From: hunchback  Read Replies (1) of 42523
 
the circuit breaker trigger levels are only monitored for the Dow Jones Industrial Average (DJIA). Why is this so significant you ask?

...this is a perfect setup for a group of market manipulators that want to capitalize on this planning oversight. A spread trade between DJIA and Nasdaq 100 futures and cash stocks could be done (by some very well-financed traders) that would effectively buy/support the DJIA index (only about 20 of the 30 stocks effectively controls the whole index) and aggressively sell the Nasdaq 100 (only 15-20 of the leader stocks control the whole index). The DJIA could be allowed to drop perhaps -8% and then initiate the spread trade: buy DJIA stocks and futures, simultaneously sell Nasdaq 100 stocks and futures. A large-enough spread trade would significantly magnify the Nasdaq losses. They'll have to be a little careful since Microsoft and Intel are part of both indexes... but now that I think of it, this makes it even better since a hard sell of MSFT and INTC may be all it takes to hold the DJIA down to -8% while the rest of the stocks are supported. It's so easy, I am sure some of the biggies are going to consider attempting it.

Where will the Crash Protection Team (CPT) be in all of this... buying S&P futures, of course. This will aid the DJIA much more than it will the Nasdaq COMP. The CPT may have trouble using Nasdaq 100 futures since it is not adequately liquid enough for the CPT floor traders to worm their way in and out of their positions. Therefore, this leaves the Nasdaq indexes (COMP and Nasdaq 100) exposed and vulnerable to massive manipulation.

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