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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: lifeisgood who wrote (44641)	7/6/2002 3:29:49 AM
From: UnBelievable	Read Replies (2) \| Respond to of 209892

The Ameritraders and J6P Seem To Have A Comprehensive Understanding Of The Most Effective Way To Move The Indices Get a list of the stocks and the weighting of the stocks in the INDU, the top ten weighted for NDX, SPX, and the components of SOX and BKX. Based on these lists identify the 20 stocks that look like they have the greatest impact on these indices. Calculate the average percent gain for these stocks today. Pick another 20 stocks, somewhat similar in Market Cap. and Industry representation as the first 20. Calculate the average percent gain for these stocks today. See if you can see any pattern. Now imagine how effectively you could move the averages if you had a computer model which, based on the weighting of the stocks in the indices, and the price elasticity of each stock (how much it costs to increase the price of that stock by a given percent) on a day when there was significantly less profit motivated investors around to sell into your initiative. Manipulation is participation in a market where the objective is to create the appearance that the market is valuing stocks other than the way in which it really is. The objective of the manipulator is not to derive a profit based on an expectation that it will be possible to sell the stocks purchased for more than they were bought, but rather it is market participation intended to create the impression that the value of a stock or stocks is different than what it actually is. The objective of this type of manipulation could be political, or it could be financial, such as when the manipulator derives a profit not based on the performance of the investment, but rather based on the value of the assets under management. (As an aside, I find it interesting that in the real world making something appear to be more valuable than it really is referred to as a scam, con, swindle or racket. It seems that when such things occur in the stock market they tend are referred to as shenanigans. Rob a Brinks truck of $1,000,000 and it is theft. Steal $2 or $3 billion by misrepresenting the value of a company and it is called corporate shenanigans.) At this time stocks have become commodities themselves. They are perceived as having value in and of themselves, rather than representing a claim on the financial results of the underlying business entity. When this is the case most buying decisions are based on prior price performance. It is this condition and fact that makes market manipulation both possible and prevalent. The grand illusion of the market is that the owner of each of the 300,000,000 shares of a companies stock perceives that the value of their stock has increased by a $1.00 if the last share sold traded $1.00 higher. While in fact the price of the last share sold has almost nothing to do with the value of the stock when the individual decides to sell it. If you were fixing up a car that you intended to keep you would probably do so in a manner quite different than a used car dealer fixing up a car he intends to sell. Unfortunately, while the car purchased from the used car dealer may look good, it does not have a very good chance to getting you where you want to go. When the capital markets are run like by used car dealers it does not bode well for the economy or the true wealth of the country. It is true, however, that while used car dealers have come to be fairly recently in any historical context, that market manipulation has been around for quite a long time.