Guide to the Confused: SP 500 Futures Intraday - 'Technical Trade'

When I talk about the 'technical trade,' I mean that fairly literally.

The market, in the absence of a major exogenous event, is running on autopilot, with the algorithmic computers and trend following traders driving it back and forth within pre-programmed levels of support and resistance.

There is always some reason that can be used to justify a big up or down day. In this case market action creates market commentary. Today it is the 'good numbers' from JPM. No mention of the raiding of loss reserves and other gimmicks that banks today use to paint their pretty pictures on rotten paper.

The SP 500 futures are just an example. This same market rigging thing takes place in many other markets including important world markets such as metals, energy, and foodstuffs.

In low volume environments with no important exterior factors in the short term, the technical game tends to have a bias higher, because in this type of paper market there is no upward limit, and one wishes to draw in the 'suckers.'  The word goes out in the pit that the trading desks 'want to try to take it up.' This is how the 'pools' operated in the 1920's.

The drops tend to come quickly and pass even faster, since that is the reaping, not the planting and growing of the scam.

And because of their collocation and speed, the computer trading algos can front run almost every transaction and skim a small percentage off it, and absent real volume use wash trades to drive the price where they will. And in the aggregate at least, their market positioning allows them to 'see what is in your hand, what cards you are holding.'

If there is any change, the well-capitalized professionals with very high priced, high speed collocated computers and departments of brainy quants are driving the smaller scamsters to the sidelines, and sometimes into the ranks of the pundits and hangers-on. The price of computers, politicians, media, and regulators provides an effective barrier to entry against competition.

Yes there is always corruption in markets, despite what the naturally efficient markets theorists from the monied interests' bastions of intellectual folly and deception might maintain. But at certain times in history the distortions in the markets become so great, so predominant, so extreme, that they crowd out much of the productive and creative investment activity.  In the resulting outcome, the inevitable return to normalcy,  society in general can suffer greatly for the greed of the few.

And if anyone should ever warn about manipulation in the markets, one responds, 'oh no, they would never allow that!  Who could be so low?' And then some mouth a few appropriate slogans supplied by the market manipulators using comic book views of the world from Ayn Rand, for example.

People deny what they cannot bear to admit. And one denial leads to another, and another, until the truth becomes not only unspeakable, but almost unthinkable. And so one deflects to another thought, a diversion and distraction, a person or group, and finally another reality. That is the way to madness, that is the credibility trap.

The LIBOR scandal, and the trainwreck of revelations about market corruption which I forecast would happen, are making the true believers a little hesitant, uneasy. But the hard core are resilient, faithful to the myth, to the end.

It's a lucrative business, and if unforeseen events intrude, you can always have the public cover your losses.

"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out."

Andrew Jackson

What a wonderful world we have created with the gifts that have been given to us.

De trop pour l'éternité. Enjoy.

NFA Ignored Warning Signs On PFGBest. What a Surprise!

The National Futures Association (NFA) is the private industry association that directly self-regulates the Futures Broker industry.

I would imagine that the NFA had not taken any of the tips or warning signs about PFGBest too seriously. Up until last week, Mr. Wasendorf, the CEO of PFGBest, was prominently listed as a member of their advisory board.

And as you may recall, a few days ago I posted an article from Atlas Ratings that had placed PFGBest in their lowest 5% of brokers because of their odd financials.

PFGBest had just been given a clean bill of health by NFA in January, in the so-called rigorous industry review inspired by the spectacular failure of MF Global in November.

From their website:

"National Futures Association (NFA) is the industrywide, self-regulatory organization for the U.S. futures industry. We strive every day to develop rules, programs and services that safeguard market integrity, protect investors and help our Members meet their regulatory responsibilities.

Managing risk by trading futures and options on futures contracts is a vital component of the global economy. Every business day tens of millions of futures contracts are traded on an increasingly broad spectrum of products, including agricultural commodities, oil, precious metals, equities, treasury bonds, financial indexes and foreign currencies.

Investor confidence is crucial to the success of the futures markets, and the best way to gain investor confidence is to ensure that the highest levels of integrity are demanded of all market participants and intermediaries.

Membership in NFA is mandatory, assuring that everyone conducting business with the public on the U.S. futures exchanges-more than 4,200 firms and 55,000 associates-must adhere to the same high standards of professional conduct.

NFA is an independent regulatory organization with no ties to any specific marketplace. We operate at no cost to the taxpayer. We are financed exclusively from membership dues and from assessment fees paid by the users of the futures markets."

And in related news, Customer Dodged Bullet, Tranferred Account From MF Global Just Before It Collapsed (wait for it) and put it into PFGBest, where it is now being liquidated/frozen.

I genuine feel sorry for anyone who is taken in by these crooks.  It is a terrible thing to see.  The markets are rigged against the private investor from top to bottom by the big Banks and trading desks.  And if you do occasionally win, the money and assets are squandered and embezzled by sociopathic insiders.

Regulations?  We don't need no stinking regulations.  Let's strike them all down, and let the devil have his day.

Do you think Wall Street is trying to send you a message?    G-E-T  O-U-T!

NYTimes
At Peregrine Financial, Signs of Trouble Seemingly Missed for Years
BY AZAM AHMED AND PETER LATTMAN

CEDAR FALLS, Iowa —...

As the founder Russell Wasendorf lies in critical condition in an Iowa City hospital, Peregrine’s angry customers are asking, How could futures industry regulators have missed another potential fraud? The scandal comes just months after MF Global , the defunct futures brokerage firm, lost more than $1 billion in clients’ money.

It now appears that regulators missed the red flags for years.

In 2004, a Peregrine client sent a letter to the National Futures Association, the firm’s primary regulator, and the C.F.T.C., asking it to intervene to prevent it from misusing customer money, according to a person with knowledge of the correspondence and a copy of the letter obtained by The New York Times. Five years later, a tipster wrote to the N.F.A. asking it to review Peregrine’s bank account information for accuracy, according to people briefed on the matter who spoke on the condition of anonymity because the investigation was private. The tip was anonymous, and it is unclear how serious the N.F.A. took it.

The auditor for Peregrine was a one-person shop run out of the accountant’s home in Glendale Heights, Ill., a Chicago suburb. As part of its investigation, the C.F.T.C. is looking into the role that the individual played, according to a person with knowledge of the case.

After the collapse of MF Global, the C.F.T.C. ordered a review of all futures firms to ensure the safety of customer money. The N.F.A. gave Peregrine a clean bill of health in January.

Government regulators are examining whether Mr. Wasendorf doctored bank statements provided to the N.F.A., according to people briefed on the matter who were not authorized to speak publicly because of the investigation. Authorities are also expected to question officials at U.S. Bank, which held the client’s money.

“The entire industry is outraged that it happened the first time, let alone a second time,” said Michael V. Dunn, a former commission of the C.F.T.C., referring to the collapse of two brokerages. “We need to do something about this.”

The N.F.A. declined to comment. Calls to Peregrine’s auditor were not immediately returned...

Read the entire article here.

CBC: For Past 30 Years Most Economic Gains Have Gone to Top One Percent

"Over the past 30 years, the benefits of economic growth in Canada, the US and much of the rest of the world, have gone increasingly to the top one percent of the population. For the majority of families, however, incomes have stagnated. This rise in inequality coincided with a sea change in government policy. Beginning in the 1980s, governments in much of the English-speaking world embarked on what has been called the neoliberal revolution - deregulation, privatization and tax cuts, aimed at liberating markets and stimulating the economy. The rising tide was supposed to lift all boats, but it didn't. Jill Eisen explores what happened."

Left Behind was originally broadcast on Ideas in January 2012 and broadcast on Ideas in the Afternoon in May 2012. The 3-part series is being re-broadcast on July 11, 18 & 25.


Click here to go to the broadcast page and listen.