Market Rigging 101

After spiking higher post-Kuroda’s lunacy last week (1300 points on the 31st alone), the Nikkei 225 ran smack dab into the .886 retracement of its crash from 18,365 to 6,990 between July 2007 and Oct 2008.

It reversed as we expected and has since given up 740 points (4.2%.)  The eminis have since given up a whopping 1.1%.  What gives?

While many tools are used by TPTB to ramp SPX/ES higher throughout the day, NKD is one of the most effective.  Today’s reversal at 11:00 AM was classic. First, some background.

ES is more than happy to rise in lock step with NKD when it’s on a tear.  And, any time stocks are in danger of declining more than would be acceptable, you can count on NKD and USDJPY to reverse higher (along with VIX reversing lower.)2014-11-04 NKD v ES 1400But, that would leave NKD and USDJPY on a perpetual rise.  And, well, people might notice how strange that is — might even question whether it made sense (but, probably not.)

So, after the futures close (4:15 PM NYT), NKD and USDJPY typically go back to where they started.  ES, on the other hand, is easily propped up in the after-hours, when volume goes from the normal pathetic to practically non-existent.

The result: a one-way street where stocks get all the gains from NKD, but very little of the pain.  And, there you have it: an unrigged market, courtesy of central bankers.  Ain’t life grand?

Next time you’re trading along, minding your own business, and your short position suddenly starts taking on water — check NKD.  There’s a pretty good chance Kuroda/Yellen/Draghi and their lackeys have decided to:

  • stabilize the economy
  • prevent deflation
  • decrease unemployment
  • rig the markets.




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