Members of the G20 colluded this weekend on their plans to prop up markets.
The markets have been volatile, with Rule 48 seemingly a daily occurrence. There are many tricks available to TPTB these days. An unprecedented era of QE/ZIRP policies has created a viscous uncontrollable monster. However, the central planners seem to still have access to the magic anesthesia required to sedate the volatility. These Central Bankers have jawbones of steel and the yap programs stuck in infinite loop.
The markets have been volatile, with Rule 48 seemingly a daily occurrence. There are many tricks available to TPTB these days. An unprecedented era of QE/ZIRP policies has created a viscous uncontrollable monster. However, the central planners seem to still have access to the magic anesthesia required to sedate the volatility. These Central Bankers have jawbones of steel and the yap programs stuck in infinite loop.
Let's talk liquidity. The crash of a couple Mondays ago was the real deal! I had been charting a seemingly endless consolidation of the SDY Dividend ETF in which I deemed 'The Chopbox of Hell'... It resolved with a 37.5% flashcrash of epic proportions!
There has been a momentous shift away from traditional mutual funds into these ETFs. The proponents of ETFs cheer-lead 'liquidity' 'ease of access & trading capabilities' However, what we find is that these ETFs are liquid like the Sahara. Big players of size cannot get out.
When you see an ETF trading north of 44M shares daily flashcrash >20% It is not fear mongering, You should be nervous!
If you can't safely exit a security trading millions of shares daily, how do you think you will fare in an illiquid little small cap? You see the game has changed. After a year long distribution process, the smart money is sitting on massive paper profits and is converting those profits into cold hard cash. Unfortunately for these major players/insiders to actually convert these QE gains into real $ they need to sell. Many players whether through greed, ignorance, or arrogance have overstayed their welcome and blew their chance of getting out. In order to sell you need a market, you need a willing public to dump your shares on. When the markets dropping and fear is in the air that market, that liquidity disappears at the drop of a hat. Most Big players cannot dump the large blocks of stock that they are sitting on without completely devastating their stock. This is exactly why this whole rally is nothing but smoke & mirrors built upon a mountain of air. Yes, the wealthy are sitting on vast paper profits, but that is where they will stay. The wealth of the Bernanke era was too easy, it was fake, a mirage, and this 'wealth' will vanish as quickly as it came. Easy come, easy go....
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