QUESTION: Marty,
Back in 2015 when they closed the Chicago MERC after 167 years, you did a piece about how flashing screens do not provide the same “feel” as tape watching and floor trading. You also mentioned in that piece that “after Socrates, you will recreate something you always wanted to do” in relation to bringing “feel” back into trading.
My question is; given all the directions you are being pulled- is this still something you aspire to undertake?
I grew up tape watching, and despise blinking screens…it’s a lost art and would welcome anything you might undertake in this area.
Rw

ANSWER: Absolutely. We are getting ready for the first launch very soon. The intention is to expand the system to intraday. We are in negotiations with a data-provider to make the system live intraday with reversals and timing on an hourly basis. Trust me. It has been this initial launch that has been delayed by banks changing rules causing us to have to re-write the payment systems three times. Then we have completely different rules for outside North America so it required then setting up another whole new payment system. Then we have been having to set up yet a third for China. This has all been driven by this Hunt for Taxes.

It will be that intraday version that will be sound. Also in Phase-Two of our launch, we will be looking at providing a download version that will link back into our system so you can just talk to it and it will answer. We just cannot do that level of sophistication over the internet.

QUESTION: What about what China did by buying stocks a few years ago to stop the hang sang from dropping

ANSWER: Do not confuse attempts to support a market from actually being able to do so. This is the same as Keynesian economics that government could prevent recessions. Larry Summers admitted the government cannot even forecast such events. Not only during the Great Depression did companies jump in to buy their shares during the crash to try to prevent the decline. Most of the companies that took that action actually failed for they bought the stock back trying to hold the price and lost needed cash reserves. They could not sell stock again nor could the borrow.

During the collapse of the Nikkei after 1989, companies held believing that the government would support the market. When they realized the government could not then the government encouraged us to bail out the Japanese corporations. We helped well over 300 public companies issuing a note to buy their portfolios at their cost with 10-year payouts and each note had to be approved by the Japanese government individually. If the governments were able to actually prevent declines, then they would. But nobody can do that for the size of the public at large far outweighs any institution, group of institutions, or banks.

People would rather believe in conspiracy theories than simply look at the reality. Attempts to manipulate markets ALWAYS fail because the majority is far greater than any minority. The trend is made by the MAJORITY. A panic sell-off like the Crash of 1987 took place BECAUSE there was no bid – not that there was a massive short position. Scare the MAJORITY and they then try to sell, you find no bid and that is how a flash crash unfolds. This is why outlawing short positions is destructive for the only person with the courage to try to catch a falling knife is the one who is taking profit – not initiating a long position.

COMMENT: It looks like the Plunge Protection Team had a field day with the 1,000 rally in the Dow. Back in the 70s I read a small article near the back page of the WSJ that said that the CIA was using two small obscure banks in the Midwest to trade futures. The way they do it is to buy the futures and force the floor traders to stop selling. Then they pile it on and force the shorts to cover.

CM

ANSWER: That is really impossible. I have NEVER found a market that has EVER defied our model. The market bottomed precisely when it should have. Our Cyclical Array pinpointed the day well in advance. That proves there was nothing unusual. Last Friday the 21st, I wrote on the Private Blog: “We do have another Weekly Bearish Reversal at 22739 and a closing below that could warn of a Cycle Inversion meaning down into new week bottoming perhaps on the 26th and then rally into the following week for year-end and then turn back down into January.”

If what you are saying is true, then the government would never collapse and they are 100% in control of everything. That is just not the case. You are attributing power to them that they believe they have. However, if they had such power, then taxes would never rise for they are 100% in control and nothing would happen. Larry Summers, the father of negative interest rates, admitted in a Bloomberg interview that those in power can NEVER forecast a decline because it is a complex system.

I wrote on the Private Blog on December 24th: “The likelihood of lower lows into the 26th are good. But this week remains as a Panic Cycle so we can then see a whipsaw back up into the end of the week. Primary support still lies at the 21600 and 21450 level followed by 20002.”

Then on the day of the low, 26th of December, I posted on the Private Blog at 3AM for the European Open: “Often the bulk of a decline will unfold the day BEFORE the market closes. This is typically as natural human response of the fear of the unknown after the market reopens.”

I just do not see ANYTHING in the market behavior or patterns that would indicate something abnormal. The real explanation is just that all the selling took place on Monday as people feared it would collapse further on the 26th after the market opened. That has been the pattern for more than 100 years – panic before a close of the market for fear of the unknown. Sorry, great story about the Plunge Protection Team. A similar theory prevailed in Japan that the government would NEVERallow the Nikkei to fall. It did, and that belief led to a 19-year depression in share market price, but 26-year economic depression which did not begin to shift trend until 2015.75.

There have been attempts to create a Plunge Protection Team before. The banks got together to try to save the market back in October 1929. Here is the Los Angeles Times from October 26th, 1929 talking about the Stabilizing Forces to save the market. They failed to prevent the Great Depression.

Nobody can step in front of a falling market and survive. Nevertheless, despite the continued failure of such efforts, this myth is always spun. Anyone who believes that such a Plunge Protection Team can even survive never bothers to look at history.