Manipulated Markets

Yes they are, get over it!

One lady recently in our Trading Room expressed deep concern that “Markets are manipulated!”, as if someone from the Securities and Exchange Commission was suddenly going to appear, straighten out the pricing and imprison the manipulators. “The SEC showing up? Never gonna happen.”, I told her.

Yes, markets are manipulated all the time. It could be in the form of extreme buying and selling, posturing, ‘leaking’ out information, rumors, many ways. Even we, in a very small way, manipulate markets by our very own trading behavior. For example, if enough retail traders recognize a particular chart pattern, say, a cup and handle forming, we would likely wait until a break out of resistance off the handle, then make a buy. Thing is, if enough people do the same thing, it will become a self-fulfilling prophecy and we all make money off the backs of those who don’t know any better. Are we wrong? Are we unethical in doing so or are we just smart traders? The more people trade that way, the better the strategy becomes. That’s manipulation.

Market control may not be a bad thing. As a recession rolls in, pundits are saying to stop spending and save. Fact is, it is that very behavior that is causing the recession… the act of stopping spending. Of course, they are saying this to slow inflation but key is that people have been in lock down mode for a couple years and yearning to get out. Say all you want, spending has never been higher and with no end in sight. That kind of spending may be what will keep us out of a recession.

Knowing this kind of information is important in that we can then work with the ‘manipulation’ instead of against it. It’s interesting to note that the moment you recognize the market to be your friend instead of an adversary, is the moment you may suddenly see your fortunes change. SPY gives us opportunities to make money all day long, many times. It is how we react to market manipulation that determines whether we will be winners or losers.

Looking to win at this game? Contact me, Hugh, for a brief chat. I’d like to show how we can change your perception of the market.

Hugh Grossman

Head Trader, DayTradeSPY