Are The Markets Manipulated?

To answer that Q, we pose another: “Was there ever a time when markets were
not manipulated?”

We think not, not that it matters, for opinions are always subjective. Stocks have
always had sponsors whose job it is to sell stocks to the genral public. Countries
and cartels have natural resources, and their interests are best served when prices
are high. For the sake of argument, let us agree to stipulate that manipulation of
markets is an ever-present factor.

To that we say, “So what?!”

It has always been a truism that big fish eat the little fish. The markets are much
like the law of the jungle: survival of the fittest. By understanding and accepting
the realities of the market place, one of the most important insights is the
realization of the power of knowledge. In and of itself, knowledge is not power,
but HOW knowledge is put to use can be very powerful.

However much or little any market may be manipulated is of little consequence,
for we know the single most important piece of information one can have about
any market is the trend. The trend is knowledge.

What is a trend? Quite simply, it is the prevailing direction of prive movement,
the line of least resistance in an up trend, a down trend, or a non-trend, which is
a sideways movement. Ill-timed buy decisions in an up trend can be saved by price
eventually working higher. An ill-timed buy decision in a down trend can prove to be
financially disasterous. Just this one little piece of information, knowledge of the
trend, can put one on a profitable course in any market.

Every professional trader has rules for financial survival. The first important rule
is to never trade against the trend, but we digress, for the topic is manipulation.

What is the express purpose of maniupulation? For smart money, it is accumulating
a number of shares in the stock market, or contracts in the futures markets. Once
the line is accumulated, the purspose then becomes the mark up of price to higher
levels to attract more buying, and eventually to unload the accumulated line at the
higher price levels. The process is reversed in a decling market, and a current example
of that would be the British Pound.  

This procedure is as old as trading. “Trading is as old as the hills. What has happened
in the past will happen again.” Why does this process work so well? People never
change, and smart money knows and depends on that.

Where do we, as small traders, fit in?

We have knowledge and the power that it can bring. The one underlying principle
behind any market that no manipulator, cartel, or country can ignore is supply vs
demand. For any market to rise in value, demand must be greater than supply. For
any market to decline in value, supply must be greater than demand. It can be no
other way. Such a simple concept, a principle which never changes over time, yet
it is consistently ignored by the majority of market participants . Such a simple
truth but not an “Aha!” moment for very many.

What is the big deal?

Like we said, knowledge by itself is not power, but the ability to put it to use is! If
the design of “smart money” is to move prices higher or lower, it cannot be done in
violation of the principle of supply v demand, not even by manipulators, no matter
how covert, no matter how secretive. Here is where the power of knowledge comes in.

Smart money will never let us know what they are doing, nor will they invite us into
their inner circle. We do not care. We have knowledge of how they operate, and we
can follow what they are doing by watching market activity in the form of price and
volume behavior, judging the size of the ranges for any trading period, monthly, weekly,
daily, and even intra day.

No matter where smart money goes or how they try to hide their actions, they leave a
trail in the form of price and volume activity, such as wider ranges, increased volume;
at times, lack of volume, smaller ranges, and a variety of combinations that provide
many clues. We can detect what they are doing, and what they do is accumulate, mark
up, then distribute; distribute, mark down and accumulate, etc, etc, etc.

We know what to look for! It is the law of the jungle.

Each morning in Africa, a lion awakens and knows it has to outrun the slowest antelope,
or he will starve and die.

Each morning, an antelope wakes up and knows it will have to outrun the fastest lion, or
he will become breakfast and die.

It does not matter if you are a lion or an antelope, each day when when the sun comes up,
you better be running.