Wednesday, October 31, 2007

Wall Street Halloween Scare Tactics.

The month of October has long been associated with all manner of things spooky. Children and adults alike enjoy the holiday at the end of the month as a time to decorate yards and houses with frightful images and dress up as ghosts and vampires to create a scary environment for Halloween.
This year the mainstream press, government officials and even the Fed have gone out of their way to bring us a scary dose of Halloween well ahead of the traditional Oct. 31.
Examples of the super-concentrated scare tactics that have been employed to frighten the public out of its collective wits are the nearly ceaseless talk of the housing slowdown and how this will supposedly ruin the U.S. homeowner/consumer and eventually lead to a major economic recession. Headlines underscoring this persistent propaganda are too numerous to mention, as you can easily see this for yourself by merely picking up today's newspaper.
Then there is the growing talk of an economic recession followed by a bear market in the U.S. stock market, culminating with a global economic recession. Even the International Monetary Fund (IMF) has recently gotten on board the bearish bandwagon by releasing a report warning that the risk of a global financial crash is increasing.

One of the most simplified statements designed to give the retail investor an early scare ahead of Halloween is this headline from the Financial Times of Sept. 27: "Bear market has begun." It doesn't get more direct than that!

But the granddaddy of the major news wire stories by far was the MSN news headline of Oct. 5: "Is a Global Crash Coming? (Report warnings world's economy is at risk)." Now anyone who has ever worked for or studied the media knows that stories that evoke negative emotions such as fear, anger or outrage are the ones that sell the most to the public. While it may be tempting to dismiss such alarmist news articles as typical media sensationalism the stories that attempt to forecast financial conditions for the general public have an uncanny tendency to be inaccurate. This is especially true whenever a "crash" or financial crisis prediction shows up in the headlines.
There is, of course, a method to the media's madness in starting rumors of financial crises and economic recessions. After all, most if not all major media outlets are owned by the same consortium of multinational corporations with holdings by large banking concerns. As far as the major headlines go, the press is the mouthpiece of these entities and will print only what they are told to print. And the only reason for leading the public along the gloom and doom path is to set up a bull market.
Here's how the game is played:
The bearish headlines scare the public into either selling stocks or at least staying on the sidelines until they are led to re-enter the market by the media once again. The purpose of this is to allow the insiders to wrap up their accumulation campaign.Once the campaign is complete and the next major bull market gets going the public will gradually be lured back into the market with a spate of bullish stories by the very same press that warned them to stay away from the market a few months earlier.
Closer to the top, the press will pull out all the stops in an unmitigated attempt at sucking everyone into the bullish camp just as stock prices reach their peaks. By this time those same insiders who bought when the public was too afraid to buy have unloaded their holdings just in time for the peak The public is left holding the bag.
After the peak and during the early stages of the decline that follows, the public is told by the press not to worry ­ it's only a normal correction within a larger bull market. But within a few months it becomes apparent to all but the most naive that a bear market is underway, and with no hope of recovering their initial investments, the public starts selling heavily. This eventually gives way to the final wave of liquidation and the insiders start buying once again at bargain prices.
After the bottom is in the media begin another "sky-is-falling" campaign (long after the sky has already fallen, of course) to keep the public from getting any bright ideas about buying stocks on the cheap. This is a game reserved strictly for the insiders.
Every day it was more of the same: "Stocks are going higher; The economy has never been better; It's a 'new paradigm' for the global economy!" In total contrast to the climate of eight years ago, we're seeing much the opposite: "Global economic crisis on the horizon; Major crash is coming; The sky is falling!" Even the weather has been used this year to browbeat the public into staying bearish and fearful and to keep them from participating in the undervalued U.S. stock market. See the editorial cartoon above.
Contrary to what the media would have us believe, October is usually one of the best times of the year to buy undervalued tech stocks ­ something the insiders have been doing in droves.
Tracking the Dow Movement On Tuesday (30/10/07)
The Dow spike down at the opening bell,seems that those market makers set it at the MAV by setting the bull trap and completed their agenda in the last half hour of trading.The last minute white candlestick just managed to coverhalf body of the black candlestick.Seems that ongoing market not so promising.
It's a "Bearish Engulfing" pairs of candlestick.Are the market makers forseeing a bearish follow through?Well,unless the Fed chairman put on his Halloween attire then only the party will get rocking!
Posted by benhctan at 5:57 AM