The market has seen a rally since the March lows. Even when news wasn't all that great, the market seemed to creep higher because it was "better than expected data." That better than expected data is still bad data. Unemployment today is at 9.4 percent, and if I remember correctly, the government constructed the stress test for banks based on a 10 percent unemployment rate. If you ask me, we will easily surpass 10 percent by the end of the year. Because of that I believe the stress tests were not very accurate, but the market still crept higher. How is the market able to creep up with all of this bad news surfacing? Yes, the market is probably correcting itself slightly due to the huge decline towards the end of 2008, but there is also evidence of something much more controversial controlling the stock market. The government. Recently (last month), Dan Shaffer, who is the president of Shaffer Asset Management, observed an interesting phenomenon. He told Fox Business that he watches the futures market closely, and towards the final minutes of trading he saw a large amount of future contracts being purchased, to the amount of 10 to 20 billion dollars worth of future S&P contracts. Now, nobody really has that much money to purchase that many contracts in such a short amount of time(last few minutes of trading) except for the government.
News like this really makes me wonder what is really going on behind closed doors. I do believe that this is a very serious issue because it undermines the fundamentals of the market and will actually do more harm in the future. The government needs to stay out of the market and let earnings and products dictate a companies future. This really upsets me and I do hope that there is some sort of an investigation.
The video of Dan Shaffer speaking with Fox Business can be found
here
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