EWI's Message Board is a free resource to get your questions answered by EWI and The Socionomics Institute's experts. We try to answer every reader, and in turn publish the best Q&As for all to see. Here is a recent frequent question we've answered:
"Plunge Protection Team: Is it manipulating this market? -- What is your take on the recent allegations that the Plunge Protection Team is manipulating this market?"
On the Message Board, the full answer is reserved for EWI subscribers only, but here is an interesting chart that will help shed light on this issue. Robert Prechter, EWI's president, published it in the October 2008 issue of his Elliott Wave Theorist.
You remember how in October 2008, utter panic ruled the markets. To help stop it, the Federal Reserve and U.S. government stepped in with various measures. Every time they'd announce a new one, the market would cheer. Result? This chart gives an unequivocal answer:
[+] CLICK TO ENLARGE
As you can see, announcements of bailouts, unlimited credit, bans on short sales, etc., were powerless against the biggest stock market collapse in 76 years. The DJIA kept on sliding and only stopped on March 6, 2009 -- below 6,500.
So, is the Plunge Protection Team engaged in market manipulation? You'll have to read Bob Prechter's views on this in the Message Board answer, but one thing is clear. When the Dow was crashing, few people thought the PPT was in the saddle. But they never were and aren’t now.
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