I love your podcasts and don't comment a lot, but I would like to offer my perspective on today's market action based on Jesse Livermore's book:

Today the light bulb went on. I would like to offer a theory about what is really happening in the markets right now. As you know, the banks have taken all that delicious money we gave them from so many deviously hidden spigots, and they have traded it on the markets rather than lent it out. One would ask oneself, why was that allowed? Sure, the Fed has voiced some pro forma objections to this, but they have done nothing. Given the fragile nature of the bank's balance sheet the Fed could crush them if it wanted, and yet it hasn't. I can only conclude that this was done with the sanction of the Fed, or more likely, it was the Fed's idea all along. The solution was in front of my face all last year and I just couldn't see it.

The divergence we are currently seeing between downward volume and upward volume is the key. Every time we surge upward it is on low volume, whereas downward volume is tremendous. At the same time, there is a huge amount of inside and big money selling. My conclusion is that the banks and big money interests know the rally is over and they are using age old techniques to sell their line of stocks. They are trying to sucker in the retail investor and realize the tremendous gains they accrued during the rally without tanking the market.

This is textbook market manipulation from the early 20th century stock pools. When a number of traders have a large line to get rid of, they have to act in concert or they individually will drive the price of the stock down as they sell.

The old game is you wait for a low volume day and you buy the leaders and your stock, driving up your stock and the market. When prices lose momentum plateau, you sell what you can until prices drop to your target buying price, then you buy back at lower prices, usually at the end of the session before anyone knows what happened. Rinse and repeat until you have sold your whole line for as much as you can. This accounts for the huge volatility we see in the last hour of trading (along with readjustments to portfolios of course) and the divergence in volume.

Going back to March, the big money went pedal to the metal during the rally using our TARP money, Fed buyouts of bad debt, and Fed interest on overnight reserves offered on money they got from, you guessed it, the Fed., at practically zero interest rates. This drove up the prices of stocks in another historic rally. Unfortunately, that creates a problem for the big bank's trading desks. Then they all looked at each other and said, this can't go on forever, how do we get rid of all this stock? Paging through Reminiscences of a Stock Operator, the recipients of our largess decided to act in unison as a modern day stock pool to screw the taxpayers who bailed them out.

Waiting for the top, they started to goose the market in Sept. on low volume and then sell their holdings. This created wild swings and chaos during the last hour of trading, but who cares, the banks are all that matters to society, right? Do this enough times, and you sell your whole line before the eventual collapse.

This is an old game, and I am humbled for not seeing it earlier. I know it sounds like a conspiracy theory because of the scale, but the scale of things increases from century to century. Additionally, secrecy is that is exactly how the secret and PRIVATE INTEREST cabal known as the Fed has always worked. They are manipulating the market on a global scale and that is why they won't allow themselves to be audited.

I went short too early and had to battle back to even, but I smell the end coming and I'm staying short now. Reread the classics. It's the same darn thing on a larger scale.

http://www.dhunplugged.com/2009/10/29/