Pumps
June 26th, 2007 by 
reality
Inside the great houses of Wall Street tonight the gnomes are busy. Calm and professional, they bustle about, carefully checking and preparing the giant pumps which keep Wall Street afloat. The overhead lights reflect off the massive, gleaming steel shafts, revolving slowly as they idle, quiet now except for the occasional creak of cooling metal as they take respite from the day’s labors. The subdued roaring sound you hear is the precious fuel, coming directly by pipeline from the Federal Reserve, gushing into the tanks that will feed the powerful pump engines tomorrow.
Soon the lights will go out, and except for a skeleton crew, the gnomes will return to their homes for a good night’s rest. They know full well that the fate of their masters, the lords of Wall Street, depends upon them. If they fail, no mercy will be shown to the gnomes or their masters. They will be there as the sun comes up, and you will hear the guttural bark as the great engines are awoken and a haze will form over Manhattan from their exhaust. Promptly at 9:30, the barking idle will turn into a deep roar as the pumps take up the load, keeping reality at bay for another day.
Posted in Truth and Trivia | 
June 27th, 2007 at 8:48 am
How does this post reconcile with your Tartar post of a couple of days ago in which you stated “Personally, other than the bumbling Fed’s interest rate manipulations, I do not think that there is any government intervention in the stock market.”
The actual operater of the pumps is secondary, imo. First, the regulators know very well what is going on, and, by not interceding, are condoning or even encouraging the pumping. Second, the apparently very rational belief by the pumpers that the govt will bail them out if it all goes wrong is an essential precondition of the pumping.
Today (6/27) is right out of the playbook. Stablilize the market at the first Dow round number hit from above (13,300 in this case) and then turn on the buy programs. Yawn.
June 27th, 2007 at 11:15 am
Anonymous, it is entirely consistent. I do not think there is any government intervention. That does not mean that the program traders (pumpers), which are generally the big securities houses like Merrill, Goldman, UBS and so forth, do not manipulate the market. Of course they do. But that is for private profit, and they can be relied upon to act purely in their own self-interest as they see it. They are competitors and do not, in my view, form a cartel. The swiftness with which Merrill, Lehman et al. turned on Bear Stearns recently supports this view.
June 27th, 2007 at 11:27 am
The govt does not intervene in the day to day operations of the banking system either, but the existence of FDIC insurance and the Fed discount window have substantial influence on the way the banks conduct their business. Whether or not this meets the dictionary definition of intervention is more semantic than practical.
As for cartels, they exist, and they exist to be broken. Some, like OPEC, are out in the open, most are hidden from the public view.
Thanks for a really outstanding site. Not the biggest in the blogoshpere, but one of the very best.
June 27th, 2007 at 11:36 am
The programs today have been quite something. I use 1,000 tick readings as proxies for programs, and the 15 min bars stretching above the 1,000 tick mark today are about as many as I recall ever seeing. Your Pump blog was about as timely as it could be.
June 27th, 2007 at 5:07 pm
Well a jam job was clearly coming. I use and recommend Carl Swenlin’s Decision Point chart site. He publishes a proprietary oscillator called, imaginatively enough, the Swenlin Trading Oscillator. It was showing very oversold readings and when that happens a bounce is highly likely.