Is the Central Bank’s Rigged Stock Market Ready to Crash on Schedule?

Monday, June 12, 2017
By Paul Martin

By David Haggith
TheGreatRecession.info
June 11, 2017

We just saw a major rift open in the US stock market that we haven’t seen since the dot-com bust in 1999. While the Dow rose by almost half a percent to a new all-time high, the NASDAQ, because it is heavier tech stocks, plunged almost 2%. Tech stocks nosedived while others rose to create new highs. Is this a one-off, or has a purge begun for the tech stocks that have driven the nation’s third-longest bull market?

“Yesterday’s dramatic “rotational” divergence between tech stocks and the rest of the market, which as Sentiment Trader pointed out the only time in history when the Dow Jones closed at a new all time high while the Nasdaq dropped 2% was on April 14, 1999, stunned many and prompted Bloomberg to write that “a crack has finally formed in the foundation of the U.S. bull market. Now investors must decide if any structural damage has been done.” (Zero Hedge)

This is important because, without the nearly constant lead of those tech stocks, the market would have been a bear a long time ago. Tech stocks created half of the market’s gains in 2017. Financials, which led the Trump Rally, also hit the rocks in recent weeks, at one point erasing almost all of their gains for 2017, though they recovered a little of late. If both continue to falter, the rally rapidly implodes and maybe the whole bull market with it.

The Tech sector suffered its worse high-altitude nose bleeds at the end of May — the biggest outflow in over a year. Said Miller Tabak’s Matt Maley in a note to clients:

“Everybody remembers 2000, so they might be getting a little nervous with this development. I just wonder how many people have said to themselves, ‘If AMZN gets to $1,000, I’m going to take at least some profits. (Zero Hedge)

Last Friday, of course, may be a one-off, but it may also be happening because central banks are pulling the plug on their direct ownership of the stock market or, at least, their hoarding of tech stocks. That direct cornering of the stock market largely went unnoticed until this past quarter. Central banks now have enough interest throughout the US stock market to be considered as having cornered the entire stock market, which means they have the capacity to let it fall or to keep it where it is by just refusing to sell their own stocks.

Have central banks rigged the stock market entirely?

The Rest…HERE

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