DJIA: Market Manipulation charted!

Authors Note: I am no expert in the Stock market. I have no certifications or Degrees, and I am not accredited in any way nor do I offer this as stock advice, or a "Special Tip". These are just the facts as I see them from studying the markets for the past 10 years.

This is the Dow Jones Industrial Average From 1970 to today

[atsimg]http://files.abovetopsecret.com/images/member/7f61ccbe513c.jpg[/atsimg]

As you can see the Chart starts around 775.00, and tops out around 14,000.00. Currently the market sits at 6,763.29, or roughly 52% less than it's all time high.

As we all know nearly 40 years of numbers on a chart show us the overall picture, but they don't tell us the whole story. I have chosen to break down these charts from 1/1980 to 3/2009 by presidential administration, not only to look at the numbers in a specific period of time, but also to show the total market effect DURING that presidents Term in Office.

My purpose of this topic is to explain how the current economic situation is NOT an economic crisis, but IS a standard course correction of a market that had been over manipulated for the past 15 years. I also intend to put forward a rough estimate as to where the current market should bottom.

While I am willing to put forth an explanation for the market, this will not automatically correct the current state of the economy on a social level pertaining to Jobs/Housing/Social Programs. It should however explain where we are headed in a purely market based economic Analysis.

So let us begin with the booming 1980's. The Era of 'Wall Street' and "Greed Is Good!!!".

[atsimg]http://files.abovetopsecret.com/images/member/0fb05d9932bf.jpg[/atsimg]

Starting at 876.11 and peaking at 2,685.43 and closing out for Bush Senior at 2,067.03. a gain of 1,278.65 points or 147.45% of the total market value. In my opinion this was due to the technological boom of the 80's ranging from VCR's to CD Players and well as The Marketing of Home Computers and eventually the Intranet.

knowing there was SOME manipulation of the Markets during this 8 year period, we can see a realistic Approximate gain of nearly 100%.

This value is on the Capitalization of the business listed on the Stock Exchange. The more Capitalization, the more likely a company is to succeed. As such, a 100% natural growth should be expected, considering the advances made in Personal Technology during this Era.

Next up is Bush senior. Dating from 1/22/1988 to 11/06/1992
Starting at 1,956.07 peaking at 3,398.69 and closing at 3240.06 for Clinton. a 1,283.99 total value increase or 65.64%.

[atsimg]http://files.abovetopsecret.com/images/member/f70199d6c312.jpg[/atsimg]

This is what I like to call the 'AOL Era' or the time when business sucked. Top it off with the First Iraq War which was short but costly, and the light 64% rise is easily explainable. add in the short four year term and a realistic increase of 50%. This leaves roughly 50% over capitalization of the market during the 1980's. -while morally unacceptable, understandable in a game of Monopoly, where the money is real.

For further clarification on the non-political side of this post, I am a Proud Democrat, and Really can say I was happy during the Clinton Era. That said... This is when the SHTF...


The Clinton Era 1/24/1992-11/02/2000. Starting at 3,232.78 peaking at 11,722.98 and closing at 10,590.62 for Bush Junior.
[atsimg]http://files.abovetopsecret.com/images/member/722812e839ee.jpg[/atsimg]

Call it the "free-market economy", Market Manipulation, De-Regulation or whatever name you want for it... The basic gist is that from 1992 to 2000 The Market was allowed to explode out of control.

So much money was in the system it wasn't worth anyone's wild to enforce regulation,or check the numbers on the actual company books. Further advances in Technology from DVD to Ethernet Technology, as well as PC and Console gaming advances led to a market boom. The newfangled "internet business" was booming, and everyone thought they had a free ride. and During this Era everyone did.

Now we are paying for this manipulation... However... This is just the beginning of the manipulation...

Bush Part Duex. 1/21/2000-11/04/2008 starting at 11,251.71 and Peaking at 14,093.06 and closing for Obama at 8,943.81.
[atsimg]http://files.abovetopsecret.com/images/member/06c576822a13.jpg[/atsimg]

Bush and Obama are the Only presidents on our List to have MAJOR stock market losses During their administration. From 1/21/2000-
11/04/2008, The Dow Jones lost 2,097.70 or 17.89% of a 11,000.00 market.

The Market was fairly stable until 9/14/2001 when it experienced the nearly 700 point drop from the shock of the 9/11 tragedy. From 9-14-2001 to 10-04-2002 you can literally see the day to day manipulation of the market. Whether done as part of the 'American Spirit' or actual government manipulation is for another thread, but either way, the manipulation failed on 10-04-2002, as the market hit 7,528.40 points.

For the Next 5 years the market slowly rose to a new high on 10-12-2007 of 14,093.08 up 2370.10 points,or 20.22% of the total market value at the time from when Bush was elected.

From October, 12th 2007 to November 4th 2008 A brief 13 month period, the market began to correct itself. The slide didn't take long to cut deep, and from 10-12-07 to 11-04-08 The market lost 4,440.73 points or 31.57% of the total market value.

11-04-2008/03-02-2009 The Obama Administration.
[atsimg]http://files.abovetopsecret.com/images/member/ef43cd5428a4.jpg[/atsimg]

Opening at 9625.28 Which is also the peak thus far, we have closed at 6,763.29 meaning during this 5 month period the market has lost 2556.54 points or 27.43% of the total market value. We are now up to date.

What was the point in all of these charts and all of these numbers?

Not only are we pointing out where the trends lie in the market, but we can now see where the market was manipulated in some manner to rise much, MUCH beyond it's reasonable Capitalized Value.

The Slump we are seeing is NOT a Market Crashing. It is a Market Correction. Yes, those of us playing with hundreds of thousands (or less) dollars feel the pinch the most (because we don't have that money to lose) but it is better overall for investors in general to allow this correction to occur.

Look at this chart again.

[atsimg]http://files.abovetopsecret.com/images/member/7f61ccbe513c.jpg[/atsimg]

Beginning in Approx late 94 early 95, our little mole hill JUMPS to a GIANT mountain.

This is evidenced further by the fact our mountain now has a good peak around 14,000+ points and has dropped so drastically in 2 years as to truly chart an image of a Mountain Peak...

Now check out this 20 year chart.

[atsimg]http://files.abovetopsecret.com/images/member/6dfc24486085.jpg[/atsimg]

from 1987-2007 the DJIA gain 12,165.77 Points or 631.23% of the Total Market Value (in 1987) a 20 year return of this magnitude is a dumb bet to not get in on! Right? Wrong! Ponzi Scheme's abound... Money is being played with when returns are in the Multiple hundred percentiles... This is OBVIOUS ILLEGAL manipulation of the Markets.

Come the Regulators and you can expect your market to correct itself very quickly, and this is what we are seeing happen right now!

[atsimg]http://files.abovetopsecret.com/images/member/6d6768ab8312.jpg[/atsimg]

if you look for the Valley, you can see where we are headed.

My conclusion is the bottom will not hit until 3900-4000 points.

Levels not seen since March of 1995, nearly 13 years ago.

We are not screwed... But those who fanned these flames, our banker robber barons, will be in the end.



Edit to Add: Please Right Click "View Image" to see the full chart images!


[edit on 3/3/2009 by coven]

Nice work Coven But, I see you only concentrated on the Dow. The Dow only tracks 30 stocks.

A comparable study on the S&P 500 would be an excellent thing, as the S&P is really much more of an economy indicator than the Dow.

Although I believe you would see the same activity, more or less.

The dot-com bubble from 95-01 was a good deal of the inflation of the markets, most specifically the NASDAQ. Back when companies were projecting completely false numbers for INTERNET use growth, but that bubble burst on 3/10/00 (beware the ides of march).

Then came the housing bubble which has now burst and we are dealing with the aftermath.

But for the most part, you are spot on with the fact that this activity, the contraction, is a market correction.

While there are new companies being traded and that would allow for a conservative growth, the growth we have seen in the past yrs is a false growth cycle

Thanks Hatty... It got to a point where it was either post it or delete it, and I was too far in to just trash all that thought!

I do agree the S& P would be a better study, but I jumped on the Dow as it is so heavily discussed right now... Depending on the response here, I probably would put a little more time into an S&P study so that it was a much more thorough example of the 'manipulation' that occurs.

As an example of what I mean by Manipulation could be as small as an individual trader with good intentions causing false fluctuations in certain stocks. I.e.

My father and I have been discussing long-term investing in some heavy trader stocks that used to be worth a pretty penny. As we now have a personal investment in one of the companies we are looking at I pitched the Idea to him that if he really wanted to make some money quick we could slow roll our investments.

It would have been work for me as I would have had to purchase more stock daily, and monitor the account to ensure my manipulation was working. The basic jist was you buy 20,000 shares at 1,000-5,000 shares a piece over the course of the day on Monday, with the largest purchase coming early in the day and the smallest right before the closing bell. The next day do the same thing, but with only 10-5,000 shares... Wednesday do the same thing with 7,500-4,000 shares, and Thursday only buy 3,000-1,500 shares. This causes your stock that went up (due to such high purchase volume on Monday) to level back down... Then you buy another 20,000 throughout the day on Friday.

Dependent on your Investment plan, you could literally drive up and down any single stock you want, with a few hundred thousand dollars (we were talking 50,000 a piece in this idea, not easy money to lose, but it wouldn't kill us...) for a week solid. Of course, the key is you also want to make sure this is a stock you are willing to keep as a long term investment, because if you get stuck with 15,000 shares for top dollar at the end of the week, you just add 'em to your portfolio and watch the profit trickle in.

Anywho, the biggest reason I haven't done this is I don't know how legal it would be... I would assume we would get hit with some kind of insider trading charges, but I'm not sure either...

I guess the point of this is the government doesn't have to manipulate the market... There are plenty of people with enough money in this country to buy and sell these companies all day long. The markets manipulate themselves, dependent on the regulation that is enforced on those who invest within them.

well... I guess I'm off to start an S& P study... but I'll need a few days to knock it out properly.

Thanks for your interest!

Coven

Great post! I've been looking at the inflation-adjusted Dow and S&P in recent days. This data seems to suggest strong support at 4000 for the DJIA, so I think you're onto something. The problem is, we also get S&P at less than 500, which many consider to be the rough point at which 1/5 of the index goes bankrupt -- so if that happens, then I don't know, I'd imagine that things would fall through the floor if 20% of our companies went into bankruptcy.

Looking forward to your S&P post!