Is there a PPT (Plunge Protection Team) ?

There was a Fed mandate after 1987 to set up a team of some sort to prevent chaos in a collapsing market. I read details on their responsibility a long time ago, can’t remember where. After witnessing first hand tick by tick several very severe breaks l can tell you that they are not present when the markets are crashing hard, and if they are, they are powerless to do anything about it.

The Fed usually does everything wrong anyway and trying to prop up the market wont be any different. Winston Churchill said it well when he said; “ Americans always do the right thing after they tried everything else first”. That’s because our government employees are not as smart as we hope they would be. I realized this even more so when I learned that Alan Greenspan called up Leo Melamed and asked him what he should do the night of the 1987 cash. Ummm… Alan was the Fed chairman managing the Federal Reserve of the wealthiest country in history; Leo was just managing the CME.

Well maybe they aren’t as dumb as I think and If that’s true then the PPT was in action today. The markets were set to break further. When we open gap lower so far from Value and below my proprietary range the markets tend to continue selling off sharply. It can rally off the bell but within the first hour (IB) and often within the first ½ hour, the market will peak and sell off straight through the opening range. The rally never fills the gap and the gap traders start puking adding to the sell off. Alternatively, the markets will sell off sharply right off the bell. The market may up tick the OR a bit but only briefly before breaking.

We didn’t get that sell off. In fact, after a quick test below the OR we found support at the opening range high and never looked back. Locals got short several times during the day but couldn’t get the market to break yet there was no huge stand out paper buying. This might be a sign that someone, with a huge bank role of.. umm the Fed, stepping in any buying the market. Maybe they saw the strong sell off yesterday and the sell off on Globex this morning and decided this would be a good time to step in prop the market. That wouldn’t be so dumb.

I still have a hard time believing this, I just don’t see a PPT organization run by the Fed doing anything right although they probably outsource the whole thing to Goldman and its their technicians that are trading the Fed account. That I might buy. Even still no market can be manipulated and if this IS the case we will be retracing the strong rally today at some point. If this was buyers stepping because they felt the market was below value then we should open and hold 79.00-81.00 tomorrow.

Regardless, as long as you disregard the “who” and “why” and only trade the “what” as in “what is happening to price in relation to the OR”, you will be on the right side of the market. The locals were a great tell too. If anyone is going to be effective manipulating the S&P’s intra day its going to be the locals. They are masters at it and when they cant get their way bulling the market lower you know you have a strong market on your hands and you want to be with that force.

May the force be with you.

Tim Mack


“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford