Okay, I'm in full tin foil clothing here, but hear me out.
If Bush/Rove think the house and Senate are lost, maybe it would be worth one last hail marry pass to save the election, and save them from many a supeona from John Conyers.
So, if you're like me and you think the 10% market rally since the July low has been artificially manufactured by the likes of Goldman Sachs, the Treasury, the Fed, and maybe even China doing the Treasury a favor for the Treasury not designating China as a Trade Manipulator, then you can easily believe that these same groups can orchestrate a market crash on Monday.
Bush and Rove can't "let" a terrorist attack occur because that would hurt the Republicans even worse as it would make them look weak on homeland security.
But the stock market crashing may be something else. The market can't crash more than 20% without being halted, so the carnage could be limited.
But the Republicans could spin this to win the election by scaring voters by saying, "Vote for us and the market will go back up. Vote for them and the market will continue to crash."
More below the fold.
The Republicans could come out in force Monday afternoon and say how great the market has been the last 3 months under Bush, but now that it looks like the Democrats will win Congress, the stock market is reacting really badly. They can say, "Just vote the Republicans back in on Tuesday and just watch that stock market go right back up on Wednesday. Trust us. Your retirement savings and 401(k)'s are in jeopardy if you don't vote us back in."
Fear and Greed are big motivators.
Now the long term ramifications for this are awful. Considering foreigners and domestic investors pick up wind of this after the election, they would pull their money out of the market and our bonds, hurting the US dollar and raising long term interest rates. But what would Bush and Rove care if they kept majorities in the house and Senate.
Here's some coverage of how the market may have been manipulated higher the last 3 months to help the Republicans in the upcoming election (obviously its not helping enough).
Assessing the Quality of the Equity Rally from July 2006
From October 13, 2006
Get this: All of the progress of this three month summer/autumn rally, all of it, occurred in only 9 days of trading, and all but one of the nine was a short-covering rally. In other words, without intervention induced short-covering, the Dow Industrials would be exactly where they stood in mid July, at the start of this rally. Other than those 9 trading days out of 63 since July 14th, the other 54 days of trading produced only 4 percent of the upside progress, and zero since July 19th. Zero. In 8 of the 9 trading days where upside progress was made, evidence of short-covering was present. That evidence included a larger rise in Demand Power than the decline in Supply Pressure, suggestive that shorts joined the buying. That evidence also included either upside volume, advancing issues, or upside points coming in at or very near a buying panic 90 percent. In each instance, a sharp up move started early in the day, followed by buying panic as shorts felt compelled to cover, pushing the rally higher throughout the day. There was only next-day follow-through to the upside one time, on August 16th, after a short-covering rally on the 15th, but it too showed evidence of short-covering. No days other than August 15th showed strong upside follow-through. Solid rallies see follow-through. This rally has been manufactured.
And, just as a check, here's a more reality based story that suggests maybe I'm over reacting - just trying to be fair and balanced.
Theories about Market Manipulation
But here's a great money quote:
John Succo, one of my favorite Minyanville professors, wrote an interesting article on Oct. 4 entitled, "Strange World." This is what professor Succo has to say:
In 25 years of trading, I haven't seen stock prices act this way. On any disappointing number (ISM, for example, this morning), stocks react vehemently positively.
And it's not stock by stock, brick by brick, which is how a stable bull market is built. It is all index led. Tick data today is just another example. They hit +1,000 probably 20 times today and +1,500 twice. Surreal.
I trade stocks and watch them heavy, only to be ripped up as futures are relentlessly bought.
I have my own theories. In a world where geopolitical events are broiling, we have political structures desperate to remain in power. It is possible to believe that in such a world desperate measures like buying stocks by governments (we know Japan did this for quite a while) is certainly plausible. Given the action, I say it is probable.
The last few years [are] all about liquidity. Who is responsible for that?
And just in time for the elections.
I made the big leap yesterday saying governments (no price sensitivity) were buying index futures in the U.S. This is the only answer I see for the odd behavior. Stocks not in an index are severely lagging.
I am not necessarily saying the Federal Reserve of the U.S. is buying stocks. More likely, it is the central banks of other countries recycling dollars from trade 'throwing' them into U.S. stock indexes.
It seems not to bother those invested in risky assets that central banks are printing money and buying things like stocks. In fact they welcome it as nominally at least they are making money as stock prices rise.
"But I warn everyone that this has vast implications that do not bode well for the future, perhaps the near future.
I'll be short for this Monday just in case.
I hope I'm wrong, but this may be the only thing left that could derail a Democrat victory on Tuesday.