Does the Fed really have a choice, given that the game is now for all the marbles?

We all know the global economy is slowing, so why would stocks soar from here? The basic answer was articulated by Chris Martenson: because this game is for all the marbles.

If the Powers That Be let markets melt down from here, where’s the bottom? Where’s the plan to bail out all the pension plans, banks, insurers, etc. that will be crippled by a full-blown market meltdown?

It would be a lot cheaper and less painful to prop up stocks at these levels (a 10% decline) rather than let them fall off a cliff to a 40% decline.

Many people dispute the idea that central planners can prop up the stock market once sellers panic. This is a worthy discussion, and the general point of disagreement is planners’ ability to counter big-volume selling.

In other words, it may be possible to elevate markets in low-volume settings, but once selling picks up, planners lack the tools to stem the tide.

On the other side of the debate are those who wonder if the panic declines are as engineered as the lofting-ever-higher uptrend. What If The “Crash” Is as Rigged as Everything Else? (August 26, 2015)

Here is a daily chart of the S&P 500: the wedge could break either up or down, but the stochastics and MACD are somewhat constructive. It wouldn’t take much of a rally to crank out a bullish cross in MACD.

The basic mechanism for pushing markets higher has been around since the 1920s. The game only requires two players colluding: one player buys everything at the ask and then some, pushing price higher. The second player picks up the baton and does the same, and then passes the baton back to the first player.

Once others see the rising trend, they start buying, and both players can sell a bit into the uptrend. When price reaches a line of resistance known to every technician (and trading bot), the players push price decisively through the resistance. This triggers more buying, and the players can sell a bit into the rally, until the next resistance line requires a push.

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