Here’s How Big Stock Price Moves Are Manufactured
When I say that these moves are manufactured, created, engineered, if you will, by marketmakers and market insiders as they attempt to square their books, there is an entire machinery of how a stock ends up in your account.
It isn’t as straightforward as simply getting it from one other person because often times the amount of stock that you want to buy, and certainly for very large clients, simply isn’t available.
So someone has to come and step into that role and provide that stock.
Eventually there is a reconciling of the books. That happens often through market makers and market insiders using the financial media to get rumors out there, or else using the panic that is generated, whether it be North Korea and a potential nuclear missile attack, or something like that.
Or in past years, it’s been concerns about whether the European Union would last, or whether the euro currency was going to fall apart.
There’s always something that the market makers and market insiders can use to get people to panic and to get people to worry about their positions.
When you do that, you are going to give them your stock cheaply, certainly far cheaper than what they could get it for if these rumors or this panic wasn’t caused.
This is the daily game of Wall Street. This is how stocks move from one hand to the other at very cheap prices.
Or in a period when the market is topping out, then you have the reverse situation, which is that now the market makers, they realize that the market is topping out, the market is setting up to go into an extended decline or even potentially a crash, and they look to unload their stock onto you.
Once again, the tactics are the same. They will suggest that everything’s great, everything’s wonderful, nothing will ever go wrong again, and then induce you into buying more stock than you can handle, more stock than you ever should hold.
Then once they are done dumping it, you’ll see that the stock will go down.
So these are the games that I refer to when I talk about market makers, when I talk about market insiders.