Yep, Just as Expected-The Close Was Manipulated

I knew what I was going to see before I looked, you don't have indicators falling apart all day and then a sudden change of heart, but what you often do have is manipulation of the market via several assets (sometimes stocks) to make it look stronger than it is.

I'm putting together the post with Leading Indicators, but as soon as I saw the first chart I knew what had happened and even though the SPY Arbitrage hasn't caught up to the close just yet, it looks exactly as I expected to find it.

Here's something for our newer members to chew on until I finish the next post, this is a quick way I can look for signs of manipulation of the market without going through 15 or 20 risk asset charts, the Capital Context SPY Arbitrage chart which is defined by CC as:

"In much the same way that a company’s valuation varies due to business condition uncertainty and its cost of capital, so the broad market can be modeled based on its capital structure. Through years of ‘capital structure arbitrage’ experience in the credit derivative markets, Capital Context has created the ‘SPY Arb’ model which identifies a tradable relationship between the stock market (SPY) and its value implied from interest rates (TLT), credit risk (HYG), and volatility (VXX). Our framework enables an active trader to take relatively low-risk balanced trades to take advantage of mis-alignments between the various broad measures of risk in the capital markets via extremely liquid ETFs."

The important parts are the 3 assets most commonly used, TLT, HYG and VXX and the part, "enables an active trader to take relatively low-risk balanced trades to take advantage of mis-alignments between the various broad measures of risk in the capital markets via extremely liquid ETFs."

Those "Misalignments" are typically short term manipulation, it is short term because these markets are so large that it would take an immense amount of money to keep the manipulation in place, so the manipulation is often used at key areas, to protect the market from falling before they want it to fall, to push it down when they want it to move down and most often the closing trade/print as that is what 95% of traders pay attention to.

Now that we have caught up to the 30 min delay, I have the entire day's chart.

Earlier in the day the manipulation wasn't too bad, the differential was in the positive $.05 to about $.20, however just a little after 3 p.m. that jumped and moved to the high of the day at $.40, meaning the manipulation caused a positive $.40 SPY model, which arbitrage algorithms will trade and lift the market to what they see as fair value, keep in mind these are programs that buy or sell based on arbitrage, they don't have human perspective as to why that arbitrage exists.

In any case, they so called, "Banged the close" at least with manipulation, it didn't do all that much for the market.