From ZERO HEDGE:
Well, it’s options expiration week again and as usual Wall Street is gunning the market for all it’s worth. The bulls are falling for this shenanigan yet again, just as they did in June.
How’d that work out?
Tracking options week manipulations isn’t easy because there are no strict rules: the action all depends on where the market is and the number of outstanding contracts at given price points.
For instance, back in April investor bullishness was at extremes. Consequently, Wall Street ramped stocks first upwards (the usual predilection) to shank the puts… only to swiftly reverse the action in the middle of the week to shake out the calls.
This whole system occurs courtesy of the Federal Reserve which openly and blatantly pumps the market on options expiration week. I’ve shown the below chart before. It’s staggering that no one in Congress or any of the regulators actually bother following up on this. How much more obvious does Bernanke need to get?
Options expiration weeks in bold
| Week | Fed Action |
| July 8 2010 | +$1 billion |
| July 1 2010 | -$13 billion |
| June 24 2010 | +$175 million |
| June 17 2010 | +$12 billion |
| June 10 2010 | -$4 billion |
| June 3 2010 | +$2 billion |
| May 27 2010 | -$16 billion |
| May 20 2010 | +$14 billion |
| May 13 2010 | +$10 billion |
| May 6 2010 | -$4 billion |
| April 29 2010 | -$1 billion |
| April 15 2010 | +$31 billion |
| April 8 2010 | +$420 million |
| April 1 2010 | -$6 billion |
| March 25 2010 | +$5 billion |
| March 17 2010 | +$25 billion |
| March 11 2010 | +$2 billion |
| March 4 2010 | -$5 billion |
| February 25 2010 | +$8 billion |
| February 18 2010 | +$21 billion |
| February 11 2010 | +$7 billion |
| February 4 2010 | +2 billion |
| January 28 2010 | -$4 billion |
| January 21 2010 | -$39 billion |
| January 14 2010 | +$56 billion |
| January 7 2010 | +$1 billion |
| December 31 2009 | -$1 billion |
| December 28 2009 | +$35 million |
| December 17 2009 | +$49 billion |
| December 10 2009 | -$17 billion |
| December 3 2009 | -$2 billion |
| November 27 2009 | -$2 billion |
| November 19 2009 | +$73 billion |
| November 12 2009 | -$30 billion |
| November 5 2009 | +$3 billion |
| October 29 2009 | -$39 billion |
| October 22 2009 | +$8 billion |
| October 15 2009 | +$54 billion |
| October 8 2009 | -$3 billion |
| October 1 2009 | -$17 billion |
| September 24 2009 | +$18 billion |
| September 17 2009 | +$51 billion |
| September 10 2009 | +$4 billion |
| September 3 2009 | +$8 billion |
| August 27 2009 | +$14 billion |
| August 20 2009 | +$46 billion |
| August 13 2009 | +$25 billion |
| August 6 2009 | -$11 billion |
| July 30 2009 | -$38 billion |
| July 23 2009 | -$33 billion |
| July 16 2009 | +$80 billion |
Notice that on non-expiration weeks the Fed either pumps the system slightly or, more commonly, removes money.
However, once options expiration week hits, it’s PUMP time. To whit, the Fed has NOT had a single options expiration week in which it HASN’T pumped the market in nearly one year.
Moreover, note that despite the Fed’s Quantitative Easing Program ending in March, the Fed continues to pump $10+ billion into the system EVERY month when options expiration week rolls around.
Didn’t Bernanke say he wouldn’t continue buying assets from Wall Street after QE ended? More importantly, didn’t QE end? Why is the Fed still pumping money into this system?
And finally… how many times does this have to happen before someone in power actually notices it? Seriously, we’re talking about the Fed going 12 for 12 in the last year. And it’s not like the pump jobs are even subtle: they’re DRAMATICALLY larger that any other capital infusions the Fed makes during non-options expiration weeks.
Good Investing!
Graham Summers
PS. For more hard-hitting investment insights revealing the real reasons the market moves as it does, join me at www.gainspainscapital.com
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