The PPT is the vaunted Plunge Protection Team, a much derided but often alluded to collusion of the major prime brokerages (Goldman, Morgan, Stanley, Citi) to halt major stock market declines by manipulating the market. It's never been proven, of course. But a firestorm of comments on ZeroHedge and in other places where hardcore (and some institutional traders) gather has zeroed in on the difficulties many have had borrowing shares of the S&P Index (SPY) in order to short the index. The commenters believe this is a result of the PPT holding back shares to stop any shorts that could torpedo the ongoing rally.Even if the existence of an actual PPT is hard to imagine, its quite possible that major brokers might collude to sustain gains in a rally in hopes of keeping their customers afloat to allow them to trade more (many hedge funds mark to market on a monthly basis) during the later parts of April.
Another rationale could be that the brokerages themselves are looking for an opportune time to exit their investments without disturbing markets and, perhaps, attracting the wrath of the Federal Government at the precise moment they are also trying to convince Uncle Same to let them pay back TARP money, reinstate lush compensation policies, and still enjoy the benefits of Government protection on billions of dollars of debt -- a move akin to having your cake and eating it, too, but times three.
Whatever the case, there is likely some reason for so many people on the buy-side of the market complaining that borrow requests of SPY to short (a very common hedging strategy) have all of a sudden become so hard to fulfill. And maybe we should all be seling PPT T-shirts emblazoned with the motto "Me Thinks Thou Dost Short Stocks Too Much." Your thoughts?
Alex Salkever is the Directof of Research at Piqqem.com, a stock prediction community powered by the wisdom of crowds.
Another rationale could be that the brokerages themselves are looking for an opportune time to exit their investments without disturbing markets and, perhaps, attracting the wrath of the Federal Government at the precise moment they are also trying to convince Uncle Same to let them pay back TARP money, reinstate lush compensation policies, and still enjoy the benefits of Government protection on billions of dollars of debt -- a move akin to having your cake and eating it, too, but times three.
Whatever the case, there is likely some reason for so many people on the buy-side of the market complaining that borrow requests of SPY to short (a very common hedging strategy) have all of a sudden become so hard to fulfill. And maybe we should all be seling PPT T-shirts emblazoned with the motto "Me Thinks Thou Dost Short Stocks Too Much." Your thoughts?
Alex Salkever is the Directof of Research at Piqqem.com, a stock prediction community powered by the wisdom of crowds.
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