Today is the 30th anniversary of Black Monday, the crash of 1987.I remember it very well.
As you may not recall, on Tuesday following the crash, with the futures market indicating a significantly lower open, Alan Greenspan and the Fed came in buying SP 500 futures in order to turn the markets around. And it worked. And it continued, with the Fed supporting the equity markets with jawboning, persuasion, and occasionally direct intervention, so that by the end of the year all was well with the markets.
And most will forget that Mr. Greenspan’s expansion of the role of the Exchange Stabilization Fund for currency markets to manipulate equity and commodity markets was formalized in the following year. On the advice of his financial advisors, President Reagan formed The Working Group on Financial Markets (colloquially referred to as the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988.
And thus came the era of bubble-nomics.
Stocks in the US opened significantly lower after an overnight sell-off overseas.
The cause of that selling was the news out of Taiwan that Apple has significantly reduced orders to its suppliers for the iPhone 8.
Bearing in mind that there is an option expiration on Friday, and more importantly that the stock market has become a proxy for the economy in general, steady buying was applied almost from the opening bell, especially to the SP 500 futures.
And see that the SP and the Dow managed to finish in the green, while the tech heavy NDX finished in the red.
This is classic bubble top action.
