The Market is Rigged — Here's the Proof

by Andrew Zatlin

The market is rigged.

Today, I’ll prove it to you…

Then I’ll explain how to take advantage of it!

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

The Market is Rigged — Here’s the Proof

Ever notice that when the market crashes, it tends to go down about 10% at a time?

There’s a reason these crashes are 10%... instead of 3% or 14% or some other number:

The market is manipulated. Those drops are engineered.

Let me prove it to you…

Then I’ll explain how we can take advantage of it.

How the Pros Do It

Portfolio managers have a lot on their plates. At any one time, they might have dozens or even hundreds of positions. They don’t have time to monitor each of them.

So, to make sure they’re maximizing their profits and minimizing any losses, they’ll often use trailing stops.

Here’s how trailing stops work:

Let’s say you buy some stock at $100/share, and then you put a 10% trailing stop in place. If the stock falls by 10% — in this case, $10 — your shares will be sold automatically.

The reason it’s called a trailing stop is because the price of the sell-order moves up as the stock price moves up. It follows it; it trails it.

For example, if the stock climbs to $200, now it would have to fall by $20 (10% of its current price) for the sell order to kick in.

Many investors use trailing stops to increase their profit potential, while limiting their risk.

But meanwhile, others use them to manipulate the market. Here’s what I mean…

Sharks in the Water

The sharks out there understand that the typical stop-loss order gets put in at 10%. So they take advantage of it. Here’s how:

Instead of letting natural market forces move a stock up or down, they’ll attempt to force a 10% drop in a stock, knowing it will trigger an automatic sale.

And at that point, they can scoop up the stock on the cheap. And because they’re no longer forcing the price down, the stock will go back up naturally — and they can make a killing.

Is it manipulation? You bet it is.

And it happens over and over again…

Four Examples of This Manipulation

For example, in January 2022, the market fell about 10% — then it rebounded 50%:

February into March, we saw the same thing:

A ~10% drop, followed by a rebound:

March into April, it happened again:

And then it happened again:

Again, this isn’t a coincidence.

It’s because of trailing stops.

The sharks are feasting

And they’re about to eat again.

Mark Your Calendars for June 17th

Recently, the S&P 500 has rebounded:

But check out the area I’ve circled above in yellow…

Those red and green bars represent trading volume. As you can see, BUYING has been weak. The reason the market rallied is because there wasn’t a lot of SELLING.

Remember, to force the market down, the sharks will come in and sell, sell, sell. And when they stop selling, then the market can climb again.

I’m convinced another 10% drop is on the way.

Sure, we might see the market tick up a bit in the coming days and weeks…

But for most investors, June 17th is going to be a really bad day.

The thing is, it doesn’t have to be a bad day for you.

In fact, if you’re a “Pro” subscriber, I’ve got a great trade idea for you.

In the meantime, Zatlin out. Talk to you soon.

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In it to win it,
Andrew Zatlin
Andrew Zatlin
Moneyball Economics