How You Can Profit from Central Bank Intervention


The TARP Effect

We asked Slipstream Trader, Murray Dawes what he thought of the central bank intervention. We wanted to know what these big up-days mean for traders and the market.

He told us:

“How long this intervention rally lasts is anyone’s guess. But they now also have the Santa rally seasonal traders on their side. Add that to a few better-than-expected economic numbers out of the States, it has the short sellers running scared. And that could see the market head higher. Perhaps this will be a TARP 1 re-enactment and the market will nose dive again within the week, but I can’t be sure. If there’s one thing to take out of this it is that the situation was obviously worse than anyone knew.”

But in typical Murray style, he’s not sitting… or watching… or waiting. He’s trading.

On Monday Murray sent out an alert to buy a stock. This morning it’s up more than 3%.

Today he saw the chance to short sell a different stock, betting on the market falling after the initial rally.

But whatever happens, Murray’s right. If the market was fine… and the banks were safe… there would be no need for six central banks to intervene in the market.

If anything, the central bank intervention confirms what we already know: the world economy is in deep trouble. And central banks will do anything they can to stop markets falling.

As an investor that gives you plenty of chances to take a punt and potentially benefit from central bank manipulation – such as the trades recommended by Murray.

But the most important thing to remember is that while central bank fiddling may give you the chance to punt the market for profits, it isn’t the answer to a sustainable economic recovery.

It’s a short term fix… and it won’t work.

If anything, we’d say you should use today to sell blue-chip growth stocks you may still own. Because odds are, these big gains will have gone by the end of next week.


P.S. Don’t forget to check Murray’s latest stock market update on YouTube.

Related Articles

Why the Fed’s Actions Make Perfect Sense

Too Big to Bail

Swiss National Bank Intervenes…

Bailouts Still Boosting the Market

Was This Just Another Rigged Market?

From the Archives…

Stock Market Predictions
2011-11-25 – Kris Sayce

Stocks on the Australian Market Today – Three Things You Need to Know
2011-11-24 – Shae Smith

The Gospel of Gold and Silver
2011-11-23 – Kris Sayce

China’s Bubble Will Pop in 2012
2011-11-22 – Greg Canavan

ASX Stock Market Winners, Losers and the Newly Dumped
2011-11-21 – Aaron Tyrrell

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How You Can Profit from Central Bank Intervention