Manipulation and/or direct intervention by goverment/central banks of the market happens constantly, if you didn't release this it would be probably be sensible you don't trade in the markets. The question is how widespread, how significant and how sinister is this manipulation?
On May 20th 2010 after the ECB/EU/IMF meetings a decision was made to protect the Euro; as it was under selling attack by short sellers namely hedge funds. The French president Nicholas Sakozy issued a warning that the Euro would be protected at all costs and that any down selling will be reversed very quickly. He was right, if fact refer to: Amazing Central Bank intervention (FX markets) the most obvious intervention or manipulation (where short sellers were forced to buy back short positions) by government and central banks (European central bank) took place on 20th of May 2010. It was a broad intervention/manipulation of the market on three fronts occurred by three central banks the Bank of Japan (sold USD), Reserve Bank of Australia (bought AUD - as the AUD is a risk barometer to market panic so it was bought and stabilized) and the European Central Bank/IMF drew a line under the EUR at 1.20. This was an extremely successful intervention and manipulation of traders who were buying and selling risk averse currencies. That is how it is, blatant and obvious and in some way acceptable (unfortunately); as long as central banks have a direct influence into the markets, as traders we have to factor in and accept their (again unfortunate) presence.
Of late there has been talk or rumours on the wires that the Swiss National Bank are now sitting of a huge amount of unrealized losses from it's EUR buying intervention (via ECB instructions). These rumours to me sound like traders possibly Hedge funds using counter tactics or fear to unsettle the markets due to it's recent stabilization (Europe, EUR etc). The other rumour is the ECB has accumulated so much toxic waste that it may have trouble reselling into back into the market (massive unrealized losses). So for the market looking to cut risk and sell from institutional investors/traders to the everyday person; they all know deep down that the propaganda won't stick much longer (central banks/government looking desperate), then the charade cannot be kept up for much longer and we have regained a selling momentum.
Stock manipulation or intervention is rarer as opposed to FX manipulation by Central banks/governments and there has been some talk that current Wall Street rallies have been bolstered by Federal Reserve bank buying via wall Street firms (the Plunge Protection team myth). There is no doubt that manipulation of stocks, FX/derivatives takes place, but the argument is that with thinning volumes and buying signal spikes point to a degree of manipulating of intervention by Central Banks/movement (PPT myth) is unlikely. What I do believe has taken place in the last month June 2010 and the last 2 weeks of July 2010 is that the only ammunition that government and central banks have left is what falling powers, leaders and empires have been trying to do in the dying moments are social/economic decline; is to try and manipulate the masses or market via rhetoric. Governments will attempt to re-seduce the people, central banks/governments will attempt to re-instill confidence into the market place/economy. As discussed in Pricing in the big one (sell) 2010 the market can be tricked on the short term, but on medium term to longer term it can't be; the massive amount of intervention that took place on the 20 May 2010 (and there after), via every central banks in the world is a short term trick or attempt at re-instilling confidence. The governments (and they are currently struggling with this) is to try and convince the people that 2009 was not a fluke (economic and social stabilization, even though underneath rot was setting in refer to:the EU/PIIGS, UK and even China re: wage hikes and strikes). So an attempt to fool the people again is hard, The Roman Empire couldn't do it, Napoleon tried it a second time and got so far and flopped, Germany during the last stages of WW2, Communist Europe after the Berlin Wall came down etc. One of the most comical ones and more recent is the Iraq war or invasion by the US army, when the Iraqi communication leader Mohammed Said al-Sahhaf, made hilarious statements to news reporters that they (Iraq army) had "... destroyed 2 tanks, fighter planes, 2 helicopters and their shovels - We have driven them back." and the "God will roast their stomachs in hell at the hands of Iraqis "all this was said whilst US tanks were driving up main Baghdad streets (refer to older blog post) .
So manipulation and intervention most certainly occurs in the markets and everyday life; but there is no sinister conspiracy theory attached or hidden agenda; simply fools are trying to maintain power and it is slipping. History shows that everything peaks out and then goes into a decline, nothing stays linear or constant; in the last stages of even the greatest Empires such as the Roman empire, stupidity, panic and disorder set in and then implodes. No shadowy figures, or ulterior motives just fools acting like fools until it all comes down. That's the reality.
Side note: re thinning volume and buys on stock positions/indices.
As the money flow indicators such as the On Balance Volume indicator show is that the smart money has been withdrawn and the 'dumb' money moved in buying stocks that most probably are bought at multiplied prices to their demand (or value). In other words 'confidence building' or short term manipulation' of everyday investors, say individual investors, has occurred. But as I said, this is a good example of mid to long term realization that all is not that good. So the 'dumb' money (eventually) will be pulled out as with the smart money.
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