Manipulation
The first assumption is: The manipulation
of the primary trend is not possible. When large amounts of money are at stake,
the temptation to manipulate is bound to be present. Hamilton did not argue
against the possibility that speculators, specialists or anyone else involved
in the markets could manipulate the prices. He qualified his assumption by
asserting that it was not possible to manipulate the primary trend. Intraday,
day-to-day and possibly even secondary movements could be prone to
manipulation. These short movements, from a few hours to a few weeks, could be
subject to manipulation by large institutions, speculators, breaking news or
rumors. Today, Hamilton would likely add message boards and day-traders to this
list.
Hamilton went on to say that individual
shares could be manipulated. Examples of manipulation usually end the same way:
the security runs up and then falls back and continues the primary trend.
While these shares were manipulated over the
short term, the long-term trends prevailed after about a month. Hamilton also
pointed out that even if individual shares were being manipulated, it would be
virtually impossible to manipulate the market as a whole. The market was simply
too big for this to occur.
