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How To Recognize (And Profit From) Market Manipulation

Writer's picture: Carnivore Aaron TradesCarnivore Aaron Trades

You won't learn this in the textbooks. This is one of the many ways that we teach our traders to recognize and profit from market manipulation tactics. In my most recent blog post I made the case for being long bonds ahead of the CPI announcement, namely via the long end of the curve (TLT, TMF, /ZN, /ZB). After CPI and the subsequent bond rally, I also made a Youtube video which explained my thesis as well as the gamma exposure, technical analysis, and other dealer analysis strategies that went into the trade.



In short, commercials (banks, dealers) used their immense capital to short the futures to push bond prices lower (and as a result TLT as well) to the key $85 strike where they also had a large short put position. Once TLT had reached $85 (right before CPI), they simply filled those short puts and went long TLT just pennies off of the lows. My suspicion was that shortly after we should see the COT reports start to show banks covering their short futures position which in turn allows them to take profits on those shorts, but simultaneously acts as a tailwind for TLT since that ETF reflects long term bond prices. It's basically a double dip scenario where the big money gets to have their cake and eat it too. As of today, (1/24/25) we can see that they have in fact started covering as TLT has so far held off of the lows.

Banks have begun covering their futures short.
Banks have begun covering their futures short.

If this continues then we'll know our thesis is correct. Nonetheless, the trade has worked out in our favor on both TMF (Swing Trades) and (/ZB) (Active Trader) and we are now in a position to simply protect profits from here. 🔐For access to premium trading content including swing trade alerts & live day trading room visit 👉 - https://www.carnivoretrades.com/ 


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