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The Tradition Of Mindless Stock Ramping On Fed POMO Days Is Back
One of the most beloved phenomena of Fed intervention is the "miraculous" ramp in stocks on days in which the Fed's Permanent Open Market Operations (POMO) occurred: while this was a requisite in 2009 when the Fed monetized $700 billion in Treasurys, it had gradually disappeared from the public consciousness after the termination of the Treasury portion of QE1 in October 2009. Well, now that POMO is back courtesy of QE Lite, and with the help of various sellside analysts, Primary Dealers knew precisely which Treasury CUSIPs to purchase in advance of the auction for a quick leveraged pick up of a few hundred bps. And now that the money is funded back to the PDs, as of the end of the POMO operation at 11am Eastern, it needs to find a new home. And with the PDs providing the initial impetus for a risk asset (read stock) ramp, and momo quants picking up the sloppy seconds as they jump over each other to send the momentum driven ramp ever higher, the result is presented below.
What this means is that going forward, every single day that the Fed is monetizing bonds via 10:15-11:00am POMOs, it will be very foolhardy to short into the Fed's stock surging offensive. As a reminder, here are the immediately upcoming POMO days through the end of August: August 19, August 24, August 26, and September 1. Shorting on those days has once again become implicitly illegal.
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Q.E.D.
Outstanding reporting
+1
+1
I can just confess....I got screwed today. I wondered WTF happened 10.37 EST.
Now, I at least believe I know
wash rinse and repeat...
And once again at 1:15 PM. WOW, someone blew some hot air up that woman's skirt.
They'll keep juggling nitro and eventually a large container of that stuff hits the floor.
Shortley thereafter the market goes through the floor. Patience grasshopper. August is irrelevant this year. There is no volume so it's what I call a good time to play golf, sleep, or fish. Unless you attempt to fish out of Pensacola or Venice, LA.
But wait a minute, I thought this was the reason for a 150pt rally...
NEW YORK (AP) -- Stocks rose Tuesday after reports showed the first rise in wholesale prices since March and a big jump in industrial production.
A slight improvement in the weak housing market and better-than-expected earnings from Home Depot Inc. and Wal-Mart Stores Inc. also gave investors a reason to buy.
The Dow Jones industrial average jumped 48 points in morning trading. Broader indexes also rose.
Economic reports in recent months have almost exclusively pointed to slowing growth. Weakening data has led some investors to worry that the country could fall back into recession. The data Tuesday provided a slice of optimism and some reassurance that the economy continues to expand, albeit slowly.
Prices at the wholesale level rose 0.2 percent last month, the Labor Department said, lessening worries about deflation. It was the first increase since March and matched expectations of economists polled by Thomson Reuters. Excluding volatile food and energy costs, the index rose 0.3 percent in July, more than the 0.1 percent growth predicted by economists.
Jitters over a double-dip recession have many investors looking for the first signs that prices and wages are on the way down. If that happens, it will trim profits and potentially dampen hiring even more. High unemployment is considered the biggest obstacle to a strong recovery right now.
Industrial production jumped 1 percent in July, double the 0.5 percent growth forecast by economists. Rising output at the nation's factories, mines and utilities comes after multiple manufacturing reports had shown a pronounced slowdown over the past couple of months.
In morning trading, the Dow Jones industrial average rose 47.99, or 0.5 percent, to 10,350.00. The Standard & Poor's 500 index rose 6.67, or 0.6 percent, to 1,086.05, while the Nasdaq composite index rose 13.58, or 0.6 percent, to 2,195.45.
What a complete and utter joke the US equity market has become.
Haha. They think the package cheating is going to work. I better run out and get me a 10 ounce pound of coffee and 10 bucks worth of ultra thin toilet paper.
AP... skanky hookers, just like Reuters and CNBS
LOL! That is too funny. Can you imagine if the moron media actually printed reality?
NEW YORK (AP) -- Stocks rose Tuesday after the Federal Reserve finished monetizing government debt, putting freshly minted cash in the hands of primary dealers.
The Fed had previously published a schedule enabling the primary dealers to front run today's debt monetization, which accounted for the massive rally in treasuries the past week.
+++ nice job
+100
ROTFLMAO!
freshly minted bernokio bucks
note to self: put schedule in calendar, set alert "buy calls take profit buy eagles"
+ Bowing down in presence of posting genius...
Who thinks that shit up? There must be a central propaganda outfit.
They must be using a modified template like this one:
http://tradertimm.wordpress.com/2010/08/16/financial-writing/
If the bots parse and also create market summaries, where will that lead us?
Very useful information. Thanks
kinda foolish to short period
The Hindenburg theory failed. Where to now Kessler, The Ducks breath?
@plocequ1
Ever watched Michael Jordan play in slo-mo? He'll be jumping to make a shot and some beef boy from the other team gets a little too close and zap!, Jordan's elbow will find the guy's nose or cheek, smooth as silk. The message is sent, and next time the beef boy keeps a fair distance.
The Fed is the Michael Jordan of central banking. The Hindenburg Omen just got elbowed. Now this doesn't mean the Fed will win the game, it's just not going to play like a dummy.
What timezone is TD's Bloomberg in?
-3EST
thanks for the heads up. look at what they are doing to AMZN. amazing how these retail stocks go, isn't it? you'd almost think the peasants still had some money.
then look at nflx. must be reading books instead of watching movies; well, today at least.
Ah, the Fed funded short squeeze.
Lets see if the half life of this shrinks exponentially like every other CB intervention.
Its all about mean reversion.
Has been the name of the game since May, even that 1000 print low on ES during globex... great we hit that low make us a solid range - notice how it wasn't revisited during the market hours on ES.
We also hit a nice high ~1130 but again that doesnt matter. Useful for range trading and understanding the upper and lower limits. Trade in the middle and youre fine.
Strong ramp were seeing up to 1095 currently - sure whatever. Be long till about 1100 then reverse course once more.
Word.
http://i36.tinypic.com/v4biwh.jpg
Extend and pretend, bitchez. In the mean time buy canned goods.
Some stocks were way oversold prior to POMO...check out this solar boner:
WHOA! Went up .40 cents youre a fukin GOD Leo!!
You're a disturbed individual...PROZAC might help. In the meantime, buy the breakout!
I can't. I'm a crack addict and 50 minute and 200 minute moving averages are too slow of investment vehicle for me. I'm looking for about 38 seconds.
YOU but the breakout or the dip. Come october, we'll see who's laughing.
Your solar posts are getting old.
nobody wants to buy your stupid solars, dumbass
Be my guest, I follow the smart hedge funds. For all of you who were laughing at Chinese solars, check out the latest quarterly filings on Jinko Solar (JKS):
http://www.nasdaq.com/asp/holdings.asp?symbol=JKS&selected=JKS&FormType=Institutional
Big players in that one. Stock has doubled in the last 30 days and earnings were excellent. I still think the solar sector has room to run a lot higher. Keep buying the dips in this sector.
"I still think the solar sector has room to run a lot higher."
Have you asked ponzerelli to give the jukebox a magic tap?
Hey Leo, who are the customers for these manufacturers? I live in a desert area with 300+ days a year of sunshine. Most of the newly-minted solar companies that popped-up around here three years ago have folded their tents and gone bust. Outside of government and state spending for rooftop panels, the demand has collapsed. So go ahead and tout those wonderful "earnings", even the Chinese will eventually run out of room to store the panels they "sold".
I'll tell you what I tell all solar shorties: COVER! COVER ASAP!!!!!!!!!!!!!
I did buy into the earlier rally about a week ago. Bought lots of October/November out of the money puts for mer pennies on big boys like F, and AAPL.
....back at the level it was a week ago
buy and hold Leo, buy and hold.......PMSL
just bc the data is bearish doesnt mean you just ignorantly short the market. The ES was oversold in general.... will short again when the market gets overbought- again
The SPX was defo in oversold territory. That was why I recommended closing out shorts last week. Expected this to be up on the "technicals" and lack of real fed data.
http://www.freestockcharts.com?emailChartID=5ce5b836-4c22-4085-be4d-4d321825521d
So if you bought a month ago, you're only down 25%... maybe Cialis would help.
Wow and if you bought it 6mo ago you would be banking big time
http://finance.yahoo.com/echarts?s=STP+Interactive#symbol=STP;range=6m
Yeah I will stay short. Much of this runup was pricing in QE. The short squeeze will be shorter lived than in 2009.
What's the matter with TD's 'time' annotation on graphs. Is that West coast time?
yes
They can't keep gold down though. $1300 soon?
The market has gotten ridiculous though. How can anybody possibly trade this thing?
If not illegal, at least an ill-advised and potentially bankrupting experience.
Thanks for the heads up. (Although I am still refusing to trade in this shadow play of a market.)
Good reporting as others have mentioned. I guess we won't read about this at MarketWatch or see on CNBC......LOL!
OK, so everyone STILL believes 'shorts' are the dumbest and most easily duped people on the planet, basically theyre Charlie Brown going after Lucy's place held football time after time?
I never believed shorts were that stupid and so available for daily shearing. What if there are no shorts getting hit by 'covering rallies' and its really just all the FED pumping to oblivion? Isnt there some group of 'smart guys' with millions who would now sit and wait to pounce on the top of all these pre-announced FED funded rallies?
I'd sure think so.
Dead Cat Bounce Bitchez!
Where's George Washington on this??
http://news.yahoo.com/s/afp/20100817/ts_alt_afp/usoilenvironmentpollutio...
Turd,
GW actually works at a job on a daily basis to feed his wife and kids. Thus he might have been busy when that article was posted at 9 this morning. He usually posts around this time of "day" depending on where you live on the globe.
In fact, it looks like GW just posted a new article.
What ... writing for ZH isn't a day job? Wow ... just reading it is my day job.
Same here. My income has gone down over the past 16 months but my knowledge has gone up. (More than) fair trade in my view.
Can't wait for the "amid" explanation...
"Stocks surge amid renewed investor confidence"... "they" always know just why stocks go up.
some interesting statistics:
today vs. yesterday, nyse advancing volume -22%, while nyse declining volume -90%
August 19, August 24, August 26, and September 1
Can anyone tell me why a 2hour trade in a 2X or 3X SPX or DOW ETF would be a bad idea on these days?
Thanks in Advance
It is a great idea. I haven't checked to see what fed data comes out on those days, but if it is market movers set a price target expecting an initial decline so it buys on the decline. Once 10:30 hits, watch it go green :)
Barely got out with my premium intact, holy zombie jesus!
That'll teach me to respect the low-volume rallybots.
Waiting for the next opportunity. Be careful out there...
I can't beleive they continue to do this? It's sickenining. Perhaps this is a stupid question but whats to prevent the fed from this type of run and gun indefinitely? Forever? Every bone in our bodies wants us levered up short on these punk ass bitches but you can't go up against these guys. I'm not sure an all out, unseen, ligit, black swan would knock these guys off their game. News, data and numbers don't mater anymore.
Don't fight them, join them:
That's what they said in France after the Nazis invaded. It was a good idea for a while, too.
I'd join you if you can tell me when the next dip is. Otherwise - you're full of...
The thing that prevents them from doing it "to infinity and beyond", is that their balance sheet is highly watched. Any bad blowup will signal money to GTFO of US equitys, bonds, cash, homes, etc., etc.
We were oversold. I went long yesterday and then reversed based on the lame market action. Big mistake. Oh well, I'm going to sit tight until 1110 and then see what happens (bet we reverse).
I believe that the Chairman of the FED should not be able to own Stocks or Bonds. Their Money should be in a Savings Account while serving as the Chairman of the FED. The same goes for the other Fed Governors.
I read an article about how much Bernankie lost in 2008 on his Portfolio. I am sure that clouds his decisions and assessments of what must be done to help the Economy. Or is he just trying to juice his Portfolio before he Retires? There is too much conflict of interest on his part in my opinion.
Always interesting how he seems to Juice the Market right before Option Experation. How he had the Market grind up for a year and a half without so much of a correction. He must really hate Shorts. He appears biased to me and I think his bias is because of his personal Portfolio. To Hell with what happens to the World as he prints, prints, prints as long as "his" Portfolio is OK. You can propably see what Stocks he owns by the ones ramped the most.
LEO has been the ONLY poster right on this market besides ME
BOO YAH
As usual, reminding people here on ZH you're better than everyone here (e.g - the "I got kicked in the teeth everyday in high school and couldn't fight back until the Internet came along" syndrome). YOU'RE SO RIGHT!! (as a cactus is smooth!)... considering the peak was 14k and the DJI hit 11k earlier this year.. YOU GUYS ARE SO RIGHT!!! GO BUY SOME SOLARS WITH LEO BECAUSE HE NEVER SELLS.. only BUYS BUYS BUYS like Jim Cramer! GAMBLE GAMBLE GAMBLE!
Tyler - could you please point me toward the current schedule page? The one I have does not seem to be updated:
http://www.newyorkfed.org/markets/operation_schedule.html
http://www.newyorkfed.org/markets/tot_operation_schedule.html
I aint buying nuttin. It's rigged.
Also a good strategy. Long on canned goods and ammo.
Actually the POMO stuff started in 2005 (If you wondered how the market continued to rise into 2007, while the economy turned down, then now you know). I did a cumulative analysis on my blog over the weekend http://www.apartofny.com/2010/09/pomo-auctions/
Resources like the one you mentioned here will be very useful for me! I like to share it with all my friends and hope they will definitely like it.
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