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Shorting Stocks On These POMO Days Will Be Hazardous To Your Health
Previously, when previewing the next month's POMO days, we cautioned readers by saying that "Shorting Stocks On These POMO Days May Be Hazardous To Your Health." Courtesy of the BOJ ludicrous speed launch of its own version of POMO, which sees the combined global central bank authority raising the amount of monthly incremental liquidity to $160 billion, we are upgrading the cautionary language from "may" to "will."
Below are the May days when Kevin Henry will be injecting liquidity. Note that just like today, the second largest POMO day is once again reserved for the month end window-dressing day. Nothing escapes those Fed PhD traders. Curiously, and just like in the past, NFP day is POMO-free.
Source: NYFed
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Sir, may I trade tomorrow?
Again and again, this headline continues to not make sense to me. In a vacuum, POMO drives the price of stocks up, thus POMO days should be a good entry point for shorts.
Sell high, buy low, is the idea.
Perhaps we should caveat by saying that only those shorts who actually have a finite balance sheet and are subject to margin calls need be concerned.
Would it be easier to list the days the days with no pomo?
Finite balance sheet? How do those work?
Imagine that those vast planes of printed paper lustily ejected from our nation's presses suddenly reaches that cardboard tube at the beginning of the roll and then ... ha hahaha, jk. Would never happen.
Maybe they went tubeless, like Scott's.
That's about as far as American innovation goes nowadays.
You know I am the first to admit that shorting US equity indices with a maniac running the printing press is suicide. Nonetheless, and speaking theoretically (i.e. in a vacuum) what I said is true.
I'd be right there with you if they were, say, pumping the markets only one time in the middle of the month and once at the end, or, even every other day. But they're doing this shit pretty much every fucking day of the month, which is kind of the sad, sad punchline to all this. In other words, shorting pretty much every day this month (because POMO is pretty much every day this month), is hazardous to one's health. Honestly, the only actionable thing one could do here is go long at about 2:15 pm EST and sell into the close.
POMO days would be good entry points for shorts if they weren't followed by more POMO days. If only you could pinpoint the day that QE ends. The burning question...
Buffett's 1625 target will be reached so the "insurance puts" are saved ? looking very much within sight now..
$1 billion less this month. The market should tank on that horrible piece of news.
Why the Fed still need to hire overpaid PhDs to run this show boggles the mind. To save money, the Fed should hire some chimpanzees to do the job at the PPT desk...or maybe they already have because the markets are going bananas every fuckin day!
woof. Rick Reilly?
<cue Seinfeld theme>
I just love how they're making sure it all adds up. It's like they suddenly discovered accounting standards.
Kevin is injecting liquidty in the market while the squid injecting liquidity into Kevin.
Only the finest squid ink is used for Fed printing.
whack-a-mole time!
Thanks Tyler. I was going to ask you for the May (POMO/MOMO) schedule.
April (liquidity) showers brings (more) May flowers showers.
Golden showers mostly.
And golden waterfalls.
There's been an expansion of profanity and dirty imagery on ZH since I've been here.
Most of it lately involves some kind of closed circle in which men penetrate each other anally (i.e. "in the can"), or link up digestive tracts, in succession, or eject bodily fluids, urine, and/or excrement on one another, perhaps in tandem or complimentarily.
All of it is accurate IMHO. Just sayin'.
It's all just a big circle-jerk until one of these mornings it all implodes again.
Nothing to stop it until we repudiate the use of the dollar. It IS a perpetual-motion-machine.
It's going to take an exogenous shock to do anything. A revolution? A war? Swine flu? We can hope for mass unemployent...or DIVIDEND CUTS! DIVIDEND CUTS! DIVIDEND CUTS! DIVIDEND CUTS! DIVIDEND CUTS! DIVIDEND CUTS! DIVIDEND CUTS! DIVIDEND CUTS!
Bring it on!
Never happen. If earnings start to deteriorate the Fed will then start giving money directly to corps to pay bigger and bigger dividends. Corps will issue special class of stock directly to the Fed who buys all of it as an investment.
It can and will happen. They will do anything to hold the market up. Even if 100% of investors stopped investing the Fed would just up the ante to 200B per month, 400B per month whatever it takes. They would bid and buy anything and everything that was sold to keep the markets inside of a 2% correction band forever. Since they do not have to answer to anyone and can print up unlimited money there is no reason to ever have it stop. SP500 earnings could get cut 50% and the market holds and pushes higher.
All they are doing is destroying the financial markets globally. There is no way they can unwind what they have done. Its all part of the plan for the master reset.
The only "re-set" I want to see is the destruction of paper wealth - for everyone! The system is unethical, immoral and thieving and deserves to die.
Each time the Fed increases the rate of printing the effectiveness of it decreases...
who's injecting what into whom?
and are they practicing safe injection?
If you can't make money with this rigged market.....
Safe bet that the 30yr treasury auction will be on the 17th - as usual on the biggest POMO day.
If Bernanke answers that he does not target asset prices (like he did on the last FOMC), how come biggest POMO day is always on end of month window dressing?
Speaking of coke and hookers:
Sex Superbug Could Be 'Worse Than AIDS'""This might be a lot worse than AIDS in the short run because the bacteria is more aggressive and will affect more people quickly," said Alan Christianson, a doctor of naturopathic medicine."
"This gonorrhea strain, HO41, was discovered in Japan two years ago in a 31-year-old female sex worker who had been screened in 2009. The bacteria has since been found in Hawaii, California and Norway."
http://www.cnbc.com/id/100685883
A gonorrhea strain named "HO-41?" Who says scientists don't have a sense of humor?
I would have voted for "The Bendromeda Strain".
What surprises me is that there are still human prostitutes in Japan, and they are active enough to spread human diseases.
I'm confused. Was the ho 31 or 41?
Why does it hurt when I pee.......................
RIP Frank.
pods
I don't want no doctor, to stick no needle in me...
Bitch gets around.
Scientific name for GC:
Neisseria gonorrHOEae
Becoming very nasty now and definitely on the upswing. Pretty much a symptomatic in women Guard your dicks guys.
Miffed;-)
So S&P 1700 would be a safe bet at the end of May?
This sounds so stupid that it's probably going to end up being accurate, but it seems like they're trying to ensure that the S&P 500 index is always bigger than the spot price of gold. Given that, even with supression schemes, gold is likely going to 2K by end of year, I'd put the S&P at about 2.2K end of year. I wish I was wrong about this, but I'm probably not.
You gotta buy in it at some point.
Sure, it is unlikely the market will crash tomorow. Or the next day. Or the next. Eventually, it's gonna blow.
Eventually, it's gonna blow.
Agreed. But why? And how? This is now "self-sustaining printing"!!!!
"The desk plans to print approximately $44,000,000,000, which will be handed over to TBTF banks in payment for 'Treasury debt' over the month of May."
This can go on forever, and they know it.
But my dream is that one day, in the far distant future, some of this money will accidentally leak into the REAL economy and then - BOOM! - we're off to the races. Game over...
Forever = As long as you and I accept dollars in exchange for goods and services.
Other than by receiving the interest difference, how to TBTF banks benefit from this? In order to sell Treasuries, they first need to buy them.
Based on articles I read here, I got the impression this has anything to do with repo financing and shadow banking, but I can't quite grasp it.
I don't quite grasp it either...I guess the banks buy, a month or so later turn around & sell back to the Fed at the latest Fed-created higher prices/lower yields...making a profit front-running the Fed.
But this arbitrage is just peanuts compared to the principal which goes directly to the Gov't.
So in essence the Fed is injecting FIAT to the Gov't. How does it end in the banks?
Truly, there's only one thing that can stop this insane 'dash-for-trash' yield-seeking, and that is
DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS. DIVIDEND CUTS...
With the real economy sinking we might just get it. Then where would POMO money go? Hahahahahaha...!
Wow, to buy all those treasuries the FED sure must have a lot of money!
pods
Why of course! They've been saving since 1913
Since supply and demand no longer set price, why are the commodity prices NOT being supported by this POMO liquidity like equity prices are?
Because for commodities they go short instead.
So who is the decider that coordinates this symphony?
Chairsatan?
I call him Daddy Berananke. All stupid Americans believe Daddy will protect them from all dangers. Most of them believe Obama loves them and would sacrifice himself in order to help the people he loves.
You'd think people would be completely outraged.
They would be outraged if they knew wtf pomo is. As long as it doesn't interfere with teevee or potato chips they don't really care.
Don't forget booze.
Next week is gonna be huge!
The Fed is single handedly destroying the primary arbiter of risk globally. Once you completely detach the markets from any sort of risk and valuation methods you now have nothing to measure against. This can and will lead to massive misallocation of resources which will end up far, far worse than 2008. I think the Fed knows this and is helping to make it happen.
They know full well there is no "level" on the SP500 that will lead to job growth - ever. They could push it up 50% this year and it would not create anything. Companies are in it for the management and large shareholders. The primary compensation for both is stock shares. The goal is to push it as high as possible to make the most money. This does not translate into hiring anyone. Once you distance yourself from any valuation methods there is no reason to even grow much beyond a minimal amount. Earnings can be flat or declining and prices will continue to accellerate higher. There is no impetus from anyone to do anything different. It is only when prices decline that complaints start happening.
S&P will never never breach 1600+ by end of week.
oh, the irony...
Last year May 2012 there was a similar POMO purchase operations schedule http://www.newyorkfed.org/markets/tot_operation_schedule_120430.html
But NYSE plunged about 100 s and p points the first 2 weeks of May 2012.
Just sayin'
It also sold $43B in Treasuries that month:
"Across all operations in the schedule listed below, the Desk plans to purchase approximately $45 billion and sell approximately $43 billion in Treasury securities over the month of May."
I'm gonna test this out this month. Every day the FED does POMO I'm going to write down the performance of both the DOW and S&P 500. I'm also going to write down the performance of the days with no POMO. If all checks out that POMO is driving the equity markets to the tee I'm going to play this little POMO schedule like a fiddle. My saying on this current ludicrous market is Long Notional & Hedge (nikkei puts, volatility options, whatever is insanely bullish)
POMO isn't solely keeping the stock market bid, the three CB (NYFed, ECB, BoJ) orgy on the 1.30EUR is + the USD liquidation is the main primer.
Anyway, the next crisis is all Asian, which is war. The China/Japan cold war started months ago. If bogus (China) tweets about Obama being blown up on AP twitter feed can flash crash a market, imagine what a war could do.
http://www.globalpost.com/dispatch/news/kyodo-news-international/130430/...
India v's China
http://online.wsj.com/article/SB1000142412788732378970457844697013013741...
Full agree with your first part, but disagree on the lower one.
It's still Europe this Summer, or better: Germany. It's election-time in September and Mutti won't act as markets would prefer; so next step is that there will be no ECB rate-cut (actually, it's stupid as they do, stupid as they don't).
So, today Benny will announce that QE4ever goes as long as necessary (forever...), markets get their heads up and tomorrow it will falter some percents due to ECB. EURUSD will then turn lower, target at 1.27-1.28 before going back to 1.30. I think $gs scriptbook has similarities with this scenery.
So, I guess "sell in May and go away" does not apply this year?