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ES and the Great POMO Rally
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ES and the Great POMO Rally

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ES and the Great POMO Rally

Liking the sub-forums idea. Just a quick observation of the ES and it's striking similarities to the most recent April high.

We have traded within a channel/rising wedge pattern for quite some time now. Interesting that the only significant up days happen to coincide with the Fed's POMO days. The volume during this rally is very suspect and greatly resembles the volume from April as well. The only high volume days are ones in which selling has occurred somewhere throughout the day. Could this be another classic pump and dump?

In any event, the best way to approach a market like this is to remain unbiased. Today was the first day in a while where we actually had selling on a POMO. Many traders were waiting for the usual ramp but it never came along until this afternoon when the market bounced off of it's supporting trendline. It's best to just follow your rules and the trend. The big picture will play out regardless.

Best of luck.

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When in doubt...buy strangles. You gotta like vol at these levels. Personally, I've been buying out of the money puts. You can call it a de facto lotto ticket, or a tail risk hedge, or just plain taking a shot, but I've caught some big moves this way before, including being long bond calls when LTCM blew up and a nice summer bean rally.

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tigertrader View Post
When in doubt...buy strangles. You gotta like vol at these levels. Personally, I've been buying out of the money puts. You can call it a de facto lotto ticket, or a tail risk hedge, or just plain taking a shot, but I've caught some big moves this way before, including being long bond calls when LTCM blew up and a nice summer bean rally.

Good call! I like it. There will be a very interesting outcome over the next few months. I guess you could say it will be exciting. Limit up in grains every few days, gold blowing though the roof, bonds rallying and stocks are tagging along? It's like a game of musical chairs... Who will be left standing?

Cheers!

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Some further observations of today's market action including NQ and TF. It appears that ES has once again bounced off of it's supporting trendline. We could have a diamond top pattern in place. By looking at TF, it appears to be showing signs of a possible rollover by technically falling out of it's rising wedge. The NQ appears to getting tighter and tighter in it's respective wedge as well. Could next week be a sell on the news?

It's starting to get interesting...

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POMO does not stand for Pomegranate

Thank you, PrivateBanker!

Great to see someone mentioning the POMO draft that is moving the markets. For those interested in learning more about this, there have been lots of articles on ZeroHedge.

A greatly oversimplified explanation of Permanent Open Market Operations is that the Fed buys Treasuries, flooding the Primary Dealers with money that they use to buy everything they can get their hands on.

In other words, the FED is using the PD's to pump the markets.

Repeat after me: the Plunge Protection Team does not exist......

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Zondor View Post
Thank you, PrivateBanker!

Great to see someone mentioning the POMO draft that is moving the markets. For those interested in learning more about this, there have been lots of articles on ZeroHedge.

A greatly oversimplified explanation of Permanent Open Market Operations is that the Fed buys Treasuries, flooding the Primary Dealers with money that they use to buy everything they can get their hands on.

In other words, the FED is using the PD's to pump the markets.

Repeat after me: the Plunge Protection Team does not exist......

Thanks! I feel POMO has been painting the tape for the last few months and is trying it's absolute best to get retail investors to buy and hold stocks. I love Zerohedge and read it everyday. It's like the only real source of news out there now.

Next Wednesday could be an interesting day. In fact, there are a lot of crucial economic reports coming out next week in addition to the Fed. I started this thread mainly because I'm getting that same gut feeling I got in April. Got to trade with the trend of course but this is getting very interesting...

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The only thing that's got me worried is that everybody and their brother is looking for the same thing we are. I would feel much better, and would be a lot less circumspect, if the sentiment was a lot more bullish. Even Bill Gross wrote a bearish article.

Below is the link to the Bill Gross article. It's not one of his best articles, but is compelling nevertheless, not because of the content of the article, but because of the implication of why he wrote the article. Gross, the penultimate establishment insider appears to be hedging himself in front of QE2 ( s/b Titanic2). While the article tells me that things may be far worse than I had imagined, it is still a glaring example of another player positioned the same way we are.

PIMCO | Investment Outlook - Run Turkey, Run


Last edited by tigertrader; October 29th, 2010 at 06:08 PM.
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The PDs are the PPT or Working Group for Financial Markets, or at least their instrument thereof...always have been! The only difference between how they did it in the past compared to how they do it in the present, is the Fed is transparent with what they are doing now. They always manipulated the markets, but they executed surreptitiously when doing it in the past.

The PD's purchases have been concentrated on, but probably not limited to, index ETFs and high beta(4-6X) naz stocks. AAPL, AMZN, NFLX etc.


Last edited by tigertrader; October 29th, 2010 at 03:09 PM.
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ForeclosureGate and Bank Control Fraud; The Elephant in the room

The amount of outright fraud and criminal conduct that is being covered up and facilitated by the Federal Government is huge and unprecedented. This has dire implications for the future of the United States.

Who IS paying the price? Just open your eyes and look around, or in the mirror:
http://market-ticker.org/akcs-www?post=170176

A little off topic but today Karl Denninger is calling for a bank holiday as a prelude to unwinding the hangover from the trillions of dollars of bank "control fraud" strangling the economy.

Let's Talk About A Bank Holiday in [Market-Ticker]


The Inspector General of the TARP Program is not at all pleased with what he has been finding:
http://market-ticker.org/akcs-www?blog=Market-Ticker&page=7

The amount of fraud over the last few years is a hundred or more times that of the S and L crisis, yet nobody is being prosecuted. William K. Black was one of the key people in the resolution of the S and L crisis. His thoughts on the current situation are well worth following. From Wikipedia: Black is currently an Associate Professor of Economics and Law at the
University of Missouri-Kansas City School of Law. He was the Executive Director of the Institute for Fraud Prevention from 2005-2007 and previously taught at the LBJ School of Public Affairs at the University of Texas, and at Santa Clara University. Black was litigation director for the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and the General Counsel of the Federal Home Loan Bank of San Francisco.[2]

Here's what Black says should be done:
William K. Black: Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership
William K. Black: Foreclose on the Foreclosure Fraudsters, Part 2: Spurious Arguments Against Holding the Fraudsters Accountable
http://market-ticker.org/akcs-www?post=170581
http://market-ticker.org/akcs-www?post=170265

Note that the Tea Party, originally conceived of as a response to this outrage, has been taken over by the banksters themselves through covert funding from such operators as the Koch brothers. http://theweek.com/article/index/206405/the-billionaire-koch-brothers-tea-party-puppetmasters

The Tea Party message is now based on outright lunatic yahooism rather than any pretense of economic reform. Karl Denninger, one of the founders, has renounced what it has turned into.
http://market-ticker.org/akcs-www?post=170167



Last edited by Zondor; October 29th, 2010 at 06:50 PM.
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Seriously....William Black for President!

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