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Fed POMO May 2012

Options Trading — Tue, 01 May 2012 14:31:45 +0000

It’s that time of the month again – and the Fed POMO May 2012 schedule is out. Operation twist continues with a net ADD of treasury assets (net Fed balance sheet gain $2Billion). I know my regular readers will have heard this before but it’s always worth mentioning why it is important to pay attention to the Fed POMO movements. Bottom line: a pile of money moves in one direction, then another on the same day. The result is a market movement in asset prices designed to absorb (read: profit from) what amounts to forced transactions in the treasury market. My make300aday.com minnows swim around with the whales and pick off a few bucks here or there in anticipation of the scheduled activity. Fed POMO May 2012 Schedule Having gone through our discussion as to why we care about this, here are the highlights of the May 2012 Fed POMO schedule, along with the actual chart itself. Cash liquid days look to be May 2nd, 8th, 15th, 21st, 24th, and 31st - with stronger withdrawal (down) days on May 7th, 11th, 16th, 23rd, 30th. The Fed continues to make all efforts necessary to extend the duration of its balance sheet while maintaining the level [...]

Fed POMO April 2012

Options Trading — Mon, 02 Apr 2012 12:27:39 +0000

70+% Accurate with Daily ActionOnce again we present to you the Fed POMO April 2012 edition. Operation twist continues with a mild net-injection of liquidity into the system ($1 billion net). This current Fed POMO schedule will carry us through the month of April 2012. As per our usual motis operandi we look for opportunities to grab short term trading gains in the market as a result of this massive single event movements of currency into and out of circulation. Highlights of the Fed POMO April 2012 Schedule It appears to me the biggest days (as has been the case in the previous Operation Twist cycles) are the Fed selling days – which tend to be much more highly concentrated than the buying days. Speaking of which, the liquidity injection days which are most notable this time around are April 3rd, 5th, 11th , 13th, and 25th. On the selling side (liquidity reduction days) we see high activity almost every day scheduled, essentially April 12th, 17th, 23rd, and 30th. Expect Some Serious Volatility April 19th from the Fed POMO Activity Fans of either the buy side or the sell side will note that I failed to mention the large scheduled [...]

Day Trading Systems

Options Trading — Tue, 07 Feb 2012 15:11:32 +0000

Although some early day trading systems have lost their sheen since the beginning of the millenium other platforms and methods have sprung up in their place. New platforms designed with the ultimate short term trader in mind exist today based on the industry desire to satisfy clients with a desire for high liquidity and volume. Here we look at how three day trading systems work for today’s high turnover investors. Forex Trading Systems Among the biggest movers in the financial industry after the first explosion of day trading systems, forex trading continues to be popular. The expansion of retail trading platforms has made currency trading available to effectively anyone who wishes to give it a try, and many people have. The strengths of working the forex market include the high leverage available and wide variety of automated trading programs to use – including self designed expert advisor / automated trading systems. The downside is the high volatility and danger of margin calls made against highly leveraged positions. Further – leaders in “high interest rate income” currencies such Brazil’s real (amongst others) have grown wise to the impact of international forex investment in their currencies and the damage it can do [...]

Fed POMO Schedule December 2011

Options Trading — Wed, 07 Dec 2011 16:12:37 +0000

Well here we are – last month of the year and the Fed POMO Schedule for December 2011 is here. It’s been a remarkable year for the Fed with literally trillions of Treasury debt on their books. Today’s release includes (as anticipated) an additional $8 billion in asset sales tacked on from the POMO operation which was canceled near the end of the November 2011 POMO schedule. This round of POMO operations is the next installment of Operation Twist – a combination of buying longer dated Treasuries and selling off shorter dated Treasuries from the Fed’s portfolio accumulated in earlier rounds of Quantitative Easing. As we look at this round of Operation Twist, we see the major purchases / cash injections occuring on / settling on December 6th ,16th, 19th, and 23rd with large sales / cash reductions settling December 5th, 9th, 15th, 22nd,and 29th. Be very wary of trading activity on December 22nd. The Fed has scheduled two $8 billion cash reductions that day – the largest draw-down I can recall in a single day. I imagine there will be some significant cash-raising activity at the Primary Dealers in order to fund those Treasury purchases (Fed asset sales). (Source: Federal Reserve) Across all operations [...]

Fed POMO Canceled and Fed Intervention for ECB

Options Trading — Wed, 30 Nov 2011 17:33:18 +0000

So in an unprecedented move, the Fed canceled its sale of paper scheduled today via POMO operation twist. In and of itself that is a big deal but the even bigger news event has been the opening and use of swap lines between the Fed and Eurozone banks. The POMO sale was scheduled to pull $8billion of currency out of circulation in exchange for short term treasuries put back into the system. That alone would be a significant event (+8billion dollars needing a short term home is as large as any single day POMO day I can recall) however the opening of the swap lines appears to have released a floodgate of dollar liquidity into the market. It appears this has greased more than a few stuck wheels in Europe – as evidenced by the previous notation that futures markets were predicting a dollar squeeze. Short Term Dollar Liquidity Crunch May Be Over Near Term In the near term the swap lines will likely keep dollar funding pressures contained while the lines remain open however there is nothing to suggest that the pressure will cease. The over-indebted periphery nations solvency issues have clearly resulted in contagion spreading to core nation [...]

Forex Day Trading Signal Service Sees a Market Drop

Options Trading — Wed, 23 Nov 2011 21:12:12 +0000

So it was all of 5 days ago a forex day trading signal service I use foresaw a number of forces aligning to predict a strengthening USD and as a result falling stock prices. Here we are all of 5 days later and the DJIA is sitting nearly 600 points lower. I am a happy man this afternoon. What Was Evident 5 Days Ago That Brought About a Stock Market Drop? I don’t honestly have access to the internal workings of the machine that produces the forex day trading signal market calls but suffice to say I read the signals and drew my own conclusions from them. I had initially warded off US residents from subscribing to the service given it is designed for a particular type of trading not allowed in the US but the SIGNALS themselves (not necessarily the trading platform itself) have already proven themselves incredibly valuable to those versed in markets and day trading. What the signals called for were for effectively long positions on the USD against a couple of key currencies in addition to a couple of calls in the futures markets which led me to conclude that the forex day trading signal service [...]

Stock Market Rally Fading into the European Summit?

Options Trading — Fri, 21 Oct 2011 17:44:59 +0000

So is today's stock market rally fading into the European Summit this weekend? It sure looks that way to me. I'm watching the forex markets all day (kind of a habit... like breathing) and seeing a nice robust risk on pattern pretty much all morning - with a sprinkle of CHF risk off mixed in for good measure. Result: Dow Jones up nearly 200 points shortly after lunch.

Fed POMO Schedule October 2011

Options Trading — Wed, 12 Oct 2011 18:58:15 +0000

In case you missed it here is the Fed POMO schedule for October 2011. Operation Twist – as it has been named in the media – has been quietly changing the consistency of the Fed’s balance sheet toward longer dated securities. The size of the overall operation is expected to be about $400billion and this first installment represents a little over 10% of that figure, or $44billion. Purchases are noted on the top of the chart with correspondent sales at the bottom of the table. For what it’s worth we’re looking at the 14th, 17th, 20th, 24th and 26th as the dates with the heaviest activity. Expecting melt-ups on those days once the funds have moved through the forex markets. (Source: Federal Reserve Bank of New York) Across all operations in the schedule listed below, the Desk plans to purchase approximately $44 billion and sell approximately $44 billion in Treasury securities over the month of October. purchase operations Operation Date1 Settlement Date Operation Type Maturity Range Expected Purchase Size October 3, 2011 October 4, 2011 Outright Treasury Coupon Purchases 02/15/2036 – 08/15/2041 $2.25 – $2.75 billion October 4, 2011 October 5, 2011 Outright Treasury Coupon Purchases 11/15/2019 – 08/15/2021 $4.25 – [...]

Export Economy Economics: Boy Are They Dumb

Options Trading — Tue, 13 Sep 2011 18:44:44 +0000

Anyone who has followed export economy economics for a long time understands the basics: separate nations engage in trade of goods and services in exchange for money. Seems straight-forward enough doesn’t it? I’m sure you’ve noticed that the United States has run a trade deficit for (effectively all of my adult life), well, forever. Ever wonder what the implications of that continued trade deficit are? Modern Monetary Theory Meets Export Economy Economics Lately I was introduced to Modern Monetary Theory. Each day I have spent thinking about the meaning and implications of MMT with regard to my old understanding of forex markets, day trading, and how to make money trading stocks. I am pleased to say that having a decent grasp on Modern Monetary Theory has greatly clarified my understand of economics as observed in the real world today as opposed to the mysticism we are taught in Econ 101 in college (admittedly college was a long time ago for me however I have never stopped learning). Real Guys and Dumb Guys in a Two State Economic System The implications are clear: net export economy participants are either dumb, exploited, or (more often than not) both. How can this be? [...]

Pricing in QE3

Options Trading — Tue, 30 Aug 2011 16:30:37 +0000

This is a short post on the pricing in of QE3 by the market. If you think I’ve been too quiet of late, you probably haven’t been following me on twitter. Twitter is a faster way to get messages and commentary out, so I have been tweeting what I’ve been seeing in stock and forex markets. While Fed Chairman’s Jackson Hole speech failed to produce an explicit committment to a further round of Quantitative Easing, it’s pretty clear from reading between the lines that “arms will be twisted” at the September meeting to approve another round, QE3, to keep the asset / treasury bubble inflated for another 6-9 months. What the Fed Statement Was Meant to Do The Fed’s Jackson Hole speech was designed to provide investors further reason to believe that the Fed intended to step in with further easing policies over and above what has already been done. How else to explain the dramatic drop initially with the statement but UP close on the day for the major indexes. We’ve also seen a steady upward rise since. Further, we’re seeing the market go from slightly red to green this afternoon, despite a dramatic fall in consumer confidence. Still [...]