Saturday, February 18, 2012

Musings on Fed QE/POMO stimulus, Armstrong timing, & stock market effects

Folks, while reading up on Martin Armstrong's writings at recently, I learned that mid-2011 was a turn date in his Economic Confidence Model. I'm not equipped to predict the market's future based on that alone. Nor would I say I'm really a believer in that - just interested to see what he's saying occasionally. But it reminded me of his timing based on the number 8.6 and its derivatives. I noticed that 17 months from the 2008/2009 market lows was the length of rise associated with the Fed's first Quantitative Easing (QE) - or, 8.6 times two. Later, QE 2 provided lift for about 8.6 months.

Operation Twist is a "POMO" discussed in this week's free chart analysis by Tom McClellan at Given that 4.3 months (half of 8.6) from October 4, 2011 lands somewhere about now - mid-February - it'll be interesting to see how the market behaves from here. Well - I won't speculate too much on that right now. But at least, here's a quote from McClellan's article, which my readers should find interesting:

small chart

February 17, 2012

Fed Sloshing The Liquidity Pool

The Fed's Permanent Open Market Operations (POMOs) have a bigger effect on pushing stock prices up and down than most people would like to believe. The financial media like to convince us that what moves the market up and down are earnings news, employment reports, or concerns about Greek debt. But this week's charts reveal that the Fed's thumb on the scale has a big effect. The New York Federal Reserve Bank is the agency conducting these POMOs on behalf of the Federal Reserve, and the NY Fed kindly publishes a lot of data about them. They even give us a… more

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