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How to play the POMO schedule?

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November 11, 2010 – Comments (4)

http://www.zerohedge.com/article/pomo-schedule-announced-105-billion-monetizations-through-december-9

 

I have been thinking about it for about 2 hours, and all i can come up with is "buy more gold"

 Are you guys trading around it?  The only 3-7 year ETF I can see is IEI, but that moves like a friggin slug. 

Also, I thought benny boy was only purchasing 3-10 years, but on the schedule in the link posted above, hes buying some with 30 year maturities.

Are you guys trading around this?

4 Comments – Post Your Own

#1) On November 11, 2010 at 3:06 PM, SockMarket (36.68) wrote:

well, if you aren't worried about any other factors you could buy a mid-long term treasury fund. There is pretty obviously more demand for them.

That would be my only guess though. 

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#2) On November 11, 2010 at 3:10 PM, goalie37 (91.47) wrote:

I don't trade with real life money, only in CAPS.  It's lucky for me too since my "trades" seem to get punished pretty severely.

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#3) On November 11, 2010 at 4:10 PM, rfaramir (29.41) wrote:

"Roadmap to Weimar" indeed.

While bonds and bond funds will be purchased, possibly raising their price, they will be hurt badly by the dollar debasement.

I'm completely out of bond funds at the moment, and short PIMCO Muni Income fund (PCQ) on CAPS, and doing nicely with it.

Long PMs and miners, short the UltraShorts of these: PMs, Basic Materials, and foreign indexes. The domestic stock indexes will likely balloon with the Fed's money, but will crash when the house of cards falls over.

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#4) On November 11, 2010 at 4:16 PM, davejh23 (< 20) wrote:

I know there's been a high correlation between POMO days and S&P gains, but the dollar was tanking throughout the entire first round.  What if the dollar continues to rise and it turns out that there is zero correlation between POMO days and market advances?  I'd watch the dollar closely here...if the market closes down over the next couple trading days (POMO days), I'd bet on a dollar rally / significant correction here...daily POMO schedule or not. 

Bernanke openly states that his goal is to lift equities (virtuous cycle, blah, blah, blah), everyone expects stocks to continue their climb here...even many very vocal bears...even while many companies are lowering forward guidance and FY11 S&P EPS estimates are being revised lower...  I'm still 100% long here, but this looks like a terrible set up...I'm being very cautious...

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