Fed POMO Stock Market Pump: Dave's Daily

POMO (link: Permanent Open Market Operations) were launched at 10:15 a.m. POMO currently is an action by the Fed to buy Treasury bonds from, in this case, their Primary Dealer network (dba: Da Boyz). In this case Da Boyz get cash and stocks immediately ramp higher. A mere coincidence? Only if you were born last night.

Further, per ZeroHedge, future operations like this will take place August 19, 24, 26 and September 1^st. So, lock up your shorts and stay out of the way.

By the way, the financial media probably has you believing today's little jam-job was all about great earnings news from retailers like WMT and HD plus a mixed bag of economic data--better Industrial Production but worse Housing Starts.

The bottom line the markets are in full financial engineering mode whether it's via the Fed or companies with high cash balances buying back shares. Granted companies are looking to expand via acquisitions and there's nothing wrong with that but how many companies are spending on R&D beyond mere gadgetry?

Retailers won't do great things until the housing issues are resolved and employment conditions improve. Until then they're just cutting costs and beating estimates without growing measurably.

Volume was once again ridiculously light given all the action (check-out the heavy selling into the close below) which just repeats the previous pattern. Breadth was quite positive.

SPY: We still have earnings to entertain us and more Fed POMO action with the next on Thursday. Hmmm, that's another Jobless Claims day. Another coincidence?

MDY & IWM: The most oversold sectors from last week rallied the most this week with Smallies leading the way.

QQQQ & AAPL: Tech's doing well overall this week but it seems to be struggling higher.

Continue to U.S. Sectors, Stocks & Bonds