POMO, EFSF News Causes Stock Surge

The Fed began POMO again today which helped the markets to stay afloat early in the session. Lighter volume this morning meant that banks did not have to use much if any of the Fed’s money to buy the market. However this afternoon the market surged on 8x average volume after news that the EFSF would be expanded. Upon actually reading the article, the fund would not be expanded and instead turned into a bond insurance plan for the first 20% of losses. The news is nonsense and is a cover for the fact the $2.75 billion was injected into the stock market. Volume on the SPY for the 3pm timeframe was around 18 million – a total of $2.178 billion dollars.

EDIT: AAPL misses earnings for the first time since 2004. Maybe another reason why the HF’s pushed the market higher this afternoon.. the backlash looks a lot less severe when the market closes at the highs.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

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