Goldman Sachs Says "Front-Run the Fed POMO"

to make money in the stock market. Buy stocks before the Fed's open market operation, and sell into the rally induced by the operation. Rinse and repeat. Buy anything.

The market is in a suspense mode, going nowhere speculating and re-speculating the Federal Reserve's move. Today's sell-off came after the reverse-repo operation was done (that sucked out liquidity from the market). Everything depends on what the Fed does, what the Fed talking heads say.

What's the point of TA? Not much these days, other than to out-guess algo bots..

Here's from Zero Hedge today:

After a few months of breaking down what the simplest trade in the world is, that would be frontrunning the Fed for the cheap seats, Zero Hedge is happy to advise our readers that finally Goldman Sachs itself has capitulated and is now indirectly telling its clients to frontrun Ben Bernanke via POMO. No complicated value investor nonsense, no pair trades, no cap structure arbitrage, no hedging, no levered beta plays. Buy ahead of POMO. Sell. Rinse. Repeat.

On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%. in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%. the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market's performance on the 19 non-OMO days: +70bps.

And there you have it - the top in frontrunning the Federal Reserve is now in.

The most recent Fed POMO calendar is linked (there is one tomorrow). Frontrun away.

Oh, and Ben, your criminal organization will one day pay for making a complete manipulated travesty out of capital markets.

I do have one chart to show you. CORN. The bull flag may break out. But it all depends on the US dollar, which seems to be finding (or trying to find) a temporary bottom. I'm not in the stock, but thinking about it, looking at the USD. G20 this weekend, a currency war brewing.

Good luck trading. No matter what Ben and the inkjets do, it could all collapse in a very short time like October 2008, and a trigger in such a case is often political... Just saying...