The POMO or Permanent Open Market Operations or QE ( Quantitative Easing) Lite is funneling of virtually free money from the Fed to Wall St. Banks and potentially to a certain area inside State St. Securities. These entities then use this money to squeeze shorts and boost the market, very often by gapping it at the open of the US session.
the Fed has decided to wage a vendetta against shorts and the PDs' (Primary Dealers) who are given the money to trade are only to happy to oblige since the death of the derivative desks. What is interesting and is posted elsewhere in this blog is that in spite of the intense "squeeze" pressure, the Short Interest remains at an all time high for 2010. This leads me to believe that the traders are not buying the pumping crap that is going on, and this will ultimately result in a flash crash like phenomenon due to the short interest finally being validated and then exarcebated by the selling of the long positions.
Although there is no way to really push back against the people with the printing press in the short term, it will be their undoing in the intermediate and long term.
The signal of a reversal to this last shenanigan rally will be signaled by the AUD/USD and EUR/USD reversing.
These being the most recent carry trade pairs.
Looks like this is imminent as they are both curving over as I write this.
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