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Fed Stock Market Capital Infusions On Options Expiration Weeks

Stock-Markets / Stock Markets 2010 Mar 23, 2010 - 03:15 AM GMT

By: Graham_Summers


Best Financial Markets Analysis ArticleOptions Expiration= Ramp Job

Well, it’s another options expiration week and that means, yes you guess it, ramp job time! Wall Street loves options expiration week because it’s that wonderful time of the month when they can move entire stock markets any which way they like just to make sure they shred the options traders and close out their own positions at a profit.

The latest addition to this scheme is the Fed’s liquidity pump. Ben Bernanke, for whatever reason, seems to like to make his biggest capital infusions to the market on options expiration week (these weeks are bolded below).Coincidence? Hard to say after nine STRAIGHT MONTHS. Nah, couldn’t be intentional. I’m probably being fooled by randomness.

Week Fed Action
March 17 +$25 billion
March 11 2010 +$2 billion
March 4 2010 -$5 billion
February 25 2010 +$8 billion
February 18 2010 +$21 billion
February 11 2010 +$7 billion
February 4 2010 +2 billion
January 28 2010 -$4 billion
January 21 2010 -$39 billion
January 14 2010 +$56 billion
January 7 2010 +$1 billion
December 31 2009 -$1 billion
December 28 2009 +$35 million
December 17 2009 +$49 billion
December 10 2009 -$17 billion
December 3 2009 -$2 billion
November 27 2009 -$2 billion
November 19 2009 +$73 billion
November 12 2009 -$30 billion
November 5 2009 +$3 billion
October 29 2009 -$39 billion
October 22 2009 +$8 billion
October 15 2009 +$54 billion
October 8 2009 -$3 billion
October 1 2009 -$17 billion
September 24 2009 +$18 billion
September 17 2009 +$51 billion
September 10 2009 +$4 billion
September 3 2009 +$8 billion
August 27 2009 +$14 billion
August 20 2009 +$46 billion
August 13 2009 +$25 billion
August 6 2009 -$11 billion
July 30 2009 -$38 billion
July 23 2009 -$33 billion
July 16 2009 +$80 billion

Greece Is/n’t Bailed Out

Elsewhere in the world Greece continues to de-fault/ get bailed out every five minutes. Greece officials have now gone from begging for a bailout to insulting Germany for crimes committed in WWII to telling the European Union they have one week to pay up or they’re (Europe) in serious trouble.

According to Psychology 101, there are five stages of Acceptance. They are: 
1. Denial and Isolation. 2. Anger. 3. Bargaining. 4. Depression. 5. Acceptance.  Greece, the cradle of Western civilization is now adding a sixth step to the list: threatening. I suppose we could classify this somewhere under Anger/ Bargaining.

However, Greece in a way is committing all five at the same time, trying to Deny any attempt to Isolate it from the European Union while Angry civilians riot, Politicians try to bargain, with other Union Members the Economy falls into a Depression that the US stock market refuses to accept as a real issue.

Speaking of which, US stocks have now entered what looks like a good old fashioned blow off top, rallying 14 days in a row and going virtually parabolic. The below chart comes courtesy of Afraid to Trade and shows just how exciting it is to buy stocks in the US:

If this were a chart of a company’s revenue streams, we’d be in a great bull market. Unfortunately, it’s not; it’s a chart of a blow off top in the stock market courtesy of investors who don’t realize that sovereign defaults don’t = the good times are back again. Indeed, on that note…

Results are Down… From the End of the World

Revenues are down year over year for many economic bell-weathers, DESPITE the fact that the world was “coming to an end” this time last year.  Karl Denninger shares the below data with us:

CAT reports retail sales of machines declined 20% y/y in Feb and sales of reciprocating & turbine engines to retail users & OEMs declined 33% y/y in Feb

Caterpillar is the world’s largest machine producer. Karl notes that back in February 2009, everyone thought the world was ending. The S&P 500 was plunging on its way down to 666, businesses were laying one million at a go, etc. So if the world was ending from an economic standpoint in early 2009… and revenues for Caterpillar are down from those levels… well the only logical conclusion to draw from this is that the US is in recovery.

Good Investing!

Graham Summers

PS. I’ve put together a FREE Special Report detailing THREE investments that will explode when stocks start to collapse again. I call it Financial Crisis “Round Two” Survival Kit. These investments will not only help to protect your portfolio from the coming carnage, they’ll can also show you enormous profits.

Swing by to pick up a FREE copy today!

Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets. 

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

    © 2010 Copyright Graham Summers - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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