POMO Ends Today. Or Not.

Found this on Zero Hedge Friday afternoon. It will be very interesting to see how the markets behave after this morning when the last Fed POMO operation is scheduled to take place under QE3 (11:00 am).

Source: Zero Hedge

There will be no press conference after this week's FOMC meeting concludes Wednesday, nor will there be a Q&A after Yellen speaks in Washington the next day, so it seems, for this week at least, that Fed intends for the market to fend to itself.

After that, who knows. I could totally see these desperate clowns adding more fuel to the fire, so by no means do I see today as the last batch ever. Especially when money velocity still looks like this after five years of stimulus.

So after five rounds of POMO in seven trading sessions, Friday still closed just below the 50dma without ever reaching it. Futures have reversed sharply from their overnight highs, and Europe appears to be making impulsive declines thus far today. There is a large gap at 1904.01 which coincides with the 200dma at roughly 1908. These levels have potential.

So does 1970.36 above.

I did see a wave count this weekend which showed the decline as either a completed wave 1 impulse or wave a. Either count could see 1970.36 exceeded before another correction. If it indeed made a wave 1 low, there could be something resembling a mini crash between right now and a few weeks from now. Best to tread carefully and take it step by step until the next high odds pattern presents itself.

Oh, and because former guerrilla and enthusiastic Amazon dam builder Dilma Rousseff won re-election in Brazil, Petrobras is down 17% this morning which means my position is down 24%. Good thing this is a very long term hedge on the price of oil.

If PBR cracks $10.20 I would eventually add more, but only when the volume calms down. On a weekly basis, it would need less than 145 million shares otherwise I will give it time. Plenty of it.

However, the high volume coming out of it could also suggest something far worse: nationalization. Too soon to tell though. Rousseff was Minister Of Energy under previous president Luiz Inácio Lula da Silva and was praised for her dialogue with the private sector as well as her practicality, including expanding the free market in Brazilian energy. So PBR's future is still up in the air for now.