Surprised that equities have been rallying since the beginning of this year? I'm actually not. It is surprising, however, how strong the FED's "Permanent Open Market Operations" (POMO) have been correlated to equity performance in recent years.
Rob Hanna of Quantifiable
Edges posts related charts in his newsletter (which I'm subscribed to)
and they are eye-opening. The following chart is taken from the public
section of his blog and gives you an idea of what
I'm talking about:
Not surprisingly, we have
seen extremely strong POMO activity during the last six weeks. The POMO pump is
maybe the strongest reason, why I still trade from the long side. I tried an
index short yesterday (TZA), but quickly closed this one with a small loss.