Didn't Quantitative Easing End in March?
by: Graham Summers July 14, 2010
seekingalpha.com
Well, it’s options expiration week again and as usual Wall Street is gunning the market for all it’s worth. The bulls are falling for this shenanigan yet again, just as they did in June.
How’d that work out?
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Tracking options week manipulations isn’t easy because there are no strict rules: the action all depends on where the market is and the number of outstanding contracts at given price points.
For instance, back in April investor bullishness was at extremes. Consequently, Wall Street ramped stocks first upwards (the usual predilection) to shank the puts… only to swiftly reverse the action in the middle of the week to shake out the calls.
This whole system occurs courtesy of the Federal Reserve which openly and blatantly pumps the market on options expiration week. I’ve shown the below chart before. It’s staggering that no one in Congress or any of the regulators actually bother following up on this. How much more obvious does Bernanke need to get?
Options expiration weeks in bold
Week
Fed Action
July 8 2010
+$1 billion
July 1 2010
-$13 billion
June 24 2010
+$175 million
June 17 2010
+$12 billion
June 10 2010
-$4 billion
June 3 2010
+$2 billion
May 27 2010
-$16 billion
May 20 2010
+$14 billion
May 13 2010
+$10 billion
May 6 2010
-$4 billion
April 29 2010
-$1 billion
April 15 2010
+$31 billion
April 8 2010
+$420 million
April 1 2010
-$6 billion
March 25 2010
+$5 billion
March 17 2010
+$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
Notice that on non-expiration weeks the Fed either pumps the system slightly or, more commonly, removes money.
However, once options expiration week hits, it’s PUMP time.
To whit, the Fed has NOT had a single options expiration week in which it HASN’T pumped the market in nearly one year.
Moreover, note that despite the Fed’s Quantitative Easing Program ending in March, the Fed continues to pump $10+ billion into the system EVERY month when options expiration week rolls around.
Didn’t Bernanke say he wouldn’t continue buying assets from Wall Street after QE ended? More importantly, didn’t QE end? Why is the Fed still pumping money into this system?
And finally… how many times does this have to happen before someone in power actually notices it? Seriously, we’re talking about the Fed going 12 for 12 in the last year. And it’s not like the pump jobs are even subtle: they’re DRAMATICALLY larger that any other capital infusions the Fed makes during non-options expiration weeks.
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