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Strategies & Market Trends : Ask DrBob -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (92394)	1/6/2006 11:38:33 AM
From: bcrafty	Respond to of 100058

Nice work Lee, and I think that your "theory that we have to add in the POMOs to give an accurate picture of total liquidity" is accurate. Nevertheless, speaking about repos only, if one looks for example on your first chart one sees the 5 period ma of the repo float starting to decline around 5/14/05 but the SPX doesn't begin to decline until 6/17/05. In that respect looking at fed repos seems to not be too useful an indicator to the trader who is looking at fed repo data and saying to himself "how can I use this data to help me with buy/sell decisions today (or this week)?" If one is watching (after a market decline) to see the fed "suddenly fire off 30 billion within a day or two and then push another 10 billion a day in until they get to 40-50 billion" then that data might provide a useful backdrop for a short to intermediate term rally, but looking at fed market repos standing alone I'd have to agree with Cush's sentiment when he concluded "I agree it has been interesting to watch, and often I felt it showed the Fed's intention* with regard to market support. I just can't see how to utilize it in my trades."*