Zero Hedge has a guest post highlighting the apparent relation between Federal Reserve purchases of Treasuries from the banks and immediately subsequent rises in the stock market. Quoting from the piece:

The theory for which we have the greatest supporting evidence of manipulation surrounds the fact that the Federal Reserve Bank of New York (FRNY) began conducting permanent open market operations (POMO) on March 25, 2009 and has conducted 42 to date. Thanks to Thanassis Stathopoulos and Billy O’Nair for alerting us to the POMO Effect discovery and the development of associated trading edges. These auctions are conducted from about 10:30 am to 11:00 am on pre-announced days. In such auctions, the FRNY permanently purchases Treasury securities from selected dealers, with the total purchase amount for a day ranging from about $1.5 B to $7.5 B. These days are highly correlated with strong paint-the-tape closes, with the theory being that the large institutions that receive the capital injections are able to leverage this money by 100 to 500 times and then use it to ramp equities.

This morning, the Evil Speculator shows a chart which pretty well documents this correlation.  See for yourself (click the image for a larger view):

There are two more POMO’s set for today and tomorrow…watch for the ramps.  If we don’t get a ramp this afternoon, it may indicate that the powers that be will “allow” a decline in equities. From the ZH piece:

Equities have had more than a nice run and can suffer a bit of a correction. Key will be watching the close on Wednesday. A failed POMO paint the tape close could signal that an equities correction of at least a few weeks has gotten underway.