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The Simple Accountant
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Harry Fotopoulos, "the Simple Accountant" is a twenty+ year veteran of corporate accounting and finance, much of it in manufacturing, but also including a stint with a tech startup. Harry manages two separate portfolios, one focused on current income, the other on total return. A... More
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  • The Market Is Indecisive Heading Into Earnings

    With apologies to readers, as I simply didn't find the time this weekend to write up the fully weekly analysis, I'd like to offer an abbreviated market outlook as we head into earnings season this week.

    First, my regular intermarket analysis picked up on some unusual correlations across assets. We saw Treasury yields move up - with oil, gold and the U.S. dollar all down. That counts as unusual in my book. In stocks, we saw what looks like ongoing distribution.

    Greg Schnell at stockcharts.com has a post on this that is worth reading, with the usual accompaniment of informative charts. My own take is not as cautious as his; I still see a reasonably good 4th quarter ahead unless earnings are a big disappointments - and remember, expectations have been lowered.

    (click to enlarge)

    (click to enlarge)

    The second area I would like to bring to the reader's attention is Chinese equities. The Shanghai exchange was closed last week for a national holiday. My articles have frequently mentioned on the Shanghai Composite as one of the weakest of the major global equity indexes. Ahead of the holiday we began to see signs of life. I will be keeping an eye on the action in Shanghai coming out of the holiday. A market recovery there will be a positive sign for global markets.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SPY, FXI
    Oct 08 9:13 AM | Link | Comment!
  • Technical Note: Did We Just See A Reversal?

    Yesterday's market action (Aug 21st) had the look of a reversal day. After a flat Monday, the SPX went to a new high, promptly turned down, and closed below the open of the last up day (Friday). The VIX popped 7% and volume, while still on the light side, was heavier than the two previous sessions.

    Over in the bond market, the ten year note yield touched the 200 day MA again, and turned back down. The long bond yield pushed through the 200 day during the session, and also closed down. The dollar broke recent support and closed below 82 on the index. Gold gained 1% to close at its best level in more than three months.

    I have been looking for a pullback in equities to get on board, so that was not at all unexpected, but the one day reversal in asset correlations was. It's early yet, but bears watching. In the current market cycle, it's not often we see equities and the dollar move in the same direction, or T-bond yields and gold move in opposite directions. Probably a short term hiccup, but we'll see what happens over time.

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Aug 22 8:47 AM | Link | Comment!
  • Premarket Musings, 6-11-2012

    Over the weekend I tried to write my weekly analysis, a couple of different times, but it just wasn't happening. Sometimes writing is like that. So I worked on the car some, tinkered with electronic gadgets, mowed the lawn, spent a day out and about with Mrs. Simple Accountant.

    That's not to say I wasn't looking at the markets and the economic news and data. Here are some thoughts ahead of the Monday morning open:

    The bounce last week was encouraging, but I am remaining cautious. Asian markets rallied in Monday trading and European and UK markets are up as I write. Futures in the U.S. are pointing higher. Not saying I think the bounce is a sucker's rally, just that it's too early to go long.

    In last weekend's article I wrote that we are likely to see a choppy summer market, lots of whipsaw action. That's a fine environment for traders but we tend to take longer positions and I think there are lower entry points ahead.

    Bond yields backed up - that was one of the more predictable moves we've seen in a while, but the 10 year note saw resistance at 1.7%, which was a bottom/support back in Q4 of 2011. Super low Treasury yields look like they will be with us for quite a while. That doesn't say good things about prospects for the economy.

    The Spanish bailout was announced over the weekend, and was also predictable in two regards: that it happened at all, and that it was completely inadequate relative to the size of the problem. It's so obviously inadequate that one has to wonder whether there is some other agenda. As I write, Spanish and Italian yields are running up.

    Commodities look like they are putting in a short term bottom. Whether it proves to be a longer term bottom remains to be seen, but there is a lot of technical damage here. Buying at this point is quite speculative.

    The euro is seeing a little bit of a bounce of its own. I would fade any rally. We could see the dollar index come back to test 81.5 or even 80.5, but again, longer term I think the dollar goes higher - much higher.

    To summarize: with the dollar pulling back and risk assets rallying, there could be some good short term trades (there's always a trade somewhere), but the larger market environment remains unsettled. Long term investors are better served by taking a patient approach.

    Good luck to everyone!

    Harry

    Jun 11 8:14 AM | Link | Comment!
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