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Alpha Prophets is a financial advisory/newsletter service founded by Robert Hammer in late-2007. The company specializes in an "outside the box" approach to portfolio management, quantitative methods, and macroeconomic research. Alpha Prophets articles focus on the global macro trends... More
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Alpha Prophets
  • Morning Stock Market Update - 12/28/2011 0 comments
    Dec 28, 2011 11:19 AM | about stocks: SPY, EWI, DIA, QQQ, FXE, UUP

    The S&P 500 is down this morning about 9 points as I write this (about -0.75%).  CNBCs big news is that most people (6 in 10) do not use their gift cards.  Big news right?  Anyway, one thing to remember this year is that GAAP accounting rules do not allow gift cards to be booked as revenue until they are redeemed.  This is even though the company has already received cash for the card, increasing cash flow.  Now, if you are a smart investor and make you decisions based off of free cash flow calculations the gift card "conumdrum" should not change anything for you.  However, if you are one of those people who base your investing decisions off of the net income reported on a make shift Yahoo Finance income statement then this does affect your decisions.  

    In other news, Italy had a surprisingly good 9 billion Euro auction of 179 day bills.  The previous auction of 6-month bills on November 25th pulled 6.504% vs this auction that sold the bills at 3.251%.  The drop in yield of over 300 basis points makes this auction a success.  I'm most certaintly not saying that the Euro crisis is over.  In fact, today the Euro has hit the lowest point since early January 2011, nearly a year ago.  What does this mean for the stock market?  In my opinion the optimistic Italian auction and the severely stretched Euro are good news for the stock market.  Here is my chart of the S&P 500 that I update daily.

    S&P 500 Daily Update

    As you can see in the chart we are currently at resistance.  However, the volume pattern is encouraging, the trend remains up (higher highs and higher lows), and the Euro is set for at least a dead cat bounce (sending dollar down).  Since the market generally rises when the dollar falls this should be enough to push the S&P 500 through 1280 resistance and clear the way to 1300 on the S&P where it will find resistance once again.

    Have a good day and good trading!

    Brant Hammer


    Investing quote of the day:

    "Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected."

    -George Soros

    Themes: Market Outlook, Macro View, Economy, Trading, Investing Stocks: SPY, EWI, DIA, QQQ, FXE, UUP
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  • $IWM moving above important resistance from 2011 topping pattern... but today's candlestick is pretty bearish. Spinning top I think?
    Jan 19, 2012
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  • Check out my new article on Private Equity, "Has the Economy Bottomed?" * http://seekingalpha.com/a/6sev * #economy #trading #investing $PSP $BLK
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