Faltering Friday – Will Oil Drag the Markets Down in August?

Will the last short seller please turn out the lights?

According to S3 Analytics, Bets against the SPDR S&P 500 (SPY), the largest ETF tracking the broad index, fell to $38.9Bn last week, the lowest level of short interest since May, 2013.  The same thing is going on in hedge funds as we're well below 2013 levels in short funds – people have simply given up on the idea that this market is going to go down – and that's probably the best time to short it!  

In our Portfolio Reviews this week, we have been pressing our hedges by using about 1/4 of the money we have made on our longs, simply trying to lock in our gains as we certainly don't expect the market to make 4-7% every month – that would be silly, right?  These days, you have to wonder as the S&P is up 25% from the mid-point (not the lows) of 2015 and early 2016 (2,000) yet, as I noted in yesterday's Live Trading Webinar (Members Only, but you can see the replay here) the earnings of the components of the S&P are not matching those gains at all:

Apple (AAPL) is the top component of the S&P.  With an almost $800Bn market cap, it makes up 3.7% of the index.  In 2015 they had $233Bn in sales and made $53Bn, last year they had $215Bn in sales and made $45Bn and this year they are looking for $220Bn in sales and $46Bn in profit yet AAPL is trading 60 points higher (66.6%) than it was at the beginning of last year (after 2015 earnings were reported).  What has AAPL actually done to justify a 66% gain?  Mostly, it was drastically undervalued but, other than that – it has added no profits to the overall S&P.  In fact, it has subtracted them!  

AAPL is also the largest Dow component and $1 in share price is 8.5 Dow points (yes, it's an idiotic system).  So AAPL alone is responsible for 510 points (12.5%) out of the Dow's 4,100 point run from 17,500 (23%).  Now I love AAPL, it was our Stock of the Year in 2013, 2014 and 2015 (this year it is WPM), so I'm fine with their value now, it was…
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  • USO, QQQ- Phil, thanks for these plays. Out of USO for about 65% gain today and just keeping 1/4 QQQ.

    Ksone88

  • Phil & Ephmen85: I hadn't thought about selling the covered calls. That should be the easiest strategy for me since I'm a beginner. Thanks a bunch!

    JWick1981

  • It is amazing how much confidence you engender, Phil………..I knew the 1% a day trades and repeated often were possible as I had done in stretches, and I knew kill zone trades were also possible and 5% to 10% returns per month were very possible with practice, experience and smart risk management all without having to take a lot of risk, but I guess I was talking to the disbelievers and since I have dropped them into my 'why bother to try to explain it' file and come over to the dark side at PSW I feel soooo much more content not only with the returns, but with the company and a comments and the obvious opportunity to learn and learn and learn some more. It all helps the mental and emotional discipline of the trading too. So thanks again.

    Roro

  • Phil, I'm up 34x what I paid in fees for your service, and that only counts the trades I didn't think of myself. Thanks!

    Barfinger

  • Phil/CLK4 – Perfect! Saw the answer 1 min after my post…out with $740 on two contracts. Thanks again for the education.

    Jeffdoc2004

  • Phil/BCS - Didn't realise they traded here. Should've known really. Thanks for the tip. managed to pick some up just before the close at a 15% discount to the UK closing price.

    DB

  • I took $2 (up 133%) and ran on those USO puts, quite a bit more than the 20 you played in the $25KP. Thank you once again for turning a bad market week into a great personal week. You will be happy to know I am back to cashy and cautious with a few of your favorite longs into the weekend. Thanks to Phil, JRW and all the members who share their knowledge here.

    Dennis

  • It was a nice day thanks to your help! Made over $1100 shorting TF every time it came up near 1260 and even more by going long oil before inventory under $46 and then waited patiently for the spike up into the close where I shorted it at 47.70 or so. Phil you gave me a road map and I simply followed the signs along the way.

    Craigsa620

  • I must give kudos to Phil for changing my way of thinking. I'm a gambler by nature and used to just play the indexes with 3x etf's… well I still do, but the options give far better returns than I ever dreamed of. With these wild swings I've been catching 50-100% winners in days.

    Mkucstars1

  • GLD I took out my callers and rolled down my longs this morning, woo hoo!

    Ephmen85

  • CZR – well that was fun! Opened the play yesterday. As the arb premium was now almost all gone from the box spread today, I just decided to close it. The rundown, after all commissions: my net was $183.51 profit for an overnight trade tying up $2000 margin in an IRA account. That's a 9% overnight return (3200% annualized!) …And all that learning, too! Thanks PSW!

    Scottmi

  • Thanks to your teaching and guidance, I was able to make a killing on my /TF shorts. I averaged into 12 shorts at 1252 and got out of 6 at 1242 and 6 more at 1235. Last week I did the same with /CL, though I got out too early and left $2 on the table. Thank you!

    Japarikh

  • Brilliant covering of the arcane, the profane , but never the mundane! Easy to understand the reason for your huge following, Phil, and why you have become a must read on my daily agenda. Please accept my complete appreciation.

    Seeking Truth

  • Hello Phil, Thanks for the heads up on the comming sell off on friday, and the bs job yesterday. your our guiding light!

    Microflux

  • Phil fantastic call on the markets… I owe you BIG…thanks and have a great weekend!

    Kustomz

  • WOW!!!!!!!!!!!! How will I ever do anything else in my life that will compare to the wild ride you get trading an ultra etf in the most volatile sector in the stock market the day before option expiration?

    Matt1966

  • Phil – I wanted to tell you how much of a privilege it is to learn from your every day. You are a shining beacon in the life of so many investors. You have assembled probably the best group of people in the history of financial blogging and you, yourself have done more to help investors in the last 6 months than all previous financial advisors combined.

    StJeanLuc

  • Well I want to thank P. Davis for his style and for the fact that he affirmed my thoughts for a correction. He was right and his confirmation of my bias saved me thousands. Mr. Davis is amoral when it comes to money. He realizes the poor are screwed but we must fight to win. A measure of sarcasm and dark humour and it is great reading. 100% right on the correction.

    Chaffey

  • 1,000% on SKF - It was a freakin' monster into the center field bleachers! I saw it play out live and squawked it from the StockTwits ID which 14k people follow: Home run trade of the week @philstockworld just knocked cover off ball w $SKF puts. http://bit.ly/piBL Great trade bud!

    Phil Pearlman - StockTwits

  • Have been a member for about 6 months or there abouts. Signed up for a quarter at first and then for a year. To me, and it's only my opinion, it's an investment and I have made the membership fees back many times over on the strategy advice. Since joining and implementing the strategy of buy/writes and hedges I have cut my portfolio losses for the year and have a really good chance of going positive this year. If I would have continued down the road I was on, I would still have been fumbling around without a strategy and completely inept in what I was doing. I feel now the strategy is working and I am far more comfortable with the risks I am taking. I still have a lot to learn but I feel the fees have been one of the best investments I have made. The returns have been fantastic. Still have problems with the politics but hey nobody is perfect

    DKGuy

  • Sold out my AAPL mar95 calls. Up over 100% today on them!

    Singapore Steve

  • Phil, I have the SRS 2011 $7.50 short puts you recommended awhile back. I sold them for $2.20 and now $1.51 (up 31%) although SRS has been down since inception. This was a nice mellow way to play it like you said, thanks.

    Jomptien

  • Started my membership in mid-Oct and have since then learned so much about options by reading the site's articles and postings, members' chats and suggested trades – as a bonus, the articles are entertaining as well! Phil's long-term investing strategy makes really good sense as I've seen its effect on my GLW positions. Phil – thanks for sharing your knowledge of the market! I've worked as risk analyst for the investment dept of a $19B insurance company, and the scope and depth of your daily commentaries blows away what I have seen and heard from the PMs and even the chief investment officer! Most of all, I will continue to be a member because you have your priorities right (from my POV) – it's not all about money and power.

    Bai2r

  • There are a lot of us that have been here a long time and we all learn something everyday. Just keep asking questions, there are a lot of smart people here and they are willing to help and then of course, you have Phil.

    Jr Mints

  • Hey Phil, Your HOV suggestion about 3 months ago basically paid for my Philstockworld subscription for years to come. My average cost is about $1.

    Ether

  • I did the same thing via your logic (sold puts that is). I glanced one time and they were already up 15% which is considered a good return for an overnight hold in most circles. This is PSW though and to us it's just another day…

    Kwan

  • PSW – Price/Value; The value of PSW on a regular basis exceeds by far the price of the annual subscription. The edition of February 26 'Which Way Wednesday – Popping or Topping?', – priceless for the serious investor.

    Winston

  • Cory Booker for President. :) . Thanks for all the good futures guidance Phil! Having one of my best months yet. Account is up 75% YTD!

    Traderd

  • Way to go Phil! Have I said how much I appreciate your site lately! Your ability to teach and your willingless to give others a forum to demonstrate their own skill sets makes your site remarkable. I got great help from you, jmm1951, and Iflantheman (special thanks!) today. Hell, if I have many more days like this I may even be able to sign up for a full year rather than doing it just quarterly. Tomorrow is another day but, fabulous job today!

    dclark41

  • HOTT / Got great trades with it: Enter 6.75 at open, out at 7.18 (avg) at 10:13 Reentered at 7.00 and out all 7.11 few minutes ago- Was a small play but I collected enoght for next month PSW subscription.

    Spider

Amazon’s Phone-Charging Robot Will Spare You The Indignity Of Talking To Strangers

Courtesy of Zero Hedge

Amazon is having a rough week.

The e-commerce powerhouse has celebrated a string of victories this year. Its stock price broke above $1,000 for the first time; it is presiding over an unprecedented retrenchment within the retail space as more than 8,000 brick-and-mortar stores are expected to close in the US this year, and the company announced plans to acquire yuppie favorite Whole Foods Market, promising to transform the company’s stores into laboratories for automation and AI where advanced sensors will perform tasks previously reserved for human cashiers. It also revealed that its “Prime Day” sale was the "Biggest Global Shopping Event in Amazon History", surpassing Black Friday and Cyber Monday sales.

But the string of good news came to an abrupt halt last week when Reuters reported that the top Democrat on the House antitrust subcommittee, David Civilline, has voiced concerns about Amazon's $13.7 billion plan to buy Whole Foods Market and requested in a letter to the House Judiciary Committee a hearing to examine the deal's potential impact on consumers – the first stirrings of what could metastasize into an anti-trust probe.

Adding to the antitrust concerns, Reuters reported Thursday that the FTC is investigating the company for allegedly misleading customers about its pricing discounts, citing a source close to the probe. The news sent Amazon shares lower in afternoon trade:

Amid the negative news, the company’s investors enjoyed a brief moment of levity when career website Ladders reported on a patent that was awarded to the company earlier in the week. The patent, first filed in 2015, revealed the company’s plans to build a robot that, using the company’s massive data-mining apparatus, would be able to track down desperate mobile-device users in crowed public spaces like an airport or concert venue and present them with the greatest gift of all: an opportunity to charge their phones.  

Here’s a quick rundown of how it’ll work, courtesy of Ladders:

“You will make a wireless request (perhaps with your last precious few moments of juice).

The robot will find you in a


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500,000 Thursday – Trump Orders GOP to Kill Over 4,000 People Per Month

Every 12 minutes.

That's how often an American citizen dies due to lack of health care.  Trump gave a fiery speech yesterday ordering his Republican goons to repeal Obamacare at any costs – and the costs are turning out to be staggering.  According to the Congressional Budget Office, Trump's plan will throw 32 MILLION Americans off health care and that will cost over 500,000 of them their lives over the next 10 years.  

That will make Trump, the GOP and the people who voted for them, the greatest mass murderers in the history of this country – right up there with the worst in World history (would rank #12, actually).  And why are they doing this, why do 4,000+ Americans have to die every month?  Well, according to the Congressional Budget Office, taking health care away from 1 out of 10 people you see today will save us $473Bn – over 10 years.  That's $47.3Bn a year and that does sound like a lot but there are 165M taxpayers so we each save $286.66 per year.  

$286.66 a year!  How many people would you kill for that kind of money?  Next time you are at a football stadium (50,000 people) pick 8 people to kill because that's how many out of 50,000 (1/6,400) are being killed to give you $286.66.  In fact, the amount of people in the stadium (all of them) is just about how many people your vote will be killing each year.  Isn't that GREAT!?!?  America is truly great again when we can value $286.66 over 50,000 human lives.  

And, if you think your own health care bill won't rise quite a lot more than $286.66 without Obamacare protections, then you are way too far down the rabbit hole to be saved.  The repeal-only act will increase premiums for those who hold plans, according to the CBO.  The office estimates that "average premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by roughly 25%" in one year.  That average premium increase would hit 50% by 2020 compared to projections of rates under the current law, and double by 2026, the CBO said.

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It’s All Happening

How long will this go on? Actually, go ahead and make your prediction in the comments. 

It’s All Happening

Courtesy of

“There are decades where nothing happens; and there are weeks where decades happen.” -Vladimir Lenin

U.S. stocks made zero progress in the seventeen months from October 2014 to January 2016. And in the seventeen months since the February lows, here’s how the following indexes have performed.

S&P 500 +36%

NASDAQ 100 +52%

Russell 2000 +52%

What’s happened in the last seventeen months? Three rate hikes, a U.S. election, and a CAPE ratio that expanded from 24 to 30.The market has had plenty of reasons to stop rising, except it has refused to acquiesce to the demands of thirsty bears and hungry bulls.

Each of these three indexes can close today at an all-time high for the seventh time this year. (The dots below represent the all-time closing highs for each)

dow

The easy money is being made, enjoy it while it lasts.





Downhill Racing Meets Value Investing

 

Downhill Racing Meets Value Investing

Courtesy of Vitaliy Katsenelson, Contrarian Edge

I wrote this article in May. Every time it was destined to be published in the pages of Institutional Investor, it got bumped by another, more timely one I had written. Finally, when a space opened in September, the market had taken a major dive, and what was supposed to be an “evergreen” article was suddenly out of touch with reality. Here is the irony: This piece addresses complacency, but its author was complacent too. The market has recouped its summer losses, and this article is relevant again.

I am a skier. When someone says this, you assume he or she is good. Well, I thought I was good. I was not Lindsey Vonn, but I had the technique down. I’d be the fastest person going down the mountain, always waiting for my friends at the bottom

Then, at the beginning of last season, I went skiing with my kids at Vail. It had snowed nonstop for a few days. Vail is a very large resort, and the mountain crew could not keep up with the snow, so I found myself skiing on unusually ungroomed slopes in powder more than knee-deep.

Suddenly, something changed. I could not ski. I could barely make turns. I was falling multiple times per run. My kids, including my nine-year-old daughter, Hannah, were now waiting for me as I dug myself out of pile after pile of snow.

My technique — along with my confidence — was gone. The discomfort from constant falling turned into fear. I was ready to go back to the hotel after only two hours on the slopes.

I was devastated. It was as if I had never skied. So I talked to a ski instructor about this incident. He told me that I’m a “good skier” on groomed slopes because they allow me to go fast without trying hard. Speed covers up a lot of mistakes and lack of skill. Skiing in powder requires different skis — not the skis I had — but more importantly, it slows you down and makes you rely on skills that I thought I had but…
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Will We Hold It Wednesday – New Highs Again?

Up and up she goes.  

Now we're watching that 6,000 line on the Nasdaq (/NQ) Futures which is up 33% in 18 months and up 40% from the lows of Jan, 2017.  We barely paused at 5,000 and didn't pull back at 5,500 but our first attempt at 6,000 was rejected and, if we call it a 1,500-point run from 4,500, then the "weak" reatracement, according to our 5% Rule™, would be back to 5,700 – and it was.

Holding the weak retracement is a sign of strength – indicicating that it's more likely we're consolidating for a move up than making a sustained move down and now we're testing 6,000 again but now we have to raise the bar and cannot accept more than a 150-point correction (5,850) to stay bullish on the Nasdaq and failing 5,700 would signal the start of a broader correction, down to 5,400 or possibly all the way to 5,000 before stabilizing.  That's why we pressed the hedges in our Short-Term Portfolio (which protects our Long-Term Portfolio) as well as our Options Opportunity Portfolio, though we still didn't find many long plays we wanted to take off the table.

That leaves us, so far, net bullish and more bullish than we thought as we "only" have about $300,000 of downside protection in our Short-Term Portfolio against a Long-Term Portfolio that gained $200,000 (17%) in the past 30 days – very aggressively bullish.  The Nasdaq is up 300 points (5%) since our last LTP review and that in itself calls for at least a 1% correction (60 points), back to 5,840 but that would then be below 5,850 – so you can see why this is such a tricky spot.  

Not much to do but see how the week plays out.  In yesterday's Live Member Chat Room, we took the money and ran on our Tesla (TSLA) short position and we added a long on Chipotle (CMG) towards the close as their sell-off has just gotten silly.  I'm not supposed to be giving away trades but this is such a juicy one I'll tell you what I said to our Members at 2:37:

"CMG Aug $370 calls are $14.30 and were $47 two weeks ago.


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ValueWalk

Japan-EU Free Trade Deal Will Rival NAFTA In Size

By FactSet. Originally published at ValueWalk.

Earlier this month, the leaders of the European Union (EU) and Japan announced that they had an “agreement in principle” for a Japan-EU Economic Partnership Agreement. Having taken more than four years to negotiate, this new deal is expected to eliminate 99% of tariffs between the two partners and create an economic trading bloc comparable to the North American Free Trade Agreement (NAFTA) in size.

]]> Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your ...



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Zero Hedge

Bitcoin (BTC/USD) Nears All-Time High on Spike Above Daily Chart Downchannel Resistance

Courtesy of ZeroHedge. View original post here.

Bitcoin (BTC/USD) crushed shorts yesterday, smashing above the daily chart's downchannel resistance and soaring towards the all-time high around 3000. With yesterday's massive rally, the negative weekly MACD crossover has been proved a false signal.  Odds are quite good that a sustainable longer term BTC/USD bottom was found last week, especially with ETH/USD also strongly rebounding this past week.  Some consolidation can be expected today with daily RSI and Stochastics tiring, although with daily MACD just having positive...



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Phil's Favorites

German Citizen Arrested in Turkey on Absurd Charges: Merkel, EU Essentially Look the Other Way

Courtesy of Mish.

As noted by the Guardian and other sources, German human rights consultant Peter Steudtner was detained at a human rights workshop on Monday with five others including Amnesty International’s country director, Idil Eser, for allegedly aiding a terror group.

In response, Germany issued a meaningless statement urging “caution” to which the Turkish foreign ministry hit back, accusing Germany of “blackmail and threats” and “direct interference in the Turkish judiciary”.

Eurointelligence is spot on with its analysis of the situation.
...



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Digital Currencies

Bitcoin Surges Above $2500 Following Goldman's Bullish Note As 'Civil War' Ends

Courtesy of ZeroHedge. View original post here.

Bitcoin is up 40% from its weekend lows as the combination of a bullish Goldman Sachs note on the virtual currency and a major sigh of relief that the potential 'civil war' over cryptocurrency's scaling solutions appears to be over (with over 80% of the hashrate currently voting for the protocol upgrade).

The entire cryptcurrency space is surging today...

...



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Insider Scoop

If The iPhone 8 Is Delayed, Will Anyone Care?

Courtesy of Benzinga.

Related AAPL Contract Manufacturers Are Joining Apple's Side As Qualcomm Legal Concerns Continue The Feds Hop In The Driver's Seat...

http://www.insidercow.com/ more from Insider

Chart School

Small Caps Breakout

Courtesy of Declan.

It has taken a few days for Small Caps to make their move but today was the day the Russell 2000 joined other indices in mounting a breakout. It was a clean breakout supported by positive technical strength - putting to bed the June 'bull trap'. Watch for the second round of stop-whips with an intraday move (and recovery) below 1,430.


Other indices added to their breakouts. The S&P gapped and pushed on, backed by higher volume accumulation. Watch for a tag of upper channel resistance.

...

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Members' Corner

Why we need to act on climate change now

 

Why we need to act on climate change now

Interview with Jan Dash PhD, by Ilene Carrie, Editor at Phil’s Stock World

Jan Dash PhD is a physicist, an expert at quantitative finance and risk management, and a consultant at Bloomberg LP. In his thought-provoking book, Quantitative Finance and Risk Management, A Physicist's Approach, Jan devotes a chapter to climate change and its long-term systemic risk. In this article, Ilene interviews Jan regarding his thoughts on climate change and the way it can affect our futu...



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OpTrader

swing trading portfolio - week of July 17th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Immunotherapy: Training the body to fight cancer

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Immunotherapy: Training the body to fight cancer

Courtesy of Balveen KaurThe Ohio State University and Pravin KaumayaThe Ohio State University

An oral squamous cancer cell (white) being attacked by two T cells (red), part of a natural immune response. ...



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Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>