Author Archive for ilene

Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail

Courtesy of Zero Hedge

When we commented yesterday morning on the unexpected "going concern" notice in Sears' just filed 10-K which sent the stock crashing, we pointed out the immediate spin provided by Eddie Lampert's distressed retailer which promised that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements", to which however we added the footnote that "the question is what happens when vendors start demanding cash on delivery as concerns about SHLD's liquidity concerns continue to grow."

As it turned out, we wouldn't have long to wait, because overnight Reuters reported that the worst case Sears scenario we envisioned for Sears is now taking shape and that suppliers to Sears have told Reuters they are doubling down on defensive measures, such as reducing shipments and asking for better payment terms, to protect against the risk of nonpayment as the company warned about its finances.

The company's disclosure turned the focus to its vendors as tension is expected to mount ahead of the key fourth-quarter selling season amid rising concern about a potential bankruptcy, they said.

Quoted by Reuters, the managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears' 2017 holiday sales. Last year, nearly half of the company's lines in its four factories were producing for Sears. "We have to protect ourselves from the risk of nonpayment," said the managing director, who declined to be identified for fear of disrupting his company's relationship with Sears.

Furthermore, precisely as we predicted, Mark Cohen, the former CEO of Sears Canada and director of retail studies at Columbia Business School said vendors will keep a close eye on Sears' finances. "Whatever vendors continue to support them are now going to put them on even more of a short string. That means they’ll ship them smaller quantities and demand payment either in advance or immediately upon delivery."

He added: "Sears stores are pathetically badly inventoried today and they will become worse."

Another supplier to Sears, Arnold Kamler, CEO of New Jersey-based bicycle manufacturer and importer Kent International Inc, said he was not surprised by Sears' Tuesday announcement.


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Are Banks About To Derail The New U.S. Shale Boom?

Courtesy of Irina Slav, OilPrice.com

Just when international oil benchmarks are sliding down, banks are preparing to review the credit lines of U.S. E&Ps. Starting in April, lenders will reassess companies’ creditworthiness on the basis of reserves, production trends, current prices, and future prospects for the industry, among others. Should anything spark worry, banks will be quick to start reducing their exposure, cutting credit lines and arresting producers’ recovery at a crucial point.

This year, U.S. E&Ps have announced an overall spending increase of $25 billion from 2016, an 11-percent rise, as a clear sign of continuing optimism after the November OPEC-non-OPEC deal that aimed to shave 1.8 million barrels of crude off daily global supply.

Besides boosting spending plans, producers have been adding rigs at a respectable pace: at the end of last week, active oil and gas rigs in the United States totaled 789, an increase of 313 over a year ago. They are also investing in more efficient drilling technologies, aiming for ever lower production prices in the aftermath of the oil price crash.

The banks could put a stop to all this if they deem the outlook for oil prices or any other element of their assessment methodology unfavorable. For oil prices, more bad news seems to be on the way if we are to trust Goldman Sachs.

The investment bank said in a note yesterday that record-high investments in 2011-2013 could start bearing fruit this year and the next two, adding around a million barrels of crude to global daily production on an annual basis in the period 2017-2019. That will only happen if the mega projects that swallowed the huge investments deliver as expected, which is by no means certain.

This message contrasts with an earlier one, contained in another note to investors, which saw global oil supply tightening thanks to the OPEC deal. In fact, at the time – a month ago – Goldman was of the opinion that the draw in global stockpiles would completely offset the rise in U.S. shale output.

But for now, Brent crude is now trading below $51 and WTI has dropped below $48 a barrel. Investors are watching OPEC again for a possible extension of the production cut deal, but it’s still uncertain if it will happen, and even if it does, no one knows what the effect of an extension would be.





Are US Treasury Yields Headed Up or Down? My Answer: Yes, Yes, Yes

Courtesy of Mish.

Many Mish readers have been asking about US treasury yields.

Are yields going up or down?

My fearless forecast is yes, yes, and yes. A series of charts will explain.

US Treasury Yield Curve Chart #1

Since mid-2015, yields on 1-year, 2-year, 3-year and 5-year treasuries has risen. Yields on 10-year and 30-year treasuries have fallen.

US Treasury Yield Curve Chart #2

Since December 2016, the yield on 1-year treasuries has risen. The yield on all longer-dated treasuries has fallen.


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Why Facts Don’t Change Our Minds

 

Why Facts Don’t Change Our Minds

Courtesy of John Mauldin, Outside the Box

You and I are both rational beings who let facts drive our thinking, but it seems our fellow humans are not so thoughtful. Or at least that’s what the research says. It turns out that behavioral psychologists have been undermining the bastions of human reasonability for decades, starting with some nefarious characters in the Stanford University psych department back in the ’70s, whose devilishly clever experiments were then taken a frightening step further at that equally suspect institution over on the other coast: Harvard. Don’t these mental types have anything better to do than conclusively prove that nobody (but you and I) can think straight?

Apparently not. And then the Harvard guys had the temerity to suggest that the human race’s muddleheadedness goes allllllll the way back to the time we spent trotting around on the African savannah. Remember that? Lotsa fun – if you didn’t get chewed up by a pack of hyenas or run down by a herd of water buffalos. You see, we weren’t just sitting out there on the plain playing checkers or debating the finer points of Cartesian philosophy. No, we were hanging on by the skin of our teeth – even as our teeth got smaller so our brains could get bigger. But it turns out that the most significant way our brains got bigger – and the main reason we survived and evolved into the total media animals we are today – was that we figured out how to cooperate.

Or at least that’s what the Harvard guys say. Their argument runs more or less like this:

It’s quite frustrating … when you think about it. But I guess it’s better to face the truth about ourselves than to go along blindly, always wondering over the irrational hijinks our fellow two-leggeds are forever getting up to.

The whole sordid – but not entirely unhopeful – story is laid out by Elizabeth Kolbert in a piece titled “Why Facts Don’t Change Our Minds,” in – you guessed it – The New Yorker … yes, the only rag in the greater English-speaking world that insists


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Russia, an alleged coup and Montenegro’s bid for NATO membership

 

Russia, an alleged coup and Montenegro's bid for NATO membership

Courtesy of Vesko Garcevic, Boston University

Testifying before a congressional committee, FBI Director James Comey has confirmed that his agency is investigating links between the Donald Trump campaign and Russia. The Conversation

While this investigation continues, Americans should be reminded of the signs of Russian interference in democratic processes outside the U.S. – specifically, in the Balkans.

Small but strategic

Recently, British Prime Minister Theresa May expressed concern over Moscow’s apparent involvement in an attempted coup in my home country.

From 2010 to 2015, I was the ambassador to NATO from Montenegro, a young democracy in southeast Europe that is part of the former Yugoslavia. Montenegro was targeted by an apparent coup attempt during its last parliamentary election on Oct. 16, 2016. While Russia has denied involvement, details of the plot shared by a Serbian man arrested at the scene point to what The New York Times called “Russian efforts to sow mayhem.”

Montenegro’s chief special prosecutor has alleged the involvement of two Russian Military Intelligence Service (GRU) agents, Vladimir Popov and Eduard Shirokov. The GRU is the same organization sanctioned by the Obama administration for hacking the Democratic National Committee offices. Shirolov, who has also gone by the name Shishmakov, was posted as the assistant military attache at the Russian Embassy in Poland until 2014 – when Poland threw him out of the country for spying.

As some of the plotters later confessed, their goal was to overthrow Montenegro’s government, kill then-Prime Minister Milo Djukanovic and put into power political groups that oppose Montenegro’s NATO membership. Russia is on the record as opposing that membership bid and promised “retaliatory actions.”

Despite Russian opposition, joining NATO is one of Montenegro’s major foreign policy goals. The overwhelming majority of NATO members, 26 states, have already ratified the country’s membership and the process seemed on track for completion at the next NATO summit in May of 2017.

However, the addition of new members to the alliance requires unanimous support, and Spain and the U.S. still haven’t passed ratification.


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3-D printing turns nanomachines into life-size workers

 

3-D printing turns nanomachines into life-size workers

Image 20170322 12437 jb8bq0

Molecular machines are ready to join forces and take on real-world work. Chenfeng Ke, CC BY-ND

Courtesy of Chenfeng Ke, Dartmouth College

Nanomachines are tiny molecules – more than 10,000 lined up side by side would be narrower than the diameter of a human hair – that can move when they receive an external stimulus. They can already deliver medication within a body and serve as computer memories at the microscopic level. But as machines go, they haven’t been able to do much physical work – until now. The Conversation

My lab has used nano-sized building blocks to design a smart material that can perform work at a macroscopic scale, visible to the eye. A 3-D-printed lattice cube made out of polymer can lift 15 times its own weight – the equivalent of a human being lifting a car.

Our polymer is able to lift an aluminum plate when chemical energy is added in the form of a solvent.

 

Nobel-winning roots are rotaxanes

The design of our new material is based on Nobel Prize-winning research that turned mechanically interlocked molecules into work-performing machines at nanoscale – things like molecular elevators and nanocars.

Rotaxanes are one of the most widely investigated of these molecules. These dumbbell-shaped molecules are capable of converting input energy – in the forms of light, heat or altered pH – into molecular movements. That’s how these kinds of molecular structures got the nickname “nanomachines.”

For example, in a molecule called [2]rotaxane, composed of one ring on an axle, the ring can move along the axle to perform shuttling motions.

Left, a [2]rotaxane. The ring can shuttle along the axle. Right, representation of billions of [2]rotaxanes in solution. The motions of nano-rings counteract macroscopically. Chenfeng Ke, CC BY-ND

So far, harnessing the mechanical work of rotaxanes has been very challenging. When billions of these tiny machines are randomly oriented, the ring motions will cancel each…
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Search for 216 Votes: Obamacare Replacement Act Headed for Flames, Perhaps Overwhelmingly

Courtesy of Mish

The search for 216 votes in the House to repeal and replace Obamacare is underway. Odds appear the search will fall short, perhaps very short.

The problem for Republicans is not a single Democrat supports the bill. All 216 votes will need to come from Republicans, of which there are 237. That means there can only be 21 Republican dissents.

The New York Times has an interesting graphic on Omabacare Replacement Intentions. Let’s take a look.

If accurate, that’s all you need to know.

If you give Paul Ryan the benefit of the doubt and all the undecideds, all the concerned, and all the supporters end up voting to repeal and replace, you reach 210 votes. That is six short. So at least six of the no votes need to change their minds.

How Likely is That?

Perhaps Salil Mehta at Statistical Ideas has a quick assessment but here’s mine:

There is a far greater chance the replacement vote is delayed, postponed, or never happens at all than it passes. We will find out soon enough, as in tomorrow. That’s when Ryan has scheduled a vote.

Off the top of my head, I suggest odds of passage tomorrow are well under 5%. The odds the vote is scrapped are about even.

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The Brazilian Meat Scandal

For Background, read: A Brazilian meat scandal damages the country’s two global producers (São Paulo, The Economist)

EVEN amid Brazil’s pungent stew of recent big corporate scandals, the latest is particularly stomach-turning. On Friday March 17th, in time for a traditional weekend churrasco, or barbecue, the federal police accused some of the country’s biggest meat producers of bribing health inspectors to turn a blind eye to grubby practices. These include repackaging beef past its sell-by date, making turkey ham out of soyabeans rather than actual birds and overuse of potentially harmful additives. The police operation, dubbed Weak Flesh, could reduce Brazil’s meat exports, worth $13bn a year, and damage its two big global meat producers, JBS and BRF.

Two days later the president, Michel Temer, treated 27 diplomats from the country’s main export markets to prime Brazilian cuts at a steakhouse (pictured [by AP]) in the capital, Brasília. Nevertheless, straight after that China, the European Union, Chile and South Korea, which together consume a third of Brazilian meat sold abroad, said they would ban some or all imports from Brazil until it can allay misgivings about its inspection regime. The reactions from China and Chile provoked particular anguish. Unlike the EU, which has restricted products only from the 21 plants that are under investigation, they have barred all Brazilian meat from crossing their borders until further notice.

Phil discusses Brazil's new meat scandal's impact on the country's economy: 

Brazil's push to root out corruption is considered short-term pain for long-term gain. For more on new meat scandal's impact on Brazil's economy, CGTN's Rachelle Akuffo spoke to Phil Davis, publisher of PhilStockWorld.com.

 




Double Dip Expansion?

 

Double Dip Expansion?

Courtesy of Wade of Investing Caffeine

Ever since the 2008-2009 financial crisis, every time the stock market has experienced a -5%, -10%, or -15% correction, industry pundits and media talking heads have repeatedly sounded the “Double Dip Recession” alarm bells. As you know, we have yet to experience a technical recession (two reported quarters of negative GDP growth), and stock prices have almost quadrupled from a 2009 low on the S&P 500 of 666 to 2,378 today (up approximately +257%).

Over the last nine years, so-called experts have been warning of an imminent stock market collapse from the likes of PIIGS (Portugal/Italy/Ireland/Greece/Spain), Cyprus, China, Fed interest rate hikes, Brexit, ISIS, U.S. elections, North Korea, French elections, and other fears. While there have been plenty of “Double Dip Recession” references, what you have not heard are calls for a “Double Dip Expansion.”

Is it possible that after the initial 2010-2014 economic expansionary rebound, and subsequent 2015-2016 earnings recession caused by sluggish global growth and a spike in the value of the U.S. dollar, we could possibly be in the midst of a “Double Dip Expansion?” (see earnings chart below)

Source: FactSet

Whether you agree or disagree with the new political administration’s politics, the economy was already on the comeback trail before the November 2016 elections, and the momentum appears to be continuing. Not only has the pace of job growth been fairly consistent (+235,000 new jobs in February, 4.7% unemployment rate), but industrial production has been picking up globally, along with a key global trade index that accelerated to 4-5% growth in the back half of 2016 (see chart below).


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Eurogroup Finance President Accuses Southern Europe of “Spending Money on Booze and Women then Begging for Help”

Courtesy of Mish.

Jeroen Dijsselbloem, Dutch finance minister and president of the Eurogroup finance ministers, is in hot water today over derogatory statements regarding peripheral Europe.

This compounds Dijsselbloem’s already significant problems as his party was trounced in the recent Dutch elections. Spain and Portugal now seek his ouster in addition to an apology.

Please consider Protests Mount Over EU Dealmaker’s ‘Booze and Women’ Slur.

Jeroen Dijsselbloem, a key euro area dealmaker, is facing calls to resign after he suggested that southern European countries had squandered their money on “booze and women”.

The Dutch finance minister was already under pressure after his Labour party was crushed in last week’s elections in the Netherlands. This had raised questions over whether he would retain his position as minister and be able to see out his term as president of the eurogroup of eurozone finance ministers — a crucial role that places him at the heart of negotiations on fiscal policy and bail-outs.

In an effort to stress the responsibilities that come with being in a currency union, Mr. Dijsselbloem said that northern Europe had shown “solidarity” with the south during the crisis, but that solidarity comes with “duties”. “I cannot spend all my money on booze and women and beg for help afterwards,” he said, adding this applies on a personal, national and European level.

The comments have been seized on by politicians across southern Europe, including Portuguese prime minister António Costa, as an offensive stereotyping of nations that bore the brunt of the euro area’s sovereign debt crisis.

Mr. Costa on Wednesday called for Mr. Dijsselbloem’s resignation, saying “Europe will only be credible as a common project” when he has stepped down and “made a clear apology to the countries and peoples who were deeply offended by his comments”.

Describing the comments as “absolutely unacceptable” and “very dangerous,” he said that they showed another face of populism, expressed by people “dressed in sheep’s clothing” and making comments that were “racist, xenophobic and sexist”.

Carlo Calenda, Italy’s economic development minister, said: “Without heartfelt, clear, formal and public apologies, his ability to remain in the job should be questioned.”

Good Riddance

Former Italian president Matteo Renzi entered the fray with “The sooner he resigns the better it is. If he wants to offend Italy, he should do it


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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

SEC May Regret the Day It Allowed Leveraged ETFs (Bloomberg)

That bit of truism is all you need to understand the rapid rise in leveraged exchange-traded funds, which were created in 2006 as a way for investors to double their exposure to stock indices.

Trump's Big Problems: Anemic Private Investment and Weak Productivity (Forbes)

Why was the Great Depression so deep, and why did it drag on for so long? According to impressive research by Robert Higgs of the Independent Institute, it was because President Roose...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

SEC May Regret the Day It Allowed Leveraged ETFs (Bloomberg)

That bit of truism is all you need to understand the rapid rise in leveraged exchange-traded funds, which were created in 2006 as a way for investors to double their exposure to stock indices.

Trump's Big Problems: Anemic Private Investment and Weak Productivity (Forbes)

Why was the Great Depression so deep, and why did it drag on for so long? According to impressive research by Robert Higgs of the Independent Institute, it was because President Roose...



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ValueWalk

Past Empires That Can Tell Us About The Future In Four Maps

By Mauldin Economics. Originally published at ValueWalk.

Studying history has little practical utility in averting past outcomes. We are doomed to repeat history whether we know it or not.

The value in knowing history is not that one might prevent its recurrence. Its value is that it allows you to identify those things that don’t change and that shape events… no matter the year on the calendar.

That’s why I want to show you four maps that highlight what parts of the world looked like in the past… and that point the way toward what may come in the future.

China 

The map below simplifies a great deal of China’s ancient and imperial history. It shows seven states that fought for control of the historic Chinese heartland during the Warring States period (475–221 BC).

...



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Zero Hedge

China's Largest Dairy Operator Suddenly Crashes 90% To Record Low, Muddy Waters Says "Worth Close To Zero"

Courtesy of ZeroHedge. View original post here.

In December 2016, Muddy Waters' Carson Block said China's largest dairy farm operator, Hong-Kong listed China Huishan Dairy Holdings Co., is "worth close to zero" and questioned its profitability in a report. Today, with no catalyst, it suddenly almost is. The stock collapsed over 90% in minutes to a record low.

The sudden crash wiped out about $4.2 billion in market value in the stock, which is a member of the MSCI China Index.

...



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Kimble Charting Solutions

Gold Bugs; Stellar performance stage set again

Courtesy of Chris Kimble.

From 2001 to 2011, would you have rather owned the S&P 500 or Gold Miners (Gold Bugs Index/HUI)? If you answered the Gold Bugs index, you would be correct. The left chart below compares the performance of the Gold Bugs Index and the S&P 500. From 2001 to 2011, the Gold Bugs index out performed the S&P 500 by 1,400% (left chart below).

Since 2011, miners have been weaker than the S&P 500 by a large percent. Could the stage be for another period where the mining stocks are going to be stronger than the broad markets again?

...

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Chart School

Semiconductors Recover at 20-day MA

Courtesy of Declan.

Yesterday's selling didn't follow through with additional losses, instead, indices dug in at lows and managed to recover some of yesterday's selloff.  The best recovery came from the Semiconductor Index. It gained over 1% as it bounced off its 20-day MA. However, it wasn't enough to stop a 'sell' trigger in the MACD and CCI.


Next is the Nasdaq 100. It staged a recovery, but not from a typical support level. Unfortunately, it has a MACD trigger 'sell' from early March and a new 'sell' trigger between the -DI an...

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Members' Corner

Natterings

Check out some new posts from our friend The Nattering Naybob. 

The Big Lebowski Sequel?

Taking a "resp-shit" or "potty break" from "in the Toilet Thursday" or "Thursday's in the Loo"... One of our favorite scenes from the 1998 cult classic The Big Lebowski, the ash can scene where Walter Subchak (John Goodman) eulogizes the departed Donnie (Steve Buscemi) with Jeffrey Lebowski (Jeff Bridges) looking on.

Keep reading: ...



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OpTrader

Swing trading portfolio - week of March 20th, 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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Digital Currencies

Bitcoin Tumbles Below Gold As China Tightens Regulations

Courtesy of Zero Hedge

Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.

A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.

As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates th...



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Mapping The Market

Congress begins rolling back Obama's broadband privacy rules

Courtesy of Jean Luc

I am trying to remember who on this board said that people wanted to Trump because they want their freedom back. Well….

Congress begins rolling back Obama's broadband privacy rules

By Daniel Cooper, Endgadget

ISPs will soon be able to sell your most private data without your consent.

As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the res...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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Biotech

The Medicines Company: Insider Buying

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

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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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...

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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.

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