Phil's Newsletter

PhilStockWorld 2017 Watch List Update – Rolling into 2018

Related imageIt's very important to have a Watch List.

I like to have about 24 stocks I keep a close eye on so that, when something happens and they go on sale, I'm ready, willing and able to pull the trigger in an instant.  We just did that this week when Macy's (M) announced their earnings and we thought they were just what we wanted yet the market sold them off after the opening pop.  That gave us a window to act and, because we follow M closely – we KNEW it was time to act and I issued a Top Trade Alert, identifying it as our top contender for Stock of the Year for 2018 (replacing LB, another retailer who has already flown higher).  

We issued our 2017 Watch List back in March and in May we picked 13 out of 24 for action, including M as well as BMY, ESRX (still cheap), FCX, GE (cheaper), GILD, LB, PSA (still cheap), QCOM, TGT, GCI, FMCC and SEE (still cheap).  So, out of 13 picks we had been watching and pulled the trigger on, 10 are winners, 2 are flat and one (GE) is down and the one that's down is the one we like most at the moment.  Our "too early" entry on GE was:

GE (3/5) – Forever $30 but talk about a safe place to park your money!  They even pay a 3.2% dividend (0.89) while you wait for something to happen – and it won't.  GE is a $262Bn company that pays no taxes ($464M refund last year on $9Bn in earnings!) and has tons of money overseas – what's not to love?  Even better, you can sell the 2019 $28 puts for $2.50 and use that free money to buy the $25 ($6.10)/30 ($3.05) bull call spread for $3.05 and that's net 0.55 on the $5 spread for a near 10-bagger if GE simply holds $30.  There's anothe interesting way to play this one and that's to effecively buy it by selling the 2019 $32 calls for $4.40 for a net $27.60 entry and then buy the $28 calls ($4.20) for a net 0.20 credit and then just sell 1/2 of the April $30s (0.75).  That way, you are collecting 0.375 per long and each time you collect $1.70 (4-5 quarters)


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TGIF – Market’s First Red Week Since September Comes to a Close

A down week?

What is that?  Since when do markets go lower?  Well, they don't generally (any more) and this market hasn't had a down week since the first week of September, when the S&P was at 2,450 so it was a nice 150-point run (6.12%) before pulling back and the 5% Rule™ says we can expect a 30-point weak retracement to 2,570 and that's exactly what we got but 2,570 is still a 5% gain (2,572.5 actually) and, as long as that holds – it's still bullish – just a minor correction

As you can see (or at least extrapolate) on our Big Chart, 2,600 is the 20% line on the S&P so of course we're going to get a pullback there.  It's going over that line that's going to be siginficant and, rather than a bearish hedge, we're going to be needing bullish hedges to play the upside from there.  

That's right, we already have bearish hedges in our Short-Term Portfolio and our Options Opportunity Portfolio and we don't want to get rid of those but, above the milestone S&P 2,600, we are going to want to hedge the hedges – in case the next 20% move up wipes them out and turns them into very expensive, unused insurance.  When we hedge a hedge we go long the laggards – the indexs that are underperforming in anticipation that they would catch up.  

We tend to take a hedge like that each quarter and, in May (19th), I was on China Global Television discussing the Brazil Crisis and we decided it was low enough to make a bullish play out of it and our trade idea at the time was:

So I like EWZ down here ($32.75) and we can take advantage of this dip with the following:


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Faltering Thursday – GOP Losses and Trump’s Lack of China Deal Spook Markets

China Donald Trump & Xi Jinping (Reuters/D. Sagolj)Mr. Trump went to China.  

That's it, nothing happened.  The deal-maker in chief made no deals, though he did take credit for $250Bn in business deals, which were actually the course of our normal trade with China, like $36Bn worth of Boeing (BA) planes, most of which were already part of their existing backlog.  While these transparent attempts to puff himself up may work with the gullible US voters, Trump faced mockery in the Chinese press – even the "official" press which said: "Emotional venting cannot become a guiding policy for solving the nuclear issue on the peninsula."

There was no trade deal, no pushback on exports, no movement on China's currency manipulation, NOTHING which Trump promised during the campaign and nothing is coming from Trump's "great friendship" with China's President Xi.  Trump went so far, in fact, to absolve China for unfair trade practices saying they were only doing what's best for their country and it was the fault of past US Presidents for making bad deals – like the one he is sticking to by leaving China empty-handed.  

"After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens. I give China great credit, but in actuality I do blame past administrations for allowing this out-of-control trade deficit to take place." 

Japan's Nikkei went on a wild ride last night and is currently off 1.666% at 22,580 after bottoming out at 22,500 and we noted this action in Tuesday's morning Report and shorted the Dow Futures at 23,500 in our Live Trading Webinar yesterday along with Oil (/CL at $57.50) and, yesterday, in our Live Member Chat Room, my comment to our Members into the close (3:58) was:

Indexes curling over, Good time to short /ES at 2,590 (tight stops above).  Lined up with 23,500, 6,340 and 1,480.


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Wild Wednesday – US Consumers go $1Tn in Debt, Saudis Confiscate $800Bn in Wealth

Image result for iq americansMaybe Americans are smart?  

Rather than saving $1Tn, like the Saudi Royals who have fallen out of favor, Americans go the other way and put themselves $1Tn into debt on their credit cards so the powers that be can't afford to lock them up – as they need to keep paying those 18% interest rates.  That's right, our fellow citizens have now passed the $1Tn mark in credit-card debt and that's up 11% ($100Bn) since Trump was elected as Americans are running out to pre-spend those tax cuts.

Some might say that having to pay $20Bn/month in interest alone on credit-card debt can be damaging to US consumers but those are people who know MATH and understand ECONOMICS and, fortunately, those kinds of people are NOT in charge of our country.  To quote our President "Bing, bing, bong, bong, bong, bing, bing."

Meanwhile, those tax cuts aren't coming and already the Senate Republicans are considering a one-year delay on the promised Corporate Tax Cut in order to save the $100Bn hit that provision alone takes from Government Revenues.  The news comes amid the expected growing opposition in the Senate to the current bill. One day after Trump nemesis John McCain said tax reform is "dead on arrival", on Tuesday, Sen. Ted Cruz said that the House tax bill could end up raising taxes on some middle-class Americans, and he pushed for assurances that the Senate bill would lower everyone’s taxes.  

Bloomberg reports that on Tuesday afternoon President Trump called into a meeting between Senate Democrats, National Economic Council Director Gary Cohn and White House Legislative Affairs Director Marc Short, Democratic Sen. Jon Tester tells reporters. Tester said that Trump spoke (maybe screamed would be a better description) for about 15 minutes by phone from Asia and insisted the rich will be hurt by the tax bill.

If the Top 1% can't pass a bill that steals money from the poor, they are going to turn on each other (something I have predicted for many years) and it's already happening in Saudi Arabia where one side of the Royal Family has arrested hundreds of members of the other side of
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Trendless Tuesday – A Pause in the News Cycle

Not much is going on.

If I were lazy, I'd stop right there and that would be the morning report.  Even Trump hasn't done anything new to piss me off this morning.  He even confirmed yesterday's rant on Kushner's Saudi agenda by saying about the arrested Saudi Princes that "Some of those they are harshly treating have been 'milking' their country for years." 

I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing….

One of those princes, keep in mind, is Rupert Murdoch's partner, Alwaleed Talal, who went against Trump during the election, tweeting:


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Monday Market Turmoil – Trouble in Saudi Arabia and More Russian Ties to Team Trump

Wow, what a weekend.

There was a tragic shooting in a Texas Church but, unlike last week's response to the NY violence by GOP Congressmen to take immediate action, the GOP now says we shouldn't let one incident panic us into "politicizing" gun violence and regulating them or something.  When 300M people have the legal right to own weapons that can kill 25 people in 60 seconds – well, you do the math…  Trump, ironically, blames mental health issues (while cutting mental health programs as well).  

“This isn’t a guns situation,” Trump added. He said based on preliminary reports, the shooter was a “very deranged individual.  Fortunately there was a person shooting in the opposite direction,." 

The NRA encourages parents to expose children as young as five to the AR-15.AR-15's were used in all of the following mass shootings: Aurora, Orlando, Las Vegas, Sandy Hook, UMPQUA CC, San Bernardino, Sutherland Springs.  It is not a mental health problem, it's a gun problem!  And let's not forget, the GOP just passed a bill that puts guns in the hands of the mentally ill and no, I AM NOT JOKING!  

Just a few weeks ago, psychiatrists and psychologists were warning that GOP health care reform efforts, most recently in the form of the Graham-Cassidy bill, would have devastated the quality and availability of mental health care in this country. It offered states the opportunity to allow insurance companies to drop mental health care coverage and reduced spending on Medicaid by billions of dollars. It effectively ended the Obamacare Medicaid expansion and reduced federal health insurance subsidies. 

While Trump was making light of the violence in Texas, he was celebrating the violent swing Abe's Right-Wing Government in Japan is taking.  While one President may have taken the opportunity to remind Japan that their constitution has outlawed war and limited its military since 1947 – leading to 70 years of peace and prosperity, this President wants to be their arms dealer, pushing for Japan to buy "massive" amounts of military equipment.


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FU Friday – Team Trump Gives Themselves Billions in Tax Cuts, Gives You $1,182

Related imageF**k the poor.  

F**k the middle class.  After failing to take away your health care, Team Trump has unveiled its latest scheme to destroy the bottom 90% of Americans by rolling out a tax plan that is so ridiculously unfair that they are trying to get it voted on before it can be scored – like they did with their health care bill – because this monstrosity would never stand up to scrutiny over time

Corporate tax rates are dropping from 35% to 20% but, on top of that companies can now deduct ALL the costs of purchasing new equipment and money made overseas is now taxed at just 12%.  By the way, PSW is officially moving to the Bahamas, which have no Corporate Taxes and we'll be bringing the money back to the US at the 12% rate so screw you 20% – that's too much for us!  Gosh that was hard to avoid, wasn't it.  Because we're moving to the Bahamas, I will need a private jet to fly back and forth – good thing that's fully deductible too – guess I won't start paying that 8% until the Government is done paying for my plane and, by "the Government" – I mean you suckers who think Trump is trying to help you – GOD you people are dumb!  

Image result for trump cabinet billionairesTrump's cabinet includes Billionaires Betsy DeVos and, of course, Jared Kushner, who is currently curing cancer on his way to broker a peace treaty in the Middle East and Wilbur Ross and Gary Cohn are also Billionaires while Cordish, Mnuchin, Tillerson and Liddle are all in the $100-300M range.  Even Keelyane Conway, for some reason, has $45M and James Mattis has $10.5M, Jeff Sessions $10M…  General John Kelly is the poorest guy in the room with only half a million to his name – no wonder he is so angry!

The President and his cabinet have $17Bn, which is more money than the bottom 100M Americans have, combined.  They earn roughly $1.3Bn a year, mostly through corporate entities and partnerships and these tax cuts will save them over $200M a year but the real bonus is eliminating the Estate Tax, which will save them about $7Bn and,
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Thursday Thoughts – Powell to Head Fed, Tesla Crashes and Burns $1.4Bn

$1,400,000,000. 

That's a lot of money to burn through in a single quarter – especially in a quarter where not only were just 260 Model 3s actually delivered by Tesal (TSLA) but they have now pushed back full-scale production targets through March, so 2 more lost quarters ahead, with Q4 losses now estimated at an even $1Bn. 

This can only mean one thing – Morgan Stanley will be ugrading TSLA any moment!  That's what usually happens when one of their leading underwriters has to defend the company's poor ACTUAL earnings.  Just a month ago, Nomura gave them a $500 price target – these analysts truly have no shame (or common sense!).  Our take on Tesla has been somewhat more negative (see February's "Tesla’s Emperor Musk Has No Clothes!" or May's "Tesla’s Earnings Miss – Emperor Musk has no Clothes!" or "Tuesday Turmoil – Tesla Valuation Reaches Peak Insanity") and, though we were often early, our Tesla shorts have all wound up being successful, so far.

On Tuesday, right here in the Morning Report (which you'd be foolish not to subscribe to HERE), our Trade Idea for this earnings period was:

  • Sell 6 TSLA April $350 calls for $23 ($13,800)
  • Buy 6 TSLA April $370 puts for $65 ($39,000)
  • Sell 6 TSLA April $320 puts for $34 ($20,400) 

That nets you into the $30,000 short position for $4,800 with a $25,200 (525%) upside potential if TSLA is below the current price of $320 in April.  It's a lot of margin ($15,465 ordinary margin) and a lot of risk – if TSLA gets back to $380, you will have to pay the short caller $18,000 but we'd roll them along to higher, longer months.  Of course, if TSLA does well then maybe our oil play does well (more electric cars) and that one we can make $2Bn on!  

With TSLA tumbling to test the $300 line this morning, we'll probably be good for 200% gains ($10,000) in just 48 hours – not bad for a free pick, right?  In yesterday's morning Report, we called…
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Wednesday Run-Up, Will This Rally Never End?

Image result for superman stock marketUp, up and away!  

It’s Super Market!  Strange index from another reality, who ignores bad news and achieves p/e multiples far beyond those of rational markets. Super Market, who can break resistance on low volume, move higher without consolidation and who – disguised as a genuine Price Discovery Mechanism, an actual indicator of the true-value of listed companies – Instead fights a never-ending battle with rational thinking and negative data because, in America, the market is only allowed to go one way!  

Ths morning, global markets are following the Nikkei higher as Abe was re-elected and the Nikkei popped 1.6% – as if it were some kind of surprise – even though Abe's party just clinched a 2/3 majority in Parliament 2 weeks ago so who didn't know he'd be re-elected too?  Apparently 1.6% of the Nikkei's worth of people is the correct answer.  Any excuse, of course, is a good excuse to rally the markets these days.  There was a terrorist attack in NYC yesterday with 8 people killed and 16 wounded and the markets still rallied into the close – just before Wall Street traders had to step over the bodies on the way home from work.  

Silver and gold blasted higher, allowing us to close out our long Silver (/SI) Trade Idea from last week's Live Trading Webinar with a lovely $6,490 gain and it's a good thing we weren't greedy as my call this morning (6:26) in our Live Member Chat Room was:

Good pop on /SI, $17.03 – taking profits there as it partly makes up for /RB losses.

Silver has since dropped back a bit, to $16.96 but Gasoline (/RB) is persistantly annoying at $1.755 and we're in at an average of $1.729 on our shorts so a loss of $1,092 per contract at the momnent ($420 per penny).  We'll have to see how the EIA report goes at 10:30 but the API Report last night showed a huge 7.69Mb draw in Gasoline, which is ridiculous as it would indicate a 15% jump in gasoline demand in a week –…
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Terminal Tuesday – Markets End October at Halloween Highs

Happy Halloween!

Clearly no one is spooked about the markets as we're drifting along at the highs into the monht's end – as well as into tomorrow's Fed meeting and maybe the traders are right and there are no economic monsters under the bed or even in the closet and maybe the President isn't an uncontrollable monster but a nice orange man who is here to grant all of our wishes – like a giant Oompa Loompa...

As I mentioned last week, Keebler Elf-man Warren Buffett gave us a great reason the markets will hold up through the holidays – the promise of lower taxes but that will require the GOP to hold things together while the indictments are flying around Washington.  If the investing public gets w a whiff of fear – it could start a stampede out of equities.  Money is already flying out of oil longs as the Oil ETF (USO) recorded it's 3rd consecutive week of outflows – even as the price of oil has risen 5%, from $49 to $54.  Gasoline (UGA) has risen 10%, from $1.55 to $1.70 – oupacing oil by 100%, even as we enter the slowest time of year for demand.  

Not only does that not make sense (OPEC has been talking up oil so speculation is driving the price, not Fundamentals) but the quantity of fake, Fake, FAKE!!! open orders at the NYMEX has never been higer, with 1.3 BILLION FAKE!!! orders in the front 4 months alone.  Consider how ridiculous this is when the US only imports 7Mb/d of oil so these orders, over 120 days, would deliver 10.8Mb/d to Cushing, OK alone – a terminal that can handle, at most, 50M barrels in a month.

Click for
Chart
Current Session Prior Day Opt's


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Zero Hedge

Will Bitcoin Mining Consume All The World's Current Electricity Production By Feb 2020?

Courtesy of ZeroHedge. View original post here.

Via PowerCompare.co.uk,

Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.

However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins.

How ...

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Phil's Favorites

Bitcoin & Fiat Paper Dollars

Courtesy of Zero Hedge

By Chris Whalen

This past week on Bloomberg Television, I referred to bitcoin as "a fraud decorated with technology." The fraud comes about because the exchange of a fiat legal dollar for a token, to use the kind description adopted by the Securities and Exchange Commission, seems unfair and frankly incomplete. But since the dollar itself is a product of government fiat, the subject seems open to debate.

The fact that a growing crowd of people have decided to speculate in this modern day version of tulip bulbs does not alter the unfairness of the exchange.  Our friend Jim Rickards recently squared off against four bitcoi...



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Digital Currencies

Bitcoin & Fiat Paper Dollars

Courtesy of Zero Hedge

By Chris Whalen

This past week on Bloomberg Television, I referred to bitcoin as "a fraud decorated with technology." The fraud comes about because the exchange of a fiat legal dollar for a token, to use the kind description adopted by the Securities and Exchange Commission, seems unfair and frankly incomplete. But since the dollar itself is a product of government fiat, the subject seems open to debate.

The fact that a growing crowd of people have decided to speculate in this modern day version of tulip bulbs does not alter the unfairness of the exchange.  Our friend Jim Rickards recently squared off against four bitcoi...



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Chart School

Happy Thanksgiving :) Friday Should Be A Winner

Courtesy of Declan

Thanksgiving Wednesday was never going to generate an exciting day but it was good to see early week gains retained. Upcoming Thanksgiving Friday is typically a day when Junior traders go wild and decent gains are posted - even if trading volume is light. With last week's lead action I wouldn't be surprised if this pattern was to repeat.

Tech Indices have been leading the charge in recent days and I would look to the Nasdaq and Nasdaq 100 to be the primary chargers on Friday. Technicals are firmly in the green.

The Nasda...



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Insider Scoop

8 Stocks To Watch For November 22, 2017

Courtesy of Benzinga.

Related CRM 9 Stock's Moving In Tuesday's After Hours Session Salesforce Falls Despite Q3 Beat The Vetr co...

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Biotech

The two obstacles that are holding back Alzheimer's research

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

 

The two obstacles that are holding back Alzheimer's research

Courtesy of Todd GoldeUniversity of Florida

Family members often become primary caregivers for loved ones with Alzheimer’s disease. tonkid/Shutterstock.com

Thirty years ago, scientists began to unlock the mysteries regarding the cause of Alzheimer’...



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ValueWalk

Robert Mugabe Under House Arrest, Military Takes Control Of Zimbabwe

By Andjela Radmilac. Originally published at ValueWalk.

Zimbabwe’s head of state, 93-year-old Robert Mugabe, has been placed under house arrest after what seems to be a military coup took place in the nation’s capital.

By U.S. Navy photo by Mass Communication Specialist 2nd Class Jesse B. Awalt/Released [Public domain], via Wikimedia CommonsRobert Mugabe is safe

Following numerous reports on social media late Thursday night about the increased military presence in Harare, the capital of Zimbabwe, the country’s military took...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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OpTrader

Swing trading portfolio - week of September 11th, 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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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...

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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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