Phil's Newsletter

Tumbling Tuesday – Oil Falls to $42.50 as Fake Contracts Hit Inventory Wall

Oil is down 10% this week (so far).

This is being caused by FAKE!!! orders that have been placed at the NYMEX where traders pretended to demand hundreds of millions of barrels of oil in order to inflate prices during the summer.  Now they are suffering for their scam as the physical inventories have filled up and they are forced to roll (now 5% of the contract cost per month) or cancel their fake orders when there are no buyers present.  

In other words, this is EXACTLY what I told you would happen when oil was at $107 in June!  As I said at the time:

Forget peak oil, we're seeing PEAK DEMAND for oil pass us by!  Keep in mind that the non-OECD line on the chart above is just 1/4 of all demand and that is barely positive while OECD demand (66M out of 90Mbd demand) has been NEGATIVE since 2008 with the very brief exception of 2011 but, of course, that was only up 2% compated to 2010, which was flat to 2009s 5% decline.  

In other words, the demand NEVER CAME BACK but that fact is being covered up by a cartel of Billionaires who own the supply of oil as well as the media that they control (see excellent History Channel report on the subject).  As I noted yesterday, the "demand" on the NYMEX for 172M barrels of oil that is scheduled to be delivered to the US in July is completely and utterly FAKE and those contracts will almost all be cancelled by next Friday – purposely shorting our country's oil just at the start of summer driving season.

Our play at the time was shorting the /CL oil futures at $107.  At $47, those shorts were already up $60,000 per contract and, for non-futures players, …
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Meaningless Monday Market Movement

What a crazy week that was!  

As you can see on our Big Chart, we were down sharply, then back up and then down to finish down just 20 points (1%) on the S&P after all that fuss.  Of course, our headline last Monday was "Watch Out for Violent Swings in the Market" so, if you are reading this – unlike the Media Morons – you were probably not surprised by the action

We've been having fun getting in and out of Futures plays on the indexes, taking advantage of the swings to pick up a few bucks while we wait to see how the Fed Meeting (and Yellen's speech) move the markets on Wednesday.    

Before any FACTS are out that might let investors make intelligent decisions, we have rumors and speculation and this morning it's China's turn to rain MORE FREE MONEY down on the markets with Premier Li saying that "the government has room to step in and has “more tools in our toolbox” should growth flag and affect employment."  Isn't it kind of scary when the Premier of China is reading off the same script as Janet Yellen?  

Unlike Yellen, this is Li's ONLY press conference of the year but look how much fun he's having – maybe he'll start doing them more often (by comparison NJ's Governor Christie has done 170 in 5 years).  

On the economy, Mr. Li said that the government is trying to strike a balance between keeping growth at a relatively high rate and pushing structural reforms. Growth, he said, faces downward pressure but if it begins to affect jobs and income, then the government would take more forceful measures.

The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth,” Mr. Li said during the two-hour-long televised news conference.  Keep in mind that when Li says “We still have more tools in our toolbox,” that a Chinese toolbox looks like this:

How can you bet against an economy where EVERY Government is doing whatever it takes to prop it up?  Well,

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PSW March Top Trade Review – Navigating Choppy Markets

What an exciting start to the year this has been.  

It's been a difficult trading environment, to say the least and this will be the first full year featuring our new Top Trade Alerts™ (Members Only) and I look forward to doing these educational review sessions at least each quarter (our last one was January) to review both our trade ideas and our use of options to make those trade ideas as profitable as possible.  

Top Trade Alerts are sent out once or twice a week via EMail and Text Message from our Basic and Premium Live Member's Chat Room.  These trades are just a very small portion of what we discuss during chat each day, but hopefully a good representative sample of the dozens of trade ideas we share with our Members each week in our Live Member Chat Room as well as our Weekly Live Webinars (replays can be seen here).  

Keep in mind these are just snapshots of trades as of today – it's up to you to take good trades off the table and cut the losses (or make adjustments) on ones that go bad.  We're always discussing adjustments in our Live Member Chat Room – join us there for follow-ups.   

Our first top trade idea for 2015 was UCO on Jan 5th and UCO did have a nice pop and we cashed them out of the $25,000 Portfolio with a nice profit on February's pop to $9.50+.

 UCO has since pulled back and the July $14s fell all the way to 0.15 but now the July $8s are just 0.95 and make a nice way to go long on oil or, you can be more conservative and buy the $6 calls for $1.85 and sell the $9s for 0.70 for net $1.15 on the $3 spread.  

On Jan 8th we took a poke at RIG when they fell to $16.15, selling the 2017 $8 puts for $1.70 for a net $6.30 entry, paired with the 2017 $10/15 bull call spread at $2.50 for net 0.80 on the $5 spread.  RIG has fallen off considerably since, to…
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Fragile Friday – Can Low-Volume Bounce Hold into the Weekend?

SPY  5  MINUTEWhat total BS.

The volume on the S&P to the upside has been pathetic and yesterday was no exception with just 92M shares trading on SPY.  To put that into context (which we reviewed in yesterday's Live Member Chat Room) – we've had 4 up days and 5 down days in March and the SPY volume on the 5 down days has been 647M while the volume on the 4 up days has been 344M – just half of what the down volume has been.  

Nonetheless, despite the massive outflow of funds, SPY is only 3 points below where it started the month, at 210.  Even if we give the benefit of the doubt and pretend this isn't a blatant act of market manipulation designed to fool retail investors into buying the dips while Fund Managers and Banksters run for the exits – it's still an indication that this "rally" has a very weak base and could easily collapse in a dramatic fashion.  

Date Open High Low Close Volume Adj Close*
Mar 12, 2015

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Thursday Fake-Out – Strong Bounces or Bust

The Dollar is down so the markets are up this morning

This isn't complicated, folks, we've seen this dance before.  The S&P almost hit our goaaaalllllll!!! of 2,035 at 2,039 yesterday and was saved by the bell and this morning we have a bit of a recovery – but only because the Dollar has fallen almost 1% to prop up the markets.

Whether Dollar-driven or not, our 5% Rule™ dictates we still need to see strong bounces before letting ourselves get more bullish.  So far, we have just the Russell making a turn off their 50 dma line at 1,203 – if that line WASN'T bouncy, things would be very bad indeed.  Keep in mind that domestic small caps are least affected by the strong Dolllar while big-cap exporters and commodity producers are most affected.  

SPY DAILYLikewise, as you can see from Dave Fry's SPY chart, we're testing the 200 dma on the S&P and that had better be bouncy or look out below.  The bounces we'll be looking for are:

  • Dow 18,200 to 17,600 is 600 points (3.3%) and we look for 120-point bounces to 17,720 (weak) and 17,840 (strong).  
  • S&P 2,120 to 2,040 is 80 points (3.7%) and we look for 16-point bounces to 2,056 (weak) and 2,071 (strong).
  • Nasdaq 5,000 to 4,850 is 150 points (3%) and we look for 30-point bounces to 4,880 (weak) and 4,910 (strong)
  • NYSE 11,100 to 10,650 is 450 points (4%) and we look for 90-point bounces but may as well round to 100 and call it 10,750 (weak) and 10,850 (strong).
  • Russell 1,240 to 1,210 is 30 points and we already closed at 1,216 (weak bounce) and we'll expect to see 1,122 (strong) today in the very least and that's where we just jumped in short (1,224) on our Live Member Chat Room as Retail Sales were disappointing.  

8:30 Update:  As I just noted, Retail Sales have come in disappointing at -0.6% in February, miles below the +0.3% expected but in-line with -0.8% in January.  They are, of course, blaming the weather because who would have thought it would
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Whipsaw Wednesday – Europe’s 180 Sets the Tone

IEV WEEKLYShake it off!  

That's what Europe is doing this morning as the Euro plunges to $1.06, down just under 25% from $1.40 last May so the DAX BETTER be up 25% just to keep up with the deflating currency.  DAX was 10,000 last May and is now 11,500 – oops, that's only up 15%, not 25%, more hidden deflation I suppose

That's why, as you can see on Dave Fry's IEV chart, when priced in Dollars (as this ETF is), Europe's markets are DOWN 15% since last May – not up at all.  These Dollar-adjusted Fundamentals are, unfortunately, so complex that most investors just ignore them and, therefore, if the DAX, FTSE and CAC go up – our markets follow, without taking the currency effects into account at all.  

That's what's happening this morning as the Euro is down another 1% and down 4.2% since Friday, which is driving the EU markets back to new highs DESPITE the fact that everything is falling apart.  

As you can see on the chart, the London FTSE 100 is still down 2.69% because they are priced in Pounds, not Euros and Spain is its own special disaster but DAX, CAC and Italy's FTSE are flying as the currency they are priced in is doing a Thelma and Louise off the economic cliff.  The FREE MONEY is flowing in Europe on day 3 of their QE program and that's $3Bn per day being pumped into the economy by the ECB, so why shouldn't they be excited – we sure were when it was our turn (remember S&P 1,400 – that was only 2 years ago!).  

So, priced in Euros, we have a 2% rally in Euro stocks but, priced in Dollars, IEV, the ETF that contains those same stocks, is crashing.  The US indexes are priced in Dolars and, this morning, we are following Europe higher.  Is that smart?  Probably not and that's keeping us cautious and VERY SKEPTICAL until we see some longer-term pattens forming.  


On the right is the S&P chart I published for our Members in our Live Chat…
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Tumblin’ Tuesday – The Sell-Off Resumes

And down we go again!  

Futures have already given up all of yesterday's ill-gotten, low-volume, gains and now we will be testing the 50-day moving average on the Dow at 17,800 and the S&P at 2,060 while the NYSE has already failed 10,850 but it never got back over our Must Hold line at 11,000, so we never thought it was strong in the first place.  

As I noted for our Members in our Live Chat Room yesterday morning, the weak bounce for the NYSE was 10,900 and failing that kept us bearish, despite the "rally" we had for the day.  The Dow finished between weak (17,950) and strong (18,050) but S&P failed weak (2,080) while the Nasdaq and Russell were both looking strong.  Still, 3 of 5 fails and we stay bearish – that's sensible, right?  

We stayed bearish on the Nikkei (see yesterday's post for why) and this morning we got a huge drop back to our goal at 18,500.  As I said way back on Feb 26th (as well as in our Live Webinars since then) our bet on /NKD was that 19,000 would fail and it's happened several times since but this is the first day we got the full drop from 19,000 to our goal all in one session.  

That's a good sign that 18,500 is not the bottom and is likely to fail eventually, which is fabulous for the EWJ puts we have in both our Short-Term Portfolio and our $25,000 Portfolio (see this weekend's Portfolio Review).  Even worse for the Nikkei is that this drop is coming DESPITE the Yen weakening to 122 to the Dollar overnight – that's the lowest it's been in 13 years and USUALLY that makes the Japanese exporters very happy.  Maybe they read my post yesterday and got worried it will all end in tears?  

FXE WEEKLYSpeaking of collapsing currencies, the Euro is down to $1.0746 this morning as ECB bond-buying (see Thursday's post) runs right into hawkish commentary by the Fed's Fisher, who says the Fed should "promptly" end it's easy monetary
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Monday Movement – iWatch Out for Violent Swings in the Markets

Strap yourselves in folks. 

It's going to be a wild ride today and probably all week as the ECB begins it's $1.2Tn QE program that is scheduled to pump roughly $70Bn a month (it keeps going lower as the Euro keeps dropping!) into the wallets of rich people across the EU.  Just to illustrate how insane they can be, they began buying German Bunds this morning – giving the most to the country that needs it the least.  

Greece, meanwhile, the country that needs it the most is not getting any and Greece has already burned through the last of their $260Bn bailout, driving their 3-year yeild to 15.21%, roughly 50 times higher than Germany's borrowing rate.  Now, bear with me here but, in order to get the same return on their bond buying from Germany as they would from Greece, the ECB would have to lend Germany $13 TRILLION that Germany doesn't need rather than lending Greece the $260Bn it does need AND THAT'S EXACTLY WHAT THIER PLAN IS!  

By putting more money into "safer" countries the ECB is making things worse for the riskier countries, which aren't benefitting from this misguided QE missile.  But don't worry about things getting out of countrol, Draghi says the ECB will not pay more than 0.2% for the privilige of lending out money!  

That's right, the ECB will PAY YOU 0.2% to borrow their money for up to 30 years.  It doesn't sound like much but, if you borrow $1Bn, you get $60M in interest over 30 years for holding onto the ECB's money.  Again – they won't do this for Greece or anyone else who needs it but, if you don't need money – it's nice to know more money is available if you are willing to be paid to hold it, right?  

This is all, of course, completely insane and our reaction to an insane policy environment has been to remain "Cashy and Cautious" while these radical policies play themselves out.  The markets got a little scare on Friday but it was a very minor sell-off and already this weekend, China claims exports rose 48.3% in a month and, whether or not you
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Weekend Reading – News You Can Use

No rest for the wicked this weekend as we have big news from China.  

Just a week after downgrading their GDP projections to as low as 6.5% (a 13% reduction from 7.5%), China now CLAIMS Exports in February jumped 48.3% while Imports fell 20.5%.  The change isn't reflected on this chart, which shows the 3.3% fall in January exports but it looks like we're back to the days of Fake Chinese Data Reports – not that those days were ever really gone in the first place.  

Amazingly, this incredible turnaroun in imports comes just one day after Commerce Minister Gao Hucheng said:

"The domestic and foreign trade environments this year have not improved markedly. To fulfill the foreign trade growth target, efforts should be made to implement existing policies.  To achieve this goal will be an uphill battle and great efforts must be made."" 

China?s export volumes exceeded expectations in January.So gold stars to his entire staff for completely fixing the problem within 24 hours of his speech!  Gao had stressed that a multi-pronged strategy must be adopted: the country should strengthen support for businesses in the process of industrial upgrading, produce higher-value products, focus on innovation-driven competitiveness and encourage the development of new export models like e-commerce.  And then they did it all in just one day! 

Meanwhile, imports slumped 20.5% from a year earlier in February, surpassing the 19.9% fall in January and exceeding market expectations of a 10% decrease. The February slide was the fourth consecutive month of lower year-over-year imports.  The import decline was partly due to the sharp fall in prices for key commodities such as oil and metals. Crude-oil imports fell 46% in value but were up 11% in volume. Iron-ore imports showed a similar trend, losing 39% in value but gaining 11% in volume.  That's key for our CLF investment as iron-ore volume is picking up – a hopeful sign (if we can believe the numbers).   

Embedded image permalinkIn other unbelievable number news – it turns out Japan overestimated their GDP growth
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PSW March Portfolio Reviews (Members Only)

What a fantastic first quarter we had!  

Despite being cautious into the end of last year (see our December Review) our paired Long-Term and Short-Term Portfolios have gained $68,000 (9%) in the last 90 days.  Our Long-Term Portfolio has gone from $608,375 on 12/6 to $640,797 as of yesterday – a gain of $32,422, which is 5.3% and perfectly on track for our planned 20% annual gains.  

Oddly enough, it was our usually bearish Short-Term Portfolio that made the big gains over the past Quarter, mostly because we weren't actully that bearish and made some aggressive bullish bets as oil collapsed that have already paid off.  The Short-Term Portfolio was up "only" 65% for the year as of our December review at $165,136 and, because we turned bearish into the recent dip – we've popped to $201,495 on yesterday's close – up $36,359 or 22% in 3 months.  

Keep in mind we are LUCKY when we happen to time a major market move correctly, like we have this quarter – you can't expect to make 10% every quarter, especially when our goal is to remain well-hedged to protect our assets over the long-term.  What we are trying to do is grow our portfolios a combined 20% each year and, in fact, when we hit the 40% mark last month – I made the case for just cashing out – as we had already made our 2-year goal in 14 months.  

UUP WEEKLYWhen you make unrealistic amounts of money – CONVERT IT INTO CASH!   We converted our Income Portfolio into cash last year and, what do you know, the cash has jumped another 20% in value.  That's something we need to consider with our own equity positions, if we trade them in for strong Dollars, we can turn around and use those Dollars to buy equities backed by weaker currencies or commodities – something we have already begun to do in our Long-Term Portfolio

As we've note for the past few weeks, we have been VERY SKEPTICAL of this recent market rally and we've stayed very CASHY and CAUTIOUS in our portfolios now, as the market turns down, you can really begin to appreciate the value of having…
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Phil's Favorites

News You Can Use From Phil's Stock World


Financial Markets and Economy

How a ‘Low Volatility’ Stock Plunged 85% in an Hour (The Wall Street Journal)

Reading the label isn’t enough for picking funds. You may need to go into the ingredients list, too.

Take a look at funds that track the MSCI Minimum Volatility Emerging Markets Index.

North Dakota Oil Spills 3 Times Larger Than First Estimated (Associated Press)

A December oil pipeline spill ...

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Zero Hedge

Russophobia - Symptom Of US Implosion

Courtesy of ZeroHedge. View original post here.

Authored by Finian Cunningha, via The Strategic Culture Foundation,

There was a time when Russophobia served as an effective form of population control – used by the American ruling class in particular to command the general US population into patriotic loyalty. Not any longer. Now, Russophobia is a sign of weakness, of desperate implosion among the US ruling cl...

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Top 5 Myths About Medicare

By VW Staff. Originally published at ValueWalk.

Google Trends data shows Health Care queries in the US is a reaching an all-time high in search engines (peaking at over 100k search volume). As health care changes are currently being discussed by lawmakers, Medicare coverage searches having increased over 250% within the last 7 days. Medicare Part B, which charges beneficiaries’ premium based on their income, has jumped the top search term in Google for Medicare related queries.

United Medicare Advisors has identified the The 5 Medicare Myths that Cause Confusion Among Seniors...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Oil Executives Are Confident That the Future Is Bright (Bloomberg)

Oil prices are down nearly 10 percent over the past month, leading some to wonder if we're set for a resumption of the plunge seen between 2014 and early 2016. Executives at oil companies, however, are optimistic.

Trump’s Misplaced Priorities Imperil His Economic Agenda (Bloomberg)

Let’s begin by stating the obvious: My priorities are different than yours or Paul Ryan’s or the president’s. We all have a different agenda, motivated by differ...

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Kimble Charting Solutions

Fund flows of this size could mark a top, says Joe Friday

Courtesy of Chris Kimble.

A year ago flows into ETFs were extremely low, actually the lowest in years, as many stock market indices were testing rising support off the 2009 lows. The crowd wasn’t adding money to ETFs as lows were taking place. In hindsight, this was a mistake by the majority. Below I look at ETF flows over the past few years with an inset chart of the S&P 500.


Nearly three months into this year, fund flows have surpassed mone...

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Chart School

Indecision Strikes

Courtesy of Declan.

It was no real surprise to see indices slow down in their recovery. Across the board doji mark a balance between buyers and sellers. The one index which bucked the trend a little was the Russell 2000. It staged a modest recovery which brought it back to former support turned resistance. However, technicals remain firmly bearish, and will stay this way even if there are additional gains.

The S&P closed on light volume with a doji below resistance. The narrow intraday trading range offers a low risk opportunity with a break and ...

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Members' Corner


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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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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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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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

Chart below from


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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 >>