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Greeks Turn to Gold on Bank Bail-in and Drachma Risks

Courtesy of ZeroHedge. View original post here.

Submitted by GoldCore.

The Greek stock market is down over 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case; the rhetoric is nationally-based and biased without unity of purpose across finance ministries. Recent official soundings from the UK and German governments saying that exposure to Greece is limited only underscores the depth of denial, ignorance and lack of consensus that exists within the euro area. A Greek exit from the euro would profoundly weaken the euro experiment and create a dangerous precedent for all future crises in the region.

The European economy is the largest middle class economy in the world. With over 400 million relatively affluent consumers it represents a massive portion of the net global economy and as such a breakup of part of it would be felt across the world in credit spreads and capital decisions for years to come. This would not have been because of Greek exit, but rather because of the inability of the authorities to manage the crisis as risks initially built up, then as bail outs were designed and implemented and then as these efforts surely failed.

We are witnesses to an epic failure of planning, statecraft and social justice. Regardless of where your politics lie, these elements are critical for a modern globally connected economy to function.

Sadly, the geopolitical backdrop is one of suspicion and hostility in the form of a festering proxy war between western and Russian interests in Ukraine and regional crisis and humanitarian catastrophe in the middle east as Syria and Iraq descend into stateless anarchy. These factors reduce the odds of a successful solution in Greece being found in time.

The share value of Greek banks cratered up to 30% Wednesday alone, before pulling back on Thursday as fears grew that the new government may not intend to soften their stance now that they are in office.

In what is probably the worst performance for the sector on record, the four major banks – Bank of Piraeus, Alpha Bank, National Bank of Greece and Eurobank – all closed more than 25% lower. Athens stock exchange closed…
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Meet Loretta Lynch – Obama’s Attorney General Nominee Who Might Be Even Worse than Eric Holder

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

On matters of policy, Ms. Lynch called capital punishment “an effective penalty” and said she disagreed with Mr. Obama’s statements that marijuana was no more harmful than alcohol. She called the National Security Agency’s collection of American phone records “certainly constitutional, and effective.”

– From the New York Times article: Criticism of Holder Dominates Hearing on Loretta Lynch, Attorney General’s Possible Successor

Eric Holder made a career out of protecting and coddling financial oligarchs (his 1999 memo essentially invented “Too Big to Jail”). This was such a lucrative decision for Mr. Holder, that it allowed him to climb all the way to the top of his profession. The dividends that supporting this man ultimately paid to Wall Street criminals were priceless. Not only were they bailed out despite wrecking the U.S. economy, they have since funneled all of the wealth gains since 2008 to themselves, while remaining above the law. This truly remarkable heist is what both Barack Obama and Eric Holder will be remembered for by history. Congratulations guys.

When Eric Holder announced his resignation, many of us breathed a sigh of relief thinking it can’t get much worse, but not so fast. The authoritarian streak and rampant cronyism of the Obama administration is a well oiled machine. You didn’t think you’d get off that easily did you? Enter Loretta Lynch.

I’ve touched upon Mrs. Lynch’s record previously, in the post, Wall Street Journal Reports Obama’s Attorney General Nominee Has Been Involved in $904 Million in Asset Forfeitures. Here’s an excerpt:

As a prosecutor Ms. Lynch has also been aggressive in pursuing civil asset forfeiture, which has become a form of policing for profit. She recently announced that her office had collected more than $904 million in criminal and civil actions in fiscal 2013, according to the Brooklyn Daily Eagle. Liberals and conservatives have begun to question forfeiture as an abuse of due process that can punish the innocent.

Naturally, that was just the tip of the iceberg. What we have learned from her ongoing confirmation hearing is that she’s a lover of NSA spying and the death penalty, while disagreeing with the statement that “marijuana is no more harmful than alcohol.”

I wonder if she has much personal experience to base this opinion on, or if it’s just more of the same…
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One Of These Things Is Not Like The Other

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

“Reality” is not “perception”

Charts: Bloomberg





The Bond Market Has Reached Tulip Bubble Proportions

Courtesy of ZeroHedge. View original post here.

Submitted by EconMatters.

By EconMatters

 

 

Fed Officials Trying to Send Signals to the Bond Market

 

James Bullard on Friday noted that the Bond Market was far too dovish in relation to where the Fed is in regard to raising rates in June, and this might be the understatement of the year so far. For example the U.S. 2-Year Bond Yield is 0.45 or 45 basis points, think about this for a moment. Even if the Fed fund`s rate finishes the year at 50 basis points which is well below the Fed`s most conservative forecasts, and we use a conservative annual inflation rate of 1% (I know oil has dropped but there are more inflation categories than just the energy component). Moreover, the overall annual inflation rate is well above 1% right now, and you factor in that this bond is paying a 2-year risk premium for tying up one`s capital with all kinds of inflation risks over that 2-year time frame, this has to be the stupidest investment of all time.  

2-Year U.S. Bond Yield is 45 Basis Points

 

To buy the 2-Year Bond when the Fed has practically stated that after two FOMC meeting`s they are liable to raise rates at least 25 basis points at the earliest (think April) and June at the latest so that is 25 basis points right there added to the Fed Fund`s rate, and needs to be added to the 2-Year Bond calculation so the current Fed target rate is 0.00 – 0.25 with the daily rate on 1/29 of 0.11 or 11 basis points, so add the June 25 basis rate hike to the


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Another Step Down The Long, Slow Road To IRA Nationalization

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Simon Black via Sovereign Man blog,

Let’s take a brief walk into financial reality for a moment.

At the time of this writing, the United States government’s official debt is nearly $18.1 trillion.

Now, let’s look at who the biggest owners of that debt are:

1) Taxpayers of the United States.

If you’ve held a job in the Land of the Free, 15.3% of your salary has gone to fund Social Security and Medicare.

Each of these programs holds massive trust funds that are supposed to pay out beneficiaries, both present and future.

Conveniently, the trust funds are required by law to buy US government debt.

And given that every single US taxpayer is an ultimate beneficiary of these trust funds, that ranks the people of the United States as among the biggest holders of US debt.

How sustainable is this? Not very.

The 2014 trustee reports for both Medicare and Social Security indicate that nearly ALL of the trust funds are sliding towards insolvency.

This isn’t some wild conjecture. The people in government who manage these trust funds are flat out telling us that they’re about to go bankrupt.

Let that sink in for a bit… then ask yourself: how long can two insolvent programs continue to be among the largest owners of US government debt?

2) The Federal Reserve

Now that we know Social Security and Medicare cannot continue to buy Treasuries indefinitely, we turn our attention to the Fed, which as of today, holds over $2.4 trillion in US government debt.

The Fed is essentially the lender of first resort to the US government and has singlehandedly managed to mop up the vast majority of government debt over the last several years.

Problem is, the Fed has to print money to do this. And the Fed has created so much money over the last few years that it’s now borderline insolvent.

The Fed’s capital now stands at just 1.27% of its total assets. To be clear, this is a razor thin margin of safety.

No other central bank in the world (except Canada, curiously) would be able to post such a pitiful number and still pretend to be credible.

But make no mistake, there is a level of monetary expansion that’s too far. And the Fed is already getting close


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Visualizing The Cost Of Living Around The World

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Imagine that users submitted hundreds of thousands of prices for everyday items, and that they all got compiled into a massive database. Then, suppose a worldwide index of prices was created that compared the cost of living across different places by using these many data points.

Well, that’s already happened at Numbeo which is the world’s largest database of user contributed data about cities and countries.

This infographic uses this information to show the most expensive and cheapest places to live by country. While it is missing some of the granularity of looking closer at individual regions and cities, it does do a good job of showing a broad perspective on living costs.

Switzerland and Norway may not surprise you as two of the most expensive countries. However, Venezuela might not have been a place that was on your radar. Of course, in retrospect, when you have inflation spiraling out of control at a rate of 64% per year, that will make things a bit pricey.

Want cheap goods and services? Head over to India, Nepal, and Pakistan. With about 1.5 billion people spread between those three countries, labour is cheap and the cost of living is very low.

Click image for massive legible version

h/t Visual Capitalist





As China’s Offshore Yuan Crashes To A 2 Year Low, Beijing Warns Its Citizens: “Don’t Buy Dollars”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We won’t go into the specific details of China’s burst housing bubble, the shady underworld of its pyramid scheme wealth-management products, the fact that any hard asset in China is rehypothecated literally a countless number of times, the nuances of its deflating shadow banking system, or even the complexities of its alleged capital controls (alleged, because as a reminder, they only exist for the common folks – the really wealthy Chinese are naturally exempt from any capital flow constraints). We will point out something even more disturbing.

Recall that China, a mercantilist, export-driven country, has a currency that is pegged to the dollar in all but name (yes, the technical peg was dropped in 2005 but since then the PBOC controls the daily moves in the strictest and tiniest of increments), a dollar which has soared in the past 6 months to levels which have prompted countless other central banks to ease in recent weeks, and even forced the Swiss National Bank out of the currency wars, waving a flag of surrender. As a result, China’s exports have been crushed regardless of what fabricated and goalseeked Chinese data will have gullible observes believing.

And while the value of the local Yuan, the CNY, is set by bureaucrats and policy makers on a daily basis, and trades in a tight band around a specific, political number and thus never truly reflects the fair value of the Chinese currency, its offshore cousin, the CNH, floats and is impacted by the private demand of the Yuan. As such, the latter is far more indicative of the pressures that face the Chinese economy and what financial interests dictate should be the fair value of the domestic currency.

It is also the former, the Offshore Yuan, that overnight hit a two-year low, reaching a level not seen since September 2012.

Why do we bring this up?

Because in a notice posted on Chinese media yesterday, China is now openly scrambling and on the defensive, when it comes to an ever stronger rush by the locals to get out of their own currency and into the US dollar.  As Want China Times reports, “prompted by the robust performance of the US dollar, growing numbers of Chinese are considering converting renminbi…
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“We Can’t Do This Forever,” Fed Admits “Market Will Overwhelm Us”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a somewhat stunning admission of the truth in central planning (that the Swiss just experienced first hand – and perhaps Venezuela has been experiencing for years), The Philly Fed’s Charles Plosser explains the following…

It may work out just fine, but there’s a risk to that strategy, and the risk is that we wait until the point where markets force us to raise rates and then we have to react quickly and aggressively. I believe that if we wait too long, then we run the risk of falling very far behind the curve or disrupting the economy by rapid rate increases.

The history is that monetary policy is not ultimately a very effective tool at solving real economic structural problems. It can try for a while but the problem then is that it’s only temporarily effective, and when you can’t do it anymore you get the explosion yesterday in the Swiss market.

One of the things I’ve tried to argue is look, if we believe that monetary policy is doing what we say it’s doing and depressing real interest rates and goosing the economy and we’re in some sense distorting what might be the normal market outcomes at some point, we’re going to have to stop doing it. At some point the pressure is going to be too great. The market forces are going to overwhelm us. We’re not going to be able to hold the line anymore. And then you get that rapid snapback in premiums as the market realizes that central banks can’t do this forever. And that’s going to cause volatility and disruption.

I think the jury is still out on the costs. Because the cost I was worried about was the longer-term cost of unraveling all of this. So maybe I was right, maybe I was wrong. That remains to be seen.

I do worry about the longer-term implications for the institution. Part of my criticism has been that we have pushed the boundaries into fiscal rather than monetary policy. That has brought us praise and opprobrium. Perhaps justifiably on both counts. I do wonder as I look down the road five or 10 years, how will that shape the institution? What happens to our independence? What happens to our ability to do things effectively? Given all that we’ve


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The Fed Is Now Frontrunning Value Investors

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Nick Nanda And Kai Wu of Kaleidoscope Capital (pdf)

The Fed Is The New Value Investor

THE DEMISE OF HEDGE FUNDS

Something strange seems to be developing beneath the surface in markets since the financial crisis. Stocks, especially U.S. stocks, have delivered abnormally high returns. The S&P 500 has produced an astounding 15% per year for the last five years. But when you strip away market exposure, active managers have had a surprisingly hard time beating the market. Outperforming the market is always difficult, but even well-known professionals with stellar track records spanning decades have stumbled since the crisis.

Since 1997, hedge funds have delivered approximately the same returns as the market but with about half the risk [Exhibit 1]. Risk can be defined as volatility or perhaps better as peak-to-trough loss in stress events such as 2008. Doubling the risk-adjusted return of the market is a tall order. It’s no wonder institutions have been showing up in droves pouring cash into hedge funds.

However, this high-level analysis misses an important wrinkle. Some of these returns have been earned by simply running net long the stock market. While actual market exposure is not available, we can proxy using beta [Exhibit 2]. Over the past 18 years, hedge fund net long exposure (beta) seems to have been remarkably stable, around 34%.

To calculate the true value added by hedge funds, we need to adjust for their consistent net long exposure. Deducting the returns resulting from positive market exposure produces an interesting picture [Exhibit 3].

This chart tells a tale of two distinct periods [Exhibit 4]. In the first period (1997-2009), hedge funds delivered spectacular performance. The second period (2010-2014), however, has been dismal. The last five years have been a terrible time to be invested in the average hedge fund.

While one of the reasons for this recent underperformance is hedge funds’ fee structures, which we believe to be unfavorable to investors (See upcoming Kaleidoscope paper on hedge fund fees), there may be other factors at play.

HEADWINDS FOR VALUE INVESTORS

As value investors, we were also interested in how our competitors had fared. We examined the performance of ten prominent value investors, each running multi-billion dollar U.S.-focused equity mutual funds. These managers have track records spanning several decades and…
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“Obama Is Clueless On Inequality,” David Stockman Rages “The Problem Is [The Fed]“

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Echoing Elliott's Paul Singer's "greatest irony of politicians railing against inequality," former Reagan OMB Director David Stockman raged that when it comes to inequality, everyone can see the symptom, but "President Obama is clueless as to the cause," blasting that the problem is not capitalism, "the problem is in the Eccles Building and the 12 people sitting there thinking that zero interest rates are some magic elixir that will cause this very toubled economy to revive.! It won't, "these people are dangerous and destructive," Stockman exclaims, and sooner or later the inequality they have created is going to cause a huge political reaction.

As Singer previously opined…

 
 

Inequality in the U.S. today is near its historical highs, largely because the Federal Reserve’s policies have succeeded in achieving their aim: namely, higher asset prices (especially the prices of stocks, bonds and high-end real estate), which are generally owned by taxpayers in the upper-income brackets. The Fed is doing all the work, because the President’s policies are growth-suppressive. In the absence of the Fed’s moneyprinting and ZIRP, the economy would either be softer or actually in a new recession. 

The greatest irony is that the President is railing against inequality as one of the most important problems of the day, despite the fact that his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough.





 
 
 

Zero Hedge

Greeks Turn to Gold on Bank Bail-in and Drachma Risks

Courtesy of ZeroHedge. View original post here.

Submitted by GoldCore.

The Greek stock market is down over 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case; the rhetoric is nationally-based and biased without unity of purpose across finance ministries. Recent official soundings from the UK and German governments saying that exposure to Greece is limited only underscores the depth of denial, ignorance and lack of consensus that exists within the euro area. A Greek exit from the euro would profoundly weaken the euro experiment and create a dangerous precedent for a...



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Chart School

Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is an advance preview of the monthly moving averages I track after the close of the last business day of the month. At this point, before the open on the last day of the month, three S&P 500 strategies are now signaling "invested" -- unchanged from last month. Two of the five of the Ivy Portfolio ETFs, Vanguard FTSE All-World ex-US ETF (VEU) and PowerShares DB Commodity Index Tracking (DBC), are signal "cash" -- also unchanged from last month.

If a position is less than 2% from a signal, it is highlighted in yellow.


Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give...



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Phil's Favorites

Greece Will Not Accept Bailout Extension or Deal With "Rottenly Constructed" Troika; Mish's Game Theory Math

Courtesy of Mish.

Greece Will No Longer Deal with ‘Troika’

It now strongly appears as if Greece, Germany, and the nannycrats in Brussels are all on one hell of a collision course. Both sides have dug in, and the war of words has escalated in all corners.

For example, please consider Greece Will No Longer Deal with ‘Troika’, Yanis Varoufakis Says
Greece will no longer co-operate with the “troika” of international lenders that has overseen its four-year bailout programme, the country’s finance minister said.

Yanis Varoufakis also said Greece would not accept an extension of its EU bailout, which expires at the end of February, and without which Greek banks could be shut off from European Centr...



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All About Trends

Mid-Day Update

Reminder: David 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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Sabrient

In the News: An ETF Rush to Bet on Insiders

Courtesy of Sabrient Systems and Gradient Analytics

(ETFTrends.com by Todd Shriber): "Betting on insider buying is again proving to be an efficacious strategy as the Direxion All Cap Insider Sentiment Shares (NYSEArca: KNOW) has been noticeably less bad than the S&P 500 to start 2015. Add to that, investors are warming to the merits of KNOW's insider sentiment strategy." [Editor's note: KNOW tracks the Sabrient Multi-cap Insider/Analyst Quant-Weighted Index (SBRQAM)]. Read article

...

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Market Shadows

What Would You Do?

What Would You Do?

Courtesy of Paul Price

Suppose you had the technical ability and raw materials to print up counterfeit dollars, euros or yen that were identical to the real things. Assume you could spend them as fast as you could create them with no fear of any repercussions.

Would you prudently print up only as much fresh currency as you needed for your current lifestyle? Would you create just a bit more than that to help relatives or those in need?

It is most likely you’d have your printing press running 24 hours a day, seven days a week. Becoming the richest person in the world would confer great power upon you.

You could rationalize this action because you plan to use the money for good purposes. Imagine the warm feeling you’d get by giving every person in America one million do...



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OpTrader

Swing trading portfolio - week of January 26th, 2015

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

Jitters After Bitcoin Exchange Suspends Services

So as I was saying yesterday (Bitcoin: The Biggest Clown Show In History?), Bitcoin has several obstacles on the path to potential success as an alternative currency. But I forgot to mention hacking and theft at Bitcoin exchanges and other technical problems. This is related to the lack of government backing and the fact that the value of Bitcoins is based entirely on confidence.  

Jitters After Bitcoin Exchange Suspends Services 

By 



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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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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