Author Archive for Zero Hedge

This Recovery Isn’t All That Resilient, Here’s Why

Courtesy of ZeroHedge. View original post here.

Authored by Danielle DiMartino Booth via,

When adjusted for inflation, credit card usage has grown faster than incomes for 18 months…

Are Federal Reserve stress tests leading economic indicators? That certainly seems to be the case. Just ask Capital One Financial Corp.

As of the first quarter, credit card loss provisions at Capital One were above 5 percent, a six-year high. The company recorded some improvement for the second quarter, yet Fed stress tests of the bank’s overall loan portfolio in a deep downturn show losses topping 12 percent. That explains Capital One’s “conditional” passing score, a black eye that prompted a reduced share buyback plan and no increase in its dividend.

Most economists today applaud the resilience of the current recovery, which has stretched into its eighth year, the third-longest in postwar history. Resilience and rising household defaults, though, don’t tend to go hand in hand.

Pressures have been building in the background for some time. When adjusted for inflation, credit card usage has grown faster than incomes for 18 months. According to Fed data, that time frame coincides with the upturn in revolving credit, a proxy for credit card debt.

In November 2015, outstanding revolving credit crossed above the $900-billion threshold for the first time since December 2009. By May of this year, annual growth was clocking 8.7 percent. Meanwhile, credit card balances hit $1.02 trillion, the highest level in almost eight years.

Whether by choice or force, the aftermath of the financial crisis prompted households to ratchet back their usage of credit cards. As the recovery got underway, frugality prevailed, punctuated by an increase in debit card purchases. It is thus notable that Bank of America data find debit card usage has weakened in recent years as households grew more comfortable rebuilding their credit card balances.

"Confidence" is the term most associated with the rising credit card debt. But it’s fair to ask why confident households would choose to pay so dearly for the privilege. At 15.83 percent, the average rate on credit card balances is at a record high.

It is more likely that households are increasingly tapping their credit cards

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Fed Believes Opioid Crisis Is Reason Why Men Aren’t Working

Courtesy of ZeroHedge. View original post here.

Bill Polacek runs a manufacturing company in Western Pennsylvania. Even though a glut in new construction projects has dried up work for tradesmen, Polacek said he struggled to find qualified welders a few years back when he had a large number of jobs to fill. Polacek interviewed 350 people to fill openings for 50 welders and machinists at his Johnstown, Pennsylvania-based manufacturing company. But he quickly found the number of qualified candidates dwindling to the point where the number of open jobs was higher than the applicants qualified to fill them. The reason? Too many of Polacek’s interviewees either had criminal histories, or couldn’t pass a drug test.

“'We weren’t attracting the right people,' Polacek says of the episode, which prompted him to invest in extensive outreach to local high schools to build up a pipeline of workers.”

America’s worsening opioid crisis has helped create a generation of men whose struggles with addiction are preventing them from finding, and holding, steady jobs. Indeed, the type of hard-to-hire Americans Polacek encountered pose a growing problem for many employers, as a deepening opioid crisis plagues American communities just as the jobless rate hovers near a 16-year low. Polacek’s situation is hardly unique; the Fed’s Beige Book, a collection of anecdotes about the business climate collected by the 12 regional Fed banks, has included many testimonials about the difficulty that some employers, particularly manufacturing firms, are having in finding qualified workers, like this one from a manufacturing firm in St. Louis.

“Manufacturing contacts in Louisville and Memphis reported difficulties finding experienced or qualified employees, with some citing candidates’ inability to pass drug tests,” the St. Louis Fed reported in the July 12 Beige Book, a survey of regional economic conditions. Businesses have also raised the issue as a barrier to finding workers in conversations with Philadelphia Fed President Patrick Harker.

According to Bloomberg, the Federal Reserve has stumbled on an explanation for the phenomenon that Polacek experienced when he tried to hire those welders – a question that has stumped central bankers, policy wonks and academics: Why are so many working-age men are dropping out of the labor force?

Even though this

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NSA Leak: Sessions Reportedly Discussed Trump Campaign With Former Russian Ambassador

Courtesy of Zero Hedge

The Washington Post just made Attorney General Jeff Sessions's rotten week even worse.

In what appears to be yet another leaked NSA intercept, WaPo reports citing 'current and former American officials', that Sergey Kislyak, the now infamous former Russian ambassador to the US, told his superiors in Moscow that he discussed campaign-related matters – including policy issues important to Moscow – with Sessions during the 2016 presidential race. If accurate, the report would amount to yet another straw on the camel's back of Sessions' relationship with the former ambassador – who has been at the center of many of the US media's stories alleging collusion between Russian officials and the Trump campaign.

When he announced his intentions to recuse himself from the DOJ’s probe into alleged collusion between the Trump campaign back in March, Sessions adamantly denied allegations that he had discussed the campaign with Russian officials, including former ambassador Kislyak. Sessions opted to recuse himself after he failed to disclose his contacts with Kislyak during his confirmation hearing with the Senate back in February.

“I never had meetings with Russian operatives or Russian intermediaries about the Trump campaign,” Sessions said in March when he announced that he would recuse himself from matters relating to the FBI probe of Russian interference in the election and any connections to the Trump campaign.

Sessions initially failed to disclose his contacts with Kislyak and then said that the meetings were not about the Trump campaign.

However, Kislyak’s accounts of two conversations with Sessions, then a top foreign policy adviser to Republican candidate Donald Trump, were intercepted by US spy agencies, which monitor the communications of senior Russian officials both in the United States and in Russia.

As WaPo details, one former official said that the intelligence indicates that Sessions and Kislyak had “substantive” discussions on matters including Trump’s positions on Russia-related issues and prospects for U.S.-Russia relations in a Trump administration.

Officials emphasized that the information contradicting Sessions comes from U.S. intelligence on Kislyak’s communications with the Kremlin, and acknowledged that the Russian ambassador could have mischaracterized or exaggerated the nature of his interactions.

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Trumptopian Markets – Where Hope Triumphs Over History

Courtesy of ZeroHedge. View original post here.

Since the election of Donald Trump as President, 'hope' has triumphed over reality…

As this Trumptopia has evolved (and as yet achieved very little in reality), hard data – real actual economic output – has collapsed to two year lows, as surveys of economic activity reached record levels of delusion… and over the last couple of months fell back somewhat to reality.

Despite that realization that all is not as utopian as surveys once suggested, US equities have soared to record highs as holdings in SPDR Gold Shares, the world’s biggest exchange-traded fund backed by bullion, plunged this week to the lowest since February.  After reaching a 2017 high last month, Bloomberg reports that assets in the ETF have dropped as signs of stronger economic growth boost equities and spur more central banks to consider raising interest rates.

So, investors are giving up on gold and going all-in on US equities on the basis that 'optimistic' surveys of self-referential management in America will come true?

There's just two things…

First: this exuberant surge in 'stretched' asset values across the globe is driven by one simple factor and it's not Trump

And Second: 'Murica faces a debacle as the debt ceiling looms (and is starting to make investors anxious in more professional markets)

So, the question is – will 'hope' continue to triumph over 'history' as record levels of money-printing worldwide is seen only as a good thing with no downside… none at all?

TEPCO Sacrifices Another “Swimming Robot” At Fukushima: Still “No Sign Of Melted Nuclear Core”

Courtesy of ZeroHedge. View original post here.

While Elon Musk is fearful of the future of AI and robots destroying man, it appears the Japanese are taking the battle to the robots as they send a third 'swimming' robot into the destroyed Fukushima reactors in search of the melted nuclear core material.

As's Aman Jain writes, a swimming robot showed just how bad the damage at Japan’s Fukushima nuclear plant is.

The robot dubbed “the Little Sunfish” went inside the factory and captured images of the containment vessel in the Unit 3 reactor, which was swept away by the massive earthquake and tsunami in March 2011.

No signs of melted nuclear fuel yet

Toshiba Corp., the company which has been given the responsibility of cleaning the plant, has co-developed the swimming robot with the International Research Institute for nuclear decommissioning.

The robot is on a mission to locate the fuel that melted and seeped from the core, falling to the bottom of the primary containment chamber where it was surrounded by highly radioactive water as deep as 6 meters, notes the Review Journal.

The little Sunfish is a small robot which propels around the area and captures data using two cameras and a dosimeter. Further, the robot is controlled by a group of four operators from a remote distance. The robot, which is about the size of a loaf of bread, is connected to data cables all the time. Further, the observations made by the robot are sent back to the team via the data cable.

On Wednesday, plant operator Tokyo Electric Power Co. (TEPCO) spokesman Takahiro Kimoto stated that they had received the first pictures of the underwater damage from the swimming robot, but there is no sign of the melted nuclear fuel that researchers are looking for.

In a late night news conference, Kimoto said, “The damage to the structures was caused by the melted fuel or its heat.”

Inside the plant, the robot was placed near the structure known as the pedestal, from where it went further in search of more information and the possibility of stumbling upon the melted fuel.

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Auto Stocks Crushed As Autoliv Slashes 2017 Growth Forecast In Half

Courtesy of ZeroHedge. View original post here.

A maker of automotive safety systems for various light vehicle platforms around the world, the $9 billion market cap Autoliv, missed 2Q 2017 on both revenue ($2.54bn actual vs. $2.57bn expected) and earnings ($1.44 actual vs. $1.49 expected) as shares dropped over 9% in early trading.

Of course, it was Autoliv's rather cautious outlook on North American production volumes in 2H 2017 that likely caught investors off-guard. Speaking on their conference call earlier, Autoliv management noted increasing uncertainty on the stability of auto markets in North America and China and expressed growing concerns on inventory levels in those two markets

We continue to see some uncertainty in the light vehicle market in particular in North America and in China. During the second quarter, the inventories remained above normal levels in China and the U.S. due to softer demand than the underlying light vehicle production, while the inventory levels in Europe remained stable based on our internal estimates.

…which prompted them to slash their top line growth forecast for the entire year from their previous guidance of 4% organic growth to just 2%.

Looking now up on the full year on the next slide. Our full year 2017 indications remains unchanged from February 2 for adjusted operating margin. However, we lowered our organic sales growth indication to about 2% from about 4% mainly due to lower demand in China and North America during the second quarter and the second half of 2017.

And summarizing our outlook on the next slide. Our outlook excludes cost for capacity alignment and anti-trust-related matters, and assume mid-July exchange rates. Our net consolidated sales for the third quarter expected to increase up to 2% as the currency translation effect is minimal. The full year 2017 indication is for a net consolidated sales increase of around 3% which remains unchanged from April 20. The lower organic sales growth of around 2% from the 4% earlier indication is offset by a lower currency translation effect of around 2 percentage points. Based on these sales assumptions, we expect an adjusted operating margin in the range of 7.5% to 8% for the third quarter and around 8.5% for the full year 2017.

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Palestinian President Cuts Off Diplomatic Ties With Israel

Courtesy of ZeroHedge. View original post here.

Palestinian President Mahmoud Abbas said Friday he was freezing contacts with Israel until it removes metal detectors that were installed recently at the Temple Mount, one of Islam’s holiest sites, after three people died and 200 more were injured during deadly clashes at the site Friday afternoon, according to Reuters.

"I declare the suspension of all contacts with the Israeli side on all levels until it cancels its measures at Al-Aqsa mosque and preserves the status quo," Abbas said in a brief televised speech after meeting his aides, referring to a mosque forming part of the holy site.

Abbas said in a speech that the freeze would stay in place until Israel lifted its stringent measures at Al-Aqsa mosque , which Jews call the Temple Mount, according to the Daily Sabah. On the advice of local police and the IDF, Israel’s cabinet decided to tighten security around the site after a series of violent terrorist attacks, including one that occurred a week ago, when three assailants somehow smuggled weapons onto the site, according to Breitbart.

Palestinian President Mahmoud Abbas

Palestinians have been battling with Israeli Defense Forces outside the Temple for days to protest the new security measures – including metal detectors that have been installed at the Temple’s entrances. On Friday, three young men were killed when fighting broke out.

Israeli police told the government that “extremist elements” where planning to “to cause violent disruptions to the public order, and thereby to threaten the public peace, including the [safety] of those coming to pray at the holy sites and other residents of the area," according to Breitbart

As a result, Israeli security forces erected checkpoints at main entrances to Jerusalem and blocked several roads leading to the Temple Mount area. Some 3,000 police forces were deployed to Jerusalem’s Old City in addition to five Israel Defense Forces battalions that have been put on standby.

According to Palestinian medical sources, Mohammad Mahmoud Sharef, 17, was shot in the neck in the East Jerusalem neighborhood of Ras Al-Amoud. Sharef reportedly and died of his wounds shortly afterwards. The Palestinian reports claimed that the gunfire came from

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US Drops Criminal Charges Against JPM “London Whale” Traders As It Is “Unable To Extradite Them”

Courtesy of ZeroHedge. View original post here.

In the latest confirmation that "justice" in the US has become a sordid farce when it comes to the banking elite, moments ago the following two headlines from Reuters hit:


Er, what: So just because two alleged criminal bankers "live outside the US" (not some 3rd world backwater dictatorship but Spain, with which the US has an extradition treaty) and "voluntarily" refuse to come to New York to defend themselves and – well – go to prison, and because the US is completely powerless to compel Spain to deliver these two men, they get to walk?

Yes, pretty much.

Here is the backstory:

Martin-Artajo and Grout were indicted in 2013 on five counts, including securities fraud, wire fraud and conspiracy.

Prosecutors said the duo hid losses within JPMorgan's chief investment office in London by marking positions in a credit derivatives portfolio at inflated prices. Those losses were part of an overall $6.2 billion trading loss suffered by the bank centered on Bruno Iksil, the former trader known as the London Whale. Martin-Artajo supervised Iksil, while Grout worked for Iksil. Both men deny wrongdoing. In 2013, JPMorgan agreed to pay more than $1 billion to settle U.S. and British regulatory probes into the London Whale losses and admitted wrongdoing.

* * * 

U.S. prosecutors said their efforts to extradite from Spain a former JPMorgan Chase & Co executive charged in connection with the bank's $6.2 billion "London Whale" scandal had hit a dead end. In a filing in Manhattan federal court [in May 2015], prosecutors said Spanish authorities have decided not to appeal an April 23 ruling by a court rejecting the extradition to the United States of Javier Martin-Artajo, a Spanish citizen.

Former JPMorgan employee Javier Martin-Artajo (C), indicted by a U.S. grand

jury in relation to the bank's "London Whale"


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Traders ‘Stunned’ As Nasdaq Fails To Rise, Debt-Ceiling Despair Inverts Yield Curve

Courtesy of ZeroHedge. View original post here.

As Stocks soared…

And today…

The day started off badly withEuropean stocks fell to the lowest level in 10 days as concern about potential antitrust collusion sent carmakers toward the worst decline in more than a year. Euro Stoxx 600 has now erased all the gains from the French Election euphoria…

Nasdaq failed to achieve its 11th day in a row of gains as early European weakness was just too much for the machines to overcome… though they tried… (11 days would have been the longest winning streak since July 2009) Dow ended the week red, Trannies worst week since Brexit

LPL's Ryan Detrick notes that the Nasdaq has been up for 10 consecutive sessions for the first time since Feb ’15. Since 1980, this has happened 21 other times, and the next month on average for Nasdaq was +2.6%, higher 16 of those 21 times overall.

VIX was clubbed to new lows in an effort to pump up stocks and go for the 11th daily win… but failed…

VIX closed at 9.31!! That is the lowest weekly VIX close in history

Utes were the week's best-performing sector (not exactly growthy) and financials worst…

FANG Stocks are up 11 days in a row and had their best week since Oct 2016 (thanks to NFLX) and the best 2-week gains (11%!) since July 2015

Bonds and Stocks recoupled this week…

As a reminder this has been an epic short-squeeze – the last time shorts were this low was at the peak for the S&P in Q2007…

Treasury yields tumbled this week… first weekly close lower in yields in the last 4 (2nd biggest weekly yield decline in 4 months)

With 10Y back below 2.25% back to pre-Fed-rate-hike levels…

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“The Swarm Effect”: Every Trader Today Has Just Two Choices

Courtesy of ZeroHedge. View original post here.

Few have dedicated as much time and effort into explaining the behavioral aspects of trading in a time of central planning (or "metastability") as Deutsche Bank's whimsical derivatives-philosopher, Aleksandar Kocic.

Three weeks after becoming the first Wall Street strategist to quantify (and qualify) the concept of market "complacency", and one week after explaining that the Fed has effectively created a state of "permanent state of exception" from conventional asset relations (and logic), one in which everyone is incentivized to perpetuate the "exception" (i.e., sticking their head in the sand and just BTFDing), where QE has become "universal basic Income for the rich", and as a result the Fed is terrified to unwind 8 years of monetary policies, today Kocic released his latest meta-financial stream-of-consciousness explainer, which highlights the choices faced by the current crop of traders every single day.

Picking up on a tangent touched upon by Canaccord's Brian Reynolds on Wednesday, who wrote that the relentless lack of volume in recent years "is more reflective of paralysis than complacency among equity investors", and then pointing to the sharp rise in NYSE short interest, countered that "investors are not complacent. Their stances range from extremely aggressive to bearish", Kocic takes the analysis one step further and writes that "the current mode of market functioning is really not so much about complacency as a result of willful blindness or ignorance as it is about difficult choices and high costs associated with those choices."

Referencing one of our favorite psychological tropes, namely the "learned helplessness" experimental framework, Kocic writes that "more than eight years of monetary stimulus and forced status quo have created a situation where change has become impossible." And adds that "to facilitate a change that would improve market conditions, there have to be multiple concessions to those forces against which change is directed. This has set in place the swarm effect: You can say no, but it is inconsequential."

Never one to shy away from expanding a market analogy into the ontological arena, Kocic, in attempting another explanation for why the market volatility is so low, then writes that "the resulting calm of the markets we have been experiencing lately has a

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Pakistan Economy In Crisis: Enormous CAD In Financial Year 2017

By Polina Tikhonova. Originally published at ValueWalk.

Pakistan economy suffers from the enormous current account deficit (CAD) increase, sending shockwaves across the nation.

OpenClipart-Vectors / Pixabay

As China and India remain locked in what appears to be the most volatile situation on the Indian subcontinent in recent years, Pakistan enters the political crisis spurred by the ongoing investigation into the government’s corruption, leaving the country’s economy in tatters.

The ...

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Phil's Favorites

Why the US doesn't understand Chinese thought - and must


Why the US doesn't understand Chinese thought – and must

Courtesy of Bryan W. Van NordenYale-NUS College

Plato, Confucius and Aristotle. Ancient Greek philosophy is widely taught in American universities, but classes in Chinese philosophy are few and far between. Public domain

The need for the U.S. to understand China is obvious. The Chinese economy is on track to become the largest in the world by 2030, Chinese leadership may be the key to ...

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Zero Hedge

This Recovery Isn't All That Resilient, Here's Why

Courtesy of ZeroHedge. View original post here.

Authored by Danielle DiMartino Booth via,

When adjusted for inflation, credit card usage has grown faster than incomes for 18 months...

Are Federal Reserve stress tests leading economic indicators? That...

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Digital Currencies

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

Courtesy of ZeroHedge. View original post here.

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

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Insider Scoop

Bank Of America Says Expectations For Groupon Are Still Too High

Courtesy of Benzinga.

Related GRPN Benzinga's Option Alert Recap From July 18 Watch These 7 Huge Call Purchases In Monday Trade ... more from Insider

Chart School

Small Caps Breakout

Courtesy of Declan.

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

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


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Members' Corner

Why we need to act on climate change now


Why we need to act on climate change now

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

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

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swing trading portfolio - week of July 17th, 2017

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


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

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

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

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

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Immunotherapy: Training the body to fight cancer

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


Immunotherapy: Training the body to fight cancer

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

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

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Mapping The Market

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

Courtesy of Jean-Luc

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

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

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

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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.


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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