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Archive for the ‘Chart School’ Category

Weekly Gasoline Price Update: Down Another Nine Cents

Courtesy of Doug Short.

It’s time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny Regular dropped another nine cents and Premium eight cents. Regular is now at its lowest price since January 2011.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon. The highest continental average price is in California at 3.49. Missouri has the cheapest Regular at $2.76.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here’s a visual answer.

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The next chart is a weekly chart overlay of West Texas Intermediate Crude, Brent Crude and unleaded gasoline end-of-day spot prices (GASO). WTIC closed today at 82.72.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

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The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

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Here are some additional commentaries related to gasoline prices:





S&P 500 Snapshot: IBM Plunges, But Day Three of the Broader Rally

Courtesy of Doug Short.

With no economic news today, there was little to distract from IBM’s pre-market announcement of disappointing Q3 earnings. The company (my employer in a special business unit from 1984 to 1997) plunged at the open. It trimmed its closing loss to -7.17%. The popular press reports that the Oracle of Omaha (aka Warren Buffett) lost about $1 Billion today, based on his latest SEC filings. In contrast, after today’s close Apple announced strong earnings and upward sales guidance. It was up 2.14% today and is trading higher after the close.

The S&P 500 was minimally impacted by the IBM fiasco. The index hit its -0.24% intraday low shortly after the open but quickly recovered and chugged higher through the day, closing with its third consecutive advance, up 0.91% and not far off its 0.97% intraday high.

The yield on the 10-year Note closed at 2.20%, down 2 bps from Friday’s close.

Here is a 15-minute chart of the past five sessions.

Here is a daily chart of the index. We can see that today’s intraday high was vitrually spot on the 200-day moving average, a level the technicians will be watching this week. Rally volume is sloping downward.

A Perspective on Drawdowns

How close were we to an “official” correction, generally defined as a 10% drawdown from a high (based on daily closes)? The chart below incorporates a percent-off-high calculation to illustrate the drawdowns greater than 5% since the trough in 2009.

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For a longer-term perspective, here is a pair of charts based on daily closes starting with the all-time high prior to the Great Recession.

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Bullish Finish for Indices

Courtesy of Declan.

Today had the kind of action which allows bulls sleep easy: steady buying action from start ’til finish. If there is a concern, it was opening gap downs which greeted some indices.

The semiconductor index didn’t deliver on its island reversal, but it may yet do so tomorrow. Those who bought today’s open will be sitting pretty. What may contain bullish enthusiasm is the presence of overhead resistance at the 200-day and/or 20-day MA, but I still like this for an opening upside gap.


Of the tech averages the Nasdaq 100 is best placed. It successfully defended its 200-day MA, and has room to run to its 20-day MA. Technicals are with the bears and it will take a few days to reverse this, but near term momentum is with bulls.  Shorts should wait for a test of 20-day MA before getting aggressive.

What may give bears something to play with tomorrow is the finish of the S&P at the 200-day MA. The high volume undercut of this key moving average will not be so easily regained. If bulls can’t push an advance in the first hour of trading it may give bears a downside opportunity, and may open a larger short play as part of a 1,820 retest.

The Nasdaq only edged a close over the 200-day MA, and it may struggle as it tests 4,325 support-turned-resistance.

Finally, the Russell 2000 confirmed the channel breakout, and closed day above its 20-day MA. Both CCI and MACD are on the bulls side too. An intraday retest of the 20-day MA may give some value in a move towards the 50-day MA.

For tomorrow, bulls should keep an eye on the Semiconductor index: a morning upside gap would be very bullish. Shorts can look to the S&P and its 200-day MA: if there is a weak open it will likely present itself here first.


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A New Look at the Total Return Roller Coaster

Courtesy of Doug Short.

Note from dshort: I received a recent email on historical total returns that prompted an update to my Roller Coaster Return series. I’ve updated the charts below based on monthly data through the September close.


Here’s an interesting set of charts that will especially resonate with those of us who follow economic and market cycles.

Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation?

The purchasing power of your investment has increased to $19,967 for an annualized real return of 13.91%.

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Had I posed the same question in March 2009, the answer would have been a depressing $5,521. The -5.93% real return would have cut the purchasing power of your initial investment nearly in half.

Fun Runs of the Roller Coaster

Let’s increase the timeframe to 10 years. The annualized return is considerably smaller. Your $10K invested 10-year ago has grown to about $17.7K adjusted for inflation, an annualized real return of 5.74%.

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The 15-year timeframe is quite disappointing. Your one-and-a-half decade investment of $10K has only grown to about 14.1K adjusted for inflation for a measly annualized real return of 2.32%.

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If we extend our investment horizon to 20 years, the roller coaster is less volatile with higher lows and lower highs.

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The volatility decreases further with a 30-year timeline. But even for that three-decade investment, the annualized returns since the 1901 have ranged from less than 2% to over 11%.

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As these charts illustrate, and as many households have discovered during the 21st century so far, investing in equities carries substantial risk. Households approaching retirement should understand this risk and make rational decisions about diversification.…
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Vehicle Miles Traveled: A Structural Change in Our Behavior

Courtesy of Doug Short.

The Department of Transportation’s Federal Highway Commission has released the latest report on Traffic Volume Trends, data through August.

Travel on all roads and streets changed by 0.4% (1.0 billion vehicle miles) for August 2014 as compared with August 2013 (see report). The less volatile 12-month moving average is up 0.03% month-over-month. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is down 0.05% month-over-month and down 0.3% year-over-year.

Here is a chart that illustrates this data series from its inception in 1970. I’m plotting the “Moving 12-Month Total on ALL Roads,” as the DOT terms it. See Figure 1 in the PDF report, which charts the data from 1990. My start date is 1971 because I’m incorporating all the available data from earlier DOT spreadsheets. As we can readily see, the post-recession pattern suggests a structural change in our driving habits.

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The rolling 12-month miles traveled contracted from its all-time high for 39 months during the stagflation of the late 1970s to early 1980s, a double-dip recession era. The most recent decline has lasted for 81 months and counting — a new record, but the trough to date was in November 2011, 48 months from the all-time high.

The Population-Adjusted Reality

Total Miles Traveled, however, is one of those metrics that should be adjusted for population growth to provide the most meaningful analysis, especially if we want to understand the historical context. We can do a quick adjustment of the data using an appropriate population group as the deflator. I use the Bureau of Labor Statistics’ Civilian Noninstitutional Population Age 16 and Over (FRED series CNP16OV). The next chart incorporates that adjustment with the growth shown on the vertical axis as the percent change from 1971.

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Clearly, when we adjust for population growth, the Miles-Traveled metric takes on a much darker look. The nominal 39-month dip that began in May 1979 grows to 61 months, slightly more than five years. The trough was a 6% decline from the previous peak.

The population-adjusted all-time high dates from…
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How Far Will the Stock Market Rebound Go?

Courtesy of Pater Tenebrarum of Acting-Man

A Brief Look at the Technical Backdrop

We can actually not answer the question posed above with certainty. We don’t know for sure whether the recent market decline was a “warning shot” or merely a short term shake-out. In this we are in good company: the whole world doesn’t know.

However, our guess at this juncture is that the decline was of the “warning shot” variety, as it has violated long-standing uptrend support lines – something that the market has managed to avoid in previous corrections over the past three years. There are also fundamental reasons for thinking so, which we discuss briefly further below. However, based on fundamentals alone, it cannot be determined whether the stock market is already “ripe” for a larger degree decline, or whether its uptrend will resume in the short/medium term.

To be sure, the technical picture certainly conveys no certainties about the future either. However, should the market peak at a “typical” retracement level or at a previous lateral support level (thereby confirming its new status as resistance) and resume its decline from a lower high, yet another change in character will be recorded. In that case, the probability that a larger degree decline is underway would accordingly increase further.

Below are charts of the most important indexes showing Fibonacci retracement levels of the recent correction and lateral resistance levels. Although it is unknowable why the market often finds support or runs into resistance at Fibonacci retracement levels (there is certainly no logical reason for this), it has happened quite often in the past, so it is useful to be aware of them. Possibly it has become a self-fulfilling prophecy, because so many traders use technical analysis nowadays.

The first chart shows the S&P 500 Index (SPX), the NYSE Composite (NYA), the Russell 2000 (RUT) and the RUT-SPX ratio. What is noteworthy is that the Russell outperformed the large cap indexes from Monday to Thursday, thereby giving slight advance warning of an imminent short term low. However, this streak ended on Friday. Whether that was just a short term blip remains to be seen, but one should continue to keep an eye on…
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Bulls Work on Establishing a Market Low

Courtesy of Declan.

Friday’s gains helped put some distance on Wednesday’s spike reversals. This will offer bulls something to defend when selling inevitable returns. Friday’s action didn’t all go bulls’ way as key moving averages played a role in halting the advance for a couple of indices.

In the case of the Nasdaq, the blocker was the 200-day MA. Friday’s high tagged the 200-day MA before weakening – although there was a bit of a recovery into the close. The index is no longer oversold, giving bears an opportunity to turn the screw again.  However, a close above the 200-day MA would give bulls confidence that last week was a low of note.


On thing which may help bulls is the Semiconductor Index. After the killer gap down, the index is well placed to post a bullish ‘island reversal’; all that’s required is a gap higher Monday (which doesn’t close in subsequent trading). The index is also edging out of oversold conditions, not a bad place to be bringing buyers in. Should an ‘island reversal’ develop, it will help both the Nasdaq and Nasdaq 100.

Nasdaq breadth is at a stage which has marked swing lows in the past – although it hasn’t reached the depths of the 2011 sell off.

There is one area bulls need to be wary of, and that’s the breakdown of the Nasdaq from the channel on the weekly time frame. Volume was also significantly higher on the break. Often enough, the net result of this is a new, slower trend, but this could also morph into sloppy sideways action – which does nobody any favors.

The other index to run into moving average resistance was the Russell 2000. It reversed off the 20-day MA, a moving average often attacked by shorts. Look for near term selling pressure, although shorts moving here would probably cover close to 1,050.

The Russell 2000 weekly picture shows a…
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World Markets Weekend Update: The Selloff Moderates … Except for Japan

Courtesy of Doug Short.

The world market selloff moderated over the past week, except for Japan’s Nikkei 225. The top performer in my gang of eight world indexes (and the sole gainer) was Germany’s DAX, which rose 0.70%. At the bottom of the heap, the Nikkei plunged 5.02%. The S&P 500, like most of the others on the list, posted its 4th weekly loss, down 1.02%

Despite its 10.64% year-to-date advance, the Shanghai Composite remains the only index on the watch list in bear territory — the traditional designation for a 20% decline from an interim high. The index is down 32.56% from its August 2009 peak. See the table inset (lower right) in the chart below.

Here is a look at 2014 so far.

Here is a table highlighting the year-to-date index performance, sorted from high to low, along with the 2014 interim highs for the eight indexes. At this point, three of the eight are positive YTD, unchanged from last week, although the Nikkei’s cliff dive has moved it from seventh place to the bottom.

A Closer Look at the Last Four Weeks

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.

The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.

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A Longer Look Back

Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX and Hang Seng)…
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Big move for vol of vol

Big move for vol of vol

(October 17, 14)

Courtesy of SoberLook.com

Staying with the volatility theme, the latest jump in VIX was clearly dwarfed by what we saw in 2008 or even in 2011. However that's not true for the volatility of VIX – the so-called "vol of vol". The CBOE's VVIX Index, "an indicator of the expected volatility of the 30-day forward price of the VIX" (see description), has been comparable to or higher than what we saw during those high stress periods. The possibility of VIX doubling or even tripling ("tail" risk) does not seem outside of the realm of possibilities these days – even from the current elevated levels. And traders are willing to pay a relatively high premium to be able to take advantage of such moves.

 

Previously…

Implied vol dislocation

(October 16, 14)

The recent spike in volatility has created a "dislocation" in US equity options markets. VIX, which is a measure of implied volatility for large cap shares is now higher than RVX – the small-cap equivalent. This is highly unusual, since small caps tend to be more volatile. Part of the issue is the outsized spike in the volatility of large energy shares due to the recent sell-off in crude oil.

 

 

Sign up for Sober Look's daily newsletter called the Daily Shot.

 





S&P 500 Snapshot: A Friday Rally Trims the Weekly Loss to -1.02%

Courtesy of Doug Short.

The S&P 500 opened higher and rallied to its 1.90% intraday high in the late morning. The afternoon was a bit less jubilant, and the index finished Friday with a 1.29% advance, thus ending a highly volatile week with a loss of 1.02%. This was the fourth consecutive weekly decline — the longest such string of red since the four-week selloff in summer of 2011. Prior to that was the six-week dive in May of 2011.

I refer to the past week as “highly volatile” because of the 5.02% high-low spread.

The yield on the 10-year Note closed at 2.22%, up 5 bps from yesterday’s close but 9 bps below last week’s close.

Here is a 15-minute chart of the week.

Here is a weekly chart of the SPY ETF, which gives us a better picture of investor behavior. Trading volume was 126% above its 10-week moving average..

A Perspective on Drawdowns

How close were we to an “official” correction, generally defined as a 10% drawdown from a high (based on daily closes)? The chart below incorporates a percent-off-high calculation to illustrate the drawdowns greater than 5% since the trough in 2009.

Click to View
Click for a larger image

For a longer-term perspective, here is a pair of charts based on daily closes starting with the all-time high prior to the Great Recession.

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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!

 
 

Sabrient

Sector Detector: Sharp selloff in stocks sets up long-awaiting buying opportunity

Courtesy of Sabrient Systems and Gradient Analytics

Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.

Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...



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Phil's Favorites

Schedule Note

Courtesy of Lee Adler of the Wall Street Examiner

The cycle screening data update will be posted Tuesday morning. I have just finished producing today’s new Radio Free Wall Street  program. It will be available shortly. Thanks for your patience!

...

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Zero Hedge

A Caliph In A Wilderness Of Mirrors

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Authored by Pepe Escobar, originally posted at Asia Times,

I'm aiming at you, lover
Cause killing you is killing myself
- Orson Welles (director), The Lady from Shanghai,1947

He's invincible. He beheads. He smuggles. He conquers. He's the ultimate jack-of-all-trades. No Tomahawk or Hellfire can touch him. He always gets what he wants; in Kobani; in Anbar province; with the House of Saud (which he wants to replace) trying to make Putin (who he wants to behead) suffer because of low oil prices....



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Chart School

Weekly Gasoline Price Update: Down Another Nine Cents

Courtesy of Doug Short.

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny Regular dropped another nine cents and Premium eight cents. Regular is now at its lowest price since January 2011.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon. The highest continental average price is in California at 3.49. Missouri has the cheapest Regular at $2.76.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer.

...



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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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OpTrader

Swing trading portfolio - week of October 20th, 2014

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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Insider Scoop

UPDATE: Bank Of America Reiterates On ITT Educational Services As Shares Surge But Risks Remain

Courtesy of Benzinga.

Related ESI Urban Outfitters Drops On Q4 Profit Warning; Mead Johnson Nutrition Shares Spike Higher ITT Educational Services Shares Soar On Preliminary Results

In a report published Monday, Bank of America analyst Sara Gubins reiterated an Underperform rating on ITT Educational Services, Inc. (NYSE: ESI), and raised the price target from $7.00 to $8.00.

In the report, Bank of America noted, “ESI shares rall...



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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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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. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

...

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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Digital Currencies

Bitcoin Has Been Getting Obliterated

Joe has found a place for Bitcoins, and if you hold a lot of them, you won't like it.

Bitcoin Has Been Getting Obliterated

Courtesy of 

Remember Bitcoin?

There's not much to say about it, except that it's doing TERRIBLY.

Here's a chart going back to earlier this summer. Charts don't get uglier than this.

Bitcoinwisdom

Interestingly, the Bitcoin industry continues to be quite excited about the prospects for the digital currency, and there continue to be announcements about expand...



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Promotions

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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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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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