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Archive for the ‘Chart School’ Category

ECRI Recession Watch: "Whiff of Panic, but Sky Not Falling"

Courtesy of Doug Short.

Friday’s release of the publicly available data from the Economic Cycle Research Institute (ECRI) puts its Weekly Leading Index (WLI) at 134.2, up from 133.1 the previous week. The WLI annualized growth indicator (WLIg) is at -0.1, up from the previous week’s -0.7 and well off its interim low of -4.7 in mid-January.

Whiff of Panic, but Sky Not Falling

The featured article on the ECRI website is a Wall Street Journal Live interview of Lakshman Achuthan, who focuses on the weak Advance Estimate of Q1 GDP and also discusses the disconnect between manufacturing and services. The article also includes a link to an April 29 commentary, A Two-Speed Economy, which elaborates on the manufacturing/services disconnect.

The ECRI Indicator Year-over-Year

Below is a chart of ECRI’s smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is fractionally higher than it was at the start of the last recession.

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Appendix: A Closer Look at the ECRI Index

The first chart below shows the history of the Weekly Leading Index and highlights its current level.

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For a better understanding of the relationship of the WLI level to recessions, the next chart shows the data series in terms of the percent off the previous peak. In other words, a new weekly high registers at 100%, with subsequent declines plotted accordingly.

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As the chart above illustrates, only once has a recession ended without the index level achieving a new high — the two recessions, commonly referred to as a “double-dip,” in the early 1980s. Our current level is still off the most recent high, which was set back in June of 2007. We’ve exceeded the previously longest stretch between highs, which was from February 1973 to April 1978. But the index level rose steadily from the trough at the end of the 1973-1975 recession to…
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NYSE Margin Debt: A New Perspective

Courtesy of Doug Short.

Note: The NYSE has released new data for margin debt, now available through March. We’ve updated the charts in this commentary to include the latest numbers.


The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let’s examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.

The first chart shows the two series in real terms — adjusted for inflation to today’s dollar using the Consumer Price Index as the deflator. At 1995 start date is we were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak.

Debt hit a trough in February 2009, a month before the March market bottom. It then began another major cycle of increase.

The Latest Margin Data

The NYSE margin debt data is about a month old when it is published. The latest debt level is up 2.5% month-over-month and at a record high. Real (inflation-adjusted) debt rose 1.9% month-over-month and also at a record high.

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At the suggestion of Mark Schofield, Managing Director at Strategic Value Capital Management, LLC, we’ve created the same chart with margin debt inverted so that we see the relationship between the two as a divergence.

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The next chart shows the percentage growth of the two data series from the same 1995 starting date, again based on real (inflation-adjusted) data. We’ve added markers to show the precise monthly values and added callouts to show the month. Margin debt grew at a rate comparable to the market from 1995 to late summer of 2000 before…
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S&P 500 Snapshot: Up for the Day, Down for the Week

Courtesy of Doug Short.

The S&P 500 rallied at the open, traded sideways for three hours and then drifted higher to its 1.09% close, which was just fractionally off its 1.10% intraday high. Today’s advance more than erasing yesterday’s -1.01% decline. For the week, the index is down 0.44%.

Today the yield on the 10-year Note closed at 2.12%, up 7 bps from the previous close and up 19 bps from last Friday’s close.

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

On a daily chart of the index, we see that it’s back above its 50-day moving average. Today’s rally came on lighter volume than the two-day selloff that preceded it.

A Perspective on Drawdowns

Here’s a snapshot of selloffs since the 2009 trough.

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For a longer-term perspective, here is a charts base on daily closes since the all-time high prior to the Great Recession.

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Light Vehicle Sales Per Capita: A New Look at the Long-Term Trend

Courtesy of Doug Short.

Note from dshort: The charts below have been updated to include today’s preliminary report on U.S. Light Vehicle sales.


For the past few years we’ve been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series we focus on the population adjusted data. Let’s now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 61.6%.

Here is a chart, courtesy of the FRED repository, of the raw data. This is a quite noisy series, to be sure. The average month-over-month change is 4.5%; the median change is 3.1%.

The latest data point is the preliminary April count published by WardsAuto, which shows a 3.2% decline from the previous month.

Here is a chart of the series with two additions:

  • A 12-month moving average is added to smooth the noise and help visualize the trend.
  • A linear regression (the red line) is added to further illustrate the long-term trend.

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In the chart above, the latest moving average value is 5.1% below is record high in September 2000.

Here is the same chart with two key modifications:

  • We’ve created a per-capita version using the FRED’s CNP16OV series for the adjustment.
  • We’ve indexed the numbers so that the first data point, January 1976, equals 100.

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The moving-average for the per-capita series peaked in February 1979. Thirty-five-plus years later, it is now down 28.2% from that February 1979 peak month.

The good news is that this adjusted metric has continued to rise from its Great Recession historic low, and it is comfortably above the linear regression. It will be interesting to see if the post-recession growth continues in the years ahead.





STTG Market Recap Apr 30, 2015

Courtesy of Blain.

Quick Note from Blain: Made some short and “to the point” market analysis videos over at Ticker.tv. These are 100% mobile friendly, please check them out and let me know what you think. If you like them I will try and make some every couple days. Thanks!

Indexes continue to show weakness as the S&P 500 fell 1.01% and the NASDAQ 1.64%.  Data today showed that consumer spending in March posted the the biggest increase since November, while February’s gain was larger than previously estimated. Incomes were little changed reflecting a drop in dividend payments.

At this point that bearish outside reversal day we mentioned Monday as a potential short term top in the NASDAQ has actually led to follow through.  Sometimes you get surprised when old fashioned bearish indicators still work in these markets.   That index has now quickly fallen below its 50 day moving average after being in a parabolic state early Monday nowhere near even the 20 day moving average – things can change fast.  The S&P 500 never closed over our upper trend line which has not been the case during the past 9 months during rallies.  So it was a notable underachiever and is now well below that level.

spx

nasdaq

The Russell 2000 – which had been an outperformer this year – really took it on the chin today. It sliced through the 50 day moving average and now is approaching the 100 day – what a quick move.  It is now near an old support level.  Remember the Russell 2000 companies were benefiting from the strong dollar as investors rotated into these names which don’t have much dollar exposure (i.e. exports).  But as we showed yesterday the dollar rally has ended and now we are seeing an almost perfect correlation out of the Russell 2000 – interesting.

rut

The NYSE McClellan Oscillator is already fast approaching the initial stage of oversold – it has been a while since we saw these type of readings.

NYMO

Apple (AAPL) was a big drag as the Wall Street Journal reported that supplies of the company’s Apple Watch were limited at the…
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S&P repeating 2000 and 2007 pattern right now?

Courtesy of Chris Kimble

spxascendingtrianglefailedbreakoutsapr28

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In 2000 and 2007 the S&P created bullish ascending triangle patterns, which two-thirds of the time suggest higher prices are ahead. The key to this pattern is support holding.  Both times multi-year support failed to hold and you know the rest of the story.

Now the S&P appears to be creating the same pattern again, at 161% Fibonacci extension resistance.

In 2000 & 2007, what the S&P did at support was very important!

In my humble opinion, what the S&P does at support right now is very important too!

To become a member of Kimble Charting Solutions, click here.





Moving Averages: April Month-End Update

Courtesy of Doug Short.

Valid until the market close on May 29, 2015

The S&P 500 closed April with a monthly gain of 0.85%, which follows a loss of 1.74% in March. All three S&P 500 MAs and four of the five Ivy Portfolio ETF MAs are signaling “Invested”. In the table below, monthly closes that are within 2% of a signal are highlighted in yellow.

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I’ve also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick and Rodrigo Gordillo:

Backtesting Moving Averages

Monthly Close Signals Over the past few years I’ve used Excel to track the performance of various moving-average timing strategies. But now I use the backtesting tools available on the ETFReplay.com website. Anyone who is interested in market timing with ETFs should have a look at this website. Here are the two tools I most frequently use:

Background on Moving Averages

Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets. In essence, when the monthly close of the index is above the moving average value, you hold the index. When the index closes below, you move to cash. The disadvantage is that it never gets you out at the top or back in at the bottom. Also, it can produce the occasional whipsaw (short-term buy or sell signal), such as we’ve occasionally experienced over the past year.

Nevertheless, a chart of the S&P 500 monthly closes since 1995 shows that a 10- or 12-month simple moving average (SMA) strategy would have insured participation in most of the upside price movement while dramatically reducing losses.

The 10-month exponential moving average (EMA) is a slight variant on the simple moving average. This version mathematically increases the weighting of newer data in the 10-month sequence. Since…
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Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is an advance preview of the monthly moving averages we 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. One of the five of the Ivy Portfolio ETFs, PowerShares DB Commodity Index Tracking (DBC), is signal “cash”. Last month the Vanguard FTSE All-World ex-US ETF VEU was also signaling “cash”.

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


Month-End PreviewNote: 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 a general sense of how US equities are behaving. However, for followers of a moving average strategy, the general practice is to make buy/sell decisions on the signals for each specific investment, not based on a broad index. Even if you’re investing in a fund that tracks the S&P 500 (e.g., Vanguard’s VFINX or the SPY ETF) the moving average signals for the funds will occasionally differ from the underlying index because of dividend reinvestment, which is not factored into the index closes.

The Ivy Portfolio

The second of the three adjacent tables previews the 10-month SMA timing signals for the five asset classes highlighted in The Ivy Portfolio.

We’ve also included (third table) the 12-month SMA timing signals for the Ivy ETFs in response to the many requests to include this slightly longer timeframe.


After the end-of-month market close, we’ll update the monthly moving average feature with charts to illustrate.

The bottom line is that these moving-average signals have a good track record for long-term gains while avoiding major losses. They’re not fool-proof, but they essentially dodged the 2007-2009 bear and have captured significant gains since the initial buy signals after the March 2009 low.





New Jobless Claims Hit a 15-Year Low

Courtesy of Doug Short.

Here is the opening statement from the Department of Labor:

In the week ending April 25, the advance figure for seasonally adjusted initial claims was 262,000, a decrease of 34,000 from the previous week’s revised level. This is the lowest level for initial claims since April 15, 2000 when it was 259,000. The previous week’s level was revised up by 1,000 from 295,000 to 296,000. The 4-week moving average was 283,750, a decrease of 1,250 from the previous week’s revised average. The previous week’s average was revised up by 500 from 284,500 to 285,000.

There were no special factors impacting this week’s initial claims. [See full report]

Today’s seasonally adjusted 262K new claims was well below the Investing.com forecast of 290K. The four-week moving average at 283,750 is off its interim low of 282,250 set the week ending on April 4th.

Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

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As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (the highlighted number) is a more useful number than the weekly data. Here is the complete data series.

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The headline Unempolyment Insurance data is seasonally adjusted. What does the non-seasonally adjusted data look like. See the chart below, which clearly shows extreme volatility of the non-adjusted data (the red dots). The 4-week MA gives an indication of the recurring pattern of seasonal change (note, for example, those regular January spikes).

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Because of the extreme volatility of the non-adjusted weekly data, we can add a 52-week moving average to give a better sense of the secular trends. The chart below also has a linear regression through the data. We can see that this metric continues…
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PCE Price Index: Virtually No Change in the Fed’s Preferred Inflation Gauge

Courtesy of Doug Short.

The Personal Income and Outlays report for March was published this morning by the Bureau of Economic Analysis.

The latest Headline PCE price index year-over-year (YoY) rate is 0.33%, statistically unchanged from 0.31% the previous month. The Core PCE index (less Food and Energy) at 1.35% is only one basis point above the previous month’s 1.34% YoY.

The general disinflationary trend in core PCE (the blue line in the charts below) must be perplexing to the Fed. After years of ZIRP and waves of QE, this closely watched indicator consistently moved in the wrong direction. In April of 2013, the Core PCE dropped below 1.4% and hovered in a narrow YoY range of 1.23% to 1.35% for twelve months. The subsequent months saw a higher plateau approaching 1.5%, but the most recent months are closer to the lower range.

The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low, a level to which it has returned in the last four months.

The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed’s preferred indicator for gauging inflation. The two percent benchmark is the Fed’s conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. The most recent FOMC statement now refers only to the two percent target.

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The index data is shown to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But core PCE is such a key measure of inflation for the Federal Reserve that precision seems warranted.

For a long-term perspective, here are the same two metrics spanning five decades.

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Note: The data source is Table 9 in Excel file available in the right-hand column here.





 
 
 

Zero Hedge

WSJ Slams Bernanke's Rambling Blog Post: "Stop Blaming Everyone" For Your Mistakes

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The mainstream is beginning to sound a lot like some fringe blog... A week after the world's largest sovereign wealth fund unleashed a tirade against high-frequency trading and monetary policy distortions, The Wall Street Journal has penned an Op-Ed ramping up its war against Bernanke (and The Fed). What next? Cats living with dogs, mass hysteria, the dead rising from the grave?

Bernanke threw the first punch... and it landed. ...



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Phil's Favorites

Beware, the Tax Man Has Eyes on You: Potential Hike for Illinoisans is Staggering

Courtesy of Mish.

Live in Chicago? A report by Nuveen shows a pension payment spike looms in 2016, and the potential tax hike to  fix it is staggering.

Please consider Chicago’s Fiscal Stress: New Term, Same Problems.
Pension Payments Are A Growing Portion of the Budget

Years of poor funding exacerbated Chicago’s pension obligations so that it may be infeasible to keep them solvent without modifying benefits. Chicago’s four pension plans have a combined $20.1 billion unfunded liability and funded ratios ranging from just 24% to 57%.



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OpTrader

Swing trading portfolio - week of May 3rd, 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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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Kimble Charting Solutions

Commodity collapse leads to rare opportunity says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Commodities have had a rough go of it the past 4-years, declining almost 40%. The above charts look at the Thompson Reuters Commodity Index since the 1980’s.

The left chart is based upon “monthly closing prices,” reflecting that a neckline support test is at hand at (1).

The right chart is the same chart, based upon Hi/Lo/Closing prices. A dual test of support is in play at (1) in this chart.

Both charts reflect that  long-term tests of support are in play and support is support until broken. Often support like this is a place where at least a counter trend rally takes place.

US Dollar weakness and Commodity strength might su...



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Chart School

Scan with the Volume Wave Chart

Courtesy of Read the Ticker.

Scanning symbols by chart is the best way to see something that is going on. Its the best view.More from RTT Tv

NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net Investing Quote...

...“My satisfaction always came from beating the market, solving the puzzle.  The money was the reward, but it was not the main reason I loved the market.  The stock market is the greatest, most complex puzzle ever invented – and it pays the biggest jackpot…it was never the money that drove me.  It was the game, solving the puzzle, beating the market that had confused and confounded the greatest minds in histo...



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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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Insider Scoop

Morgan Stanley Reviews Exxon's Earnings

Courtesy of Benzinga.

Related XOM Exxon Posted A Positive Surprise: Evercore ISI Group Analyst Explains 4 Energy Pair Trades From MKM Partners Apple Has Cursed The Market - Cramer's Mad Money (4/30/15) (Seeking Alpha)

In a report published Friday, Morgan Stanley analysts maintained an Underweight rating on Exxon Mobil Corporation (NYSE: ...



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Sabrient

Sector Detector: Sector rotation model stays bullish, but neutral rankings and technical resistance flash caution

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

Courtesy of Sabrient Systems and Gradient Analytics

Last week, stocks cycled bullish yet again. In fact, the S&P 500, NYSE Composite, and NASDAQ each closed at record highs as investors positioned for the heart of earnings season in the wake of strong reports from some of the Tech giants. Notably, Utilities stocks got some renewed traction as yield-starved investors returned to the sector. Although our trend-following sector rotation model remains bullish, strong overhead technical resistance and neutral rankings in our SectorCast quant model indicate that caution is in order, and this might not be the moment for a major upside breakout, particularly given the expected softne...



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Digital Currencies

Why Bitcoin's male domination will be its downfall

Here's an interesting argument by Felix Salmon, although I think he is taking two correct observations and mistakenly attributing a cause-and-effect relationship to them: Bitcoin is going nowhere because women are not involved.

More likely, in my opinion, women are not involved in bitcoin because bitcoin is going nowhere (and they know it). Or maybe, simply, bitcoin is going nowhere and women are not involved. 

Why Bitcoin's male domination will be its downfall 

By Felix Salmon

Nathaniel Popper’s new book, Digital Gold, is as close as you can get to being the definitive account of the history of Bitcoin. As its subtitle proclaims, the book tells the story of the “misfits” (the first generation of hacker-l...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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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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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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