Archive for the ‘Chart School’ Category

Semiconductors Pull Indices Along

Courtesy of Declan.

A big day for Semiconductor Indices has finally boosted other indices. Semiconductors finished above March/April highs on new near term highs in relative performance. It has been a big week for this index and this could set a positive tone for the rest of the summer.






The Nasdaq broke out from consolidation, safely clearing converged 20-day and 50-day MAs. This is setting up nicely for a challenge of 4969, and could easily go on to challenge 2015 highs.  Technicals delivered a positive MACD trigger ‘buy’ and ADX ‘buy’.





The Russell 2000 made a clean break of the downward channel and now finds itself up against former rising channel support turned resistance. The technical picture is a little different with ‘buy’ trigger in Stochastics and ADX.  It also delivered a break of 20-day, 50-day, and 200-day MAs.  Relative performance has picked up and if this can be maintained it will re-affirm the secular rally from March 2009 (long in the tooth this rally is); long term rallies require Small Caps leadership.





Large Caps were least effected by these gains. The bearish head-and-shoulder pattern in the S&P is not negated, but it is under pressure. The only technical change was a bullish cross in ADX.





Bulls look to have cracked the code. The failure of the head-and-shoulder patterns to follow through on what were managed breakdowns is a big hit to bears. Tomorrow, assuming action quietens, then it will be important indices finish near today’s highs.




You’ve now read my opinion, next read Douglas’ and Jani’s.




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S&P 500 Snapshot: Best Gain Since March 11th

Courtesy of Doug Short’s Advisor Perspectives.

Most Asian markets had a bad session, but European indexes surged. The Euro STOXX 50 rose 2.53%. The S&P 500 soared at the open, and the upward trend was reinforced by a dramatic 16.6% month-over-month jump in new home sales announced 30 minutes after the opening bell (more on the housing data here). The index hit its 1.54% intraday high in the final hour and closed with a trimmed gain of 1.37%, biggest best advance since its 1.64% pop 51 sessions ago on March 11th.

The yield on the 10-year note closed at 1.86%, up two basis points from the previous close.

Here is a snapshot of past five sessions in the S&P 500.

S&P 500

Here’s a daily chart of the index, which closed above its 50-day moving average. Volume was a bit below trend on today’s rally.

S&P 500

A Perspective on Drawdowns

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

S&P 500 Drawdowns

Here is a more conventional log-scale chart with drawdowns highlighted.

S&P 500 MAs

Here is a linear scale version of the same chart with the 50- and 200-day moving averages.

S&P 500 MAs

A Perspective on Volatility

For a sense of the correlation between the closing price and intraday volatility, the chart below overlays the S&P 500 since 2007 with the intraday price range. We’ve also included a 20-day moving average to help identify trends in volatility.

S&P 500 Snapshot





Existing-Home Sales in April Signal Slowly Building Momentum

Courtesy of Doug Short’s Advisor Perspectives.

This morning’s release of the April Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.45 million units from an upwardly revised 5.36 million in March. The Investing.com consensus was for 5.40 million. The latest number represents a 1.7% increase from the previous month and a 6.0% increase year-over-year.

Here is an excerpt from today’s report from the National Association of Realtors.

Lawrence Yun, NAR chief economist, says April’s sales increase signals slowly building momentum for the housing market this spring. “Primarily driven by a convincing jump in the Midwest, where home prices are most affordable, sales activity overall was at a healthy pace last month as very low mortgage rates and modest seasonal inventory gains encouraged more households to search for and close on a home,” he said. “Except for in the West — where supply shortages and stark price growth are hampering buyers the most — sales are meaningfully higher than a year ago in much of the country.” [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed’s FRED repository and is now only available from January 2013. It can be found here.

Existing Home Sales

Over this time frame we clearly see the Real Estate Bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession. The latest estimate puts us back to the general level around the turn of the century.

The Population-Adjusted Reality

Now let’s examine the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show a 16.4% increase in the US population since the turn of the century. The snapshot below is an overlay of the NAR’s annualized estimates with a population-adjusted version.

Existing Home Sales Growth

Existing-home sales are 4.2% above the NAR’s January 2000 estimate. The population-adjusted version is 9.5% below the turn-of-the-century sales.


For additional perspectives on residential real estate, here is the complete list of our monthly updates:





NAHB Housing Market Index: Fourth Flat Month

Courtesy of Doug Short’s Advisor Perspectives.

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook.

The latest reading of 58, unchanged from the previous three months, was below the Investing.com forecast of 59.

Here is the opening of this morning’s monthly report:

Builder confidence in the market for newly-built single-family homes remained unchanged in May at a level of 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Builder confidence has held steady at 58 for four straight months, which indicates that the single-family housing sector remains in positive territory,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “However, builders are facing an increasing number of regulations and lot supply constraints.” [link to report]

Here is the historical series, which dates from 1985.

Housing Market Index

The HMI correlates fairly closely with broad measures of consumer confidence. Here is a pair of overlays with the Michigan Consumer Sentiment Index and the Conference Board’s Consumer Confidence Index.

HMI and Consumer Sentiment

HMI and Consumer Confidence

The HMI is an interesting prelude to tomorrow’s release of Building Permits and Housing Starts.


For additional perspectives on residential real estate, here is the complete list of our monthly updates:





New Residential Housing Starts in April Better Than Forecast

Courtesy of Doug Short’s Advisor Perspectives.

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential housing starts. Revisions were made back to January of 2014.

The latest reading of 1.172M was above the Investing.com forecast of 1.127M.

Here is the opening of this morning’s monthly report:

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,172,000. This is 6.6 percent (±10.2%)* above the revised March estimate of 1,099,000, but is 1.7 percent (±10.1%)* below the April 2015 rate of 1,192,000.

Single-family housing starts in April were at a rate of 778,000; this is 3.3 percent (±12.1%)* above the revised March figure of 753,000. The April rate for units in buildings with five units or more was 373,000. [link to report]

Here is the historical series for total privately-owned housing starts, which dates from 1959. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Housing Starts

The Population-Adjusted Reality

Here is the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show substantial growth in the US population since 1959. Here is a chart of housing starts as a percent of the population. We’ve added a linear regression through the monthly data to highlight the trend.

Housing Starts Population-Adjusted

A Footnote on Volatility

The extreme volatility of this monthly indicator is the rationale for paying more attention to its 6-month moving average than to its noisy monthly change. Over the complete data series, the absolute MoM average percent change is 6.3%. The MoM range minimum is -26.4% and the maximum is 29.3%.

For visual confirmation of the volatility, here is a snapshot of the monthly percent change since 1990.


For additional perspectives on residential real estate, here is the complete list of our monthly updates:





New Residential Building Permits: April Disappoints Forecast

Courtesy of Doug Short’s Advisor Perspectives.

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential building permits. Revisions were made back to January of 2014.

The latest reading of 1.116M was below the Investing.com forecast of 1.130M.

Here is the opening of this morning’s monthly report:

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,116,000. This is 3.6 percent (±1.3%) above the revised March rate of 1,077,000, but is 5.3 percent (±1.3%) below the April 2015 estimate.

Single-family authorizations in April were at a rate of 736,000; this is 1.5 percent (±0.8%) above the revised March figure of 725,000. Authorizations of units in buildings with five units or more were at a rate of 348,000 in April. [link to report]

Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Housing Permits

Here is the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show substantial growth in the US population since 1960. Here is a chart of housing starts as a percent of the population. We’ve added a linear regression through the monthly data to highlight the trend.

Housing Permits Population-Adjusted

A Footnote on Volatility

The extreme volatility of this monthly indicator is the rationale for paying more attention to its 6-month moving average than to its noisy monthly change. Over the complete data series, the absolute MoM average percent change is 4.4%. The MoM range minimum is -24.0% and the maximum is 33.9%.

For visual confirmation of the volatility, here is a snapshot of the monthly percent change since 1990.


For additional perspectives on residential real estate, here is the complete list of our monthly updates:





Secular Trends in Residential Building Permits and Housing Starts

Courtesy of Doug Short’s Advisor Perspectives.

Yesterday we reported separately on the latest residential building permits and housing starts in the government’s monthly report, courtesy of the Census Bureau and the Department of Housing and Urban Development. Despite the fact that both are monthly SAAR series (seasonally adjusted annualized rate), they are exceptionally volatile and subject to extensive revisions. Thus it is unwise to assign much credibility to a single month.

Over the long haul, however, the two offer a compelling study of trends in residential real estate, especially when we adjust the Permits and Starts for population growth. Here is an overlay of the two series since the 1959 inception of the Starts data and the 1960 inception of the Permits data. The monthly data points are preserved as faint dots. The trends are illustrated with 6-month moving averages of data divided by the Census Bureau’s mid-month population estimates.

Housing Permits and Starts Population-Adjusted

Here is a closer look at the overlay since 1990.

Since 1990

About that volatility…

The extreme volatility of these indicators is the rationale for paying more attention to the 6-month moving average than to its noisy monthly change.

Over the complete data series, the Starts absolute MoM average percent change is 6.3%. The MoM range minimum is -26.4% and the maximum is 29.3%.

Permits are slightly less volatile with an absolute MoM average percent change of 4.4%. The MoM range minimum is -24.0% and the maximum is 33.9%.


For additional perspectives on residential real estate, here is the complete list of our monthly updates:





The Big Four Economic Indicators: April Industrial Production

Courtesy of Doug Short’s Advisor Perspectives.

Note: This commentary has been updated to incorporate the April data for Industrial Production.


Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Nonfarm Employment
  • Industrial Production
  • Real Retail Sales
  • Real Personal Income (excluding Transfer Receipts)

The Latest Indicator Data

Today’s report on Industrial Production for April shows a month-over-month increase of 0.7 percent (0.66 percent to two decimal places), which was better than the Investing.com consensus of a 0.3 percent increase. The previous month’s -0.59 percent decline was revised downward to -0.87 percent. Industrial Production has contracted for 13 of the last 17 months.

Here is the overview from the Federal Reserve:

Industrial production increased 0.7 percent in April after decreasing in the previous two months. Manufacturing output rose 0.3 percent after declining the same amount in March. The index for utilities jumped 5.8 percent in April, as the demand for electricity and natural gas returned to a more normal level after being suppressed by warmer-than-usual weather in March. Mining production fell 2.3 percent in April, and it has decreased more than 1 1/2 percent per month, on average, over the past eight months. At 104.1 percent of its 2012 average, total industrial production in April was 1.1 percent below its year-earlier level. Capacity utilization for the industrial sector increased 0.5 percentage point in April to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average. [view full report]

The chart below shows the year-over-year percent change in Industrial Production since the series inception in 1919, the current level is lower than at the onset of 15 of the 17 recessions over this time fame of nearly a century. The only lower instance was at the start of the eight-month recession at the end of World War II. To one decimal place it is currently tied with the recession start in 2001.

Industrial Production Since 1919

Capacity Utilization

The Fed’s monthly Industrial Production…
continue reading





The Big Four Economic Indicators: Real Personal Income for March

Courtesy of Doug Short’s Advisor Perspectives.

Note: This commentary has been updated to include this morning’s release of the March data for Real Personal Income Less Transfer Receipts.


Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Nonfarm Employment
  • Industrial Production
  • Real Retail Sales
  • Real Personal Income (excluding Transfer Receipts)

The Latest Indicator Data

Personal Income (excluding Transfer Receipts) in March rose 0.38% and is up 4.3% year-over-year. When we adjust for inflation using the BEA’s PCE Price Index, Real Personal Income (excluding Transfer Receipts) rose 0.33%. The real number is up 3.5% year-over-year.

Real PI less TR is one of those indicators that warrants adjustment for population growth to understand the long-term trends. Here is a chart of the series since 2000 adjusted accordingly by using the Civilian Population Age 16 and Over as the divisor.

Real Personal Income Less Transfer Payments Per Capita

A Note on the Excluded Transfer Receipts: These are benefits received for no direct services performed. They include Social Security, Medicare & Medicaid, Unemployment Assistance, and a wide range other benefits, mostly from government, but a few from businesses. Here is an illustration Transfer Receipts as a percent of Personal Income.

The Generic Big Four

The chart and table below illustrate the performance of the generic Big Four with an overlay of a simple average of the four since the end of the Great Recession. The data points show the cumulative percent change from a zero starting point for June 2009.

Current Assessment and Outlook

The US economy has been slow in recovering from the Great Recession, and the overall picture has been a mixed bag for well over a year and counting. Employment and Income have been relatively strong. Real Retail Sales have essentially gone nowhere for the past nine months, and Industrial Production has essentially been in a recession.

The chart…
continue reading





The Big Four Economic Indicators: April Nonfarm Employment

Courtesy of Doug Short’s Advisor Perspectives.

Note: This commentary has been updated to include this morning’s release of Nonfarm Employment for April.


Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Nonfarm Employment
  • Industrial Production
  • Real Retail Sales
  • Real Personal Income (excluding Transfer Receipts)

The Latest Indicator Data

This commentary has been updated to include Nonfarm Employment for April. As the adjacent thumbnail of the past year illustrates, Nonfarm Employment remains in its upward trend. However, the April report of 160K new jobs was substantially below expectations (Investing.com was looking for 202K). Furthermore, the February and March numbers were revised downward by 19K (12K and 7K, respectively).

The chart below shows the monthly percent change in this indicator since the turn of the century, a period that includes two recessions.

The Problem of Revisions

At first glance this indicator appears to have a strong correlation with the business cycle. However, there is a major problem with this assumption: The data in this survey of business establishments undergoes multiple revisions. The initial monthly estimate is subject to a first and second revision, subsequent benchmark revisions and annual revisions that stretch back many years (the most recent includes revisions back as far as February 1990). The cumulative size of the revisions is quite stunning, much of which is owing to the “hindsight” of those annual revisions.

The chart below measures the size of the revisions from the initial estimate to the latest employment report.

The downward revisions are absolutely astonishing.

The Problem of Population Growth

Another problem with the Nonfarm Employment data is that it isn’t adjusted for population growth, which reduces its usefulness in illustrating secular trends. The chart below incorporates a population adjustment by dividing the Nonfarm Employment (FRED series PAYEMS) by the Civilian Labor Force Age 16 and Over (FRED series CLF16OV). We’ve added a couple of trend lines and a callout — not to suggest a forecast but rather to highlight the potential…
continue reading





 
 
 

Phil's Favorites

Where have all the cowboys gone?

 

Where have all the cowboys gone?

Courtesy of Joshua M. Brown

Flipping out over how awesome this new post at Michael Batnick’s blog is, which presents the career arc of history’s most important investors of all time. He takes their dates of birth, advances them 22 years for a typical career starting point, and then overlays them with the future cumulative performance of the Dow Jones Industrial Average to give you a sense of how much wind they had at their backs.

Looks like this (click to embiggen!):

...



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Zero Hedge

Paul Craig Roberts: "Americans Are A Conquered People"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Authored by Paul Craig Roberts,

As readers know, I have seen some optimism in voters support for Trump and Sanders as neither are members of the corrupt Republican and Democratic political establishments. Members of both political establishments enrich themselves by betraying the American people and serving only the interest of the One Percent. The American people are being driven into the ground purely for the sake of more me...



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Chart School

Equity Valuations, Recessions and Stock Market Declines

Courtesy of Doug Short's Advisor Perspectives.

Note: In response to an email, I've updated the data in this article through the March month-end numbers and at the launch of the Q1 2016 earnings season.

When I initiated the dshort web page in late 2005, one of my routine topics was equity valuations, initially inspired by Nobel laureate Robert Shiller's book, Irrational Exuberance, the second edition of which was published earlier that year. I gradually expanded my focus from his cyclically adjusted price-to-earnings ratio (CAPE) to include Ed Easterling's Crestmont P/E, Nobel laureate James Tobin's Q Ratio and m...



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ValueWalk

Wilbur Ross discusses Donald Trump's candidacy, and his investing strategy

By Jacob Wolinsky. Originally published at ValueWalk.


Wilbur Ross discusses Donald Trump’s candidacy, and his investing strategy

The post Wilbur Ross discusses Donald Trump’s candidacy, and his investing strategy appeared first on ValueWalk.

Sign up for ValueWalk's free newsletter here.

...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Global Stocks Broadly Higher, Reversing Early Losses (Wall Street Journal)

Global stocks climbed Tuesday, while the dollar strengthened against the euro and yen.

Shares, dollar climb as markets play Fed waiting game (Reuters)

European shares were heading for their best day in over a month on Tuesday as the waiting game to see whether the U.S. raises interest rates again next month sent the euro to its lowest since March.

Asian shares had stumbled to near 2-1/2-month lows ove...



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OpTrader

Swing trading portfolio - week of May 23rd, 2016

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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Kimble Charting Solutions

Gold- Two-thirds odds prices fall on a support break

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Since the peak in 2011, Gold remains in a downtrend, creating a series of lower high and lower lows.

Gold’s rally in 2016 is attempting to break this 5-year falling trend, as it is attempting to break a series of lower highs.

Over the past 6-months, Gold could be creating a rising wedge pattern. This pattern two-thirds of the time, suggests lower prices are ahead.

...

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Digital Currencies

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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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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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