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Archive for the ‘Chart School’ Category

S&P 500 Snapshot: Down -1.35% … No Help from Apple or the Fed

Courtesy of Doug Short.

Apple’s blowout numbers after yesterday’s close may have triggered a positive open, but the major US indexes wobbled through the morning and rolled over in the final hour. The S&P 500 hit its 0.64% intraday high shortly after the open and sold off in two waves, a small one in the morning and a large one in the afternoon. It closed with a loss of -1.35%, fractionally off its 1.38% intraday low. Today’s FOMC statement was obviously no help to the market.

Are we seeing some evidence of a flight to the safety of Treasuries? The yield on the 10-year Note closed at 1.73%, down 10 bps from yesterday’s close. The yield on the 30-year Bond closed at 2.29%, an all-time low.

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

Here is a daily chart of the SPY ETF, which gives a better sense of investor participation. Volume increased on today’s selloff but remains well below the levels we saw during October 2014 dip.

A Perspective on Drawdowns

Here’s a snapshot of selloffs since the 2009 trough. The S&P 500 is 4.23% off its record close on December 29th.

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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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Sharp Reversals on Economic News

Courtesy of Declan.

It has been a while since something other than Central Banks have moved the market. This time, it was the turn of old fashioned Durable Goods to upset the party. The loss was big, but it’s still noise within the bounds of the ‘Santa Rally’.  Consolidation breakouts remain in play, although volume climbed to register distribution.

The S&P crossed below its 50-day MA, but it’s a flatlined moving average. Technicals are mixed.


The Nasdaq repeated the action of the S&P. The MACD edged a break of declining resistance, although there was a bearish cross between -DI and +DI.

The Russell 2000 had a relatively quiet day. Selling action in the S&P and Nasdaq didn’t really impact on the Russell 2000. This is good news for bulls, even if today didn’t look it.  Technicals for this index are all net bullish.

Tomorrow is another day, but at worst the consolidations which had formed since Christmas are negated, but those December ‘Santa Rally’ support and resistance levels remain (bar some real *heavy* selling/buying).

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





The "Real" Goods on the Latest Durable Goods Data

Courtesy of Doug Short.

Earlier today I posted an update on the January Advance Report on December Durable Goods New Orders. This Census Bureau series dates from 1992 and is not adjusted for either population growth or inflation.

Let’s now review Durable Goods data with two adjustments. In the charts below the red line shows the goods orders divided by the Census Bureau’s monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today’s dollar value. This gives us the “real” durable goods orders per capita and thus a more accurate historical context in which to evaluate the conventional reports on the nominal monthly data.

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Economists frequently study this indicator excluding Transportation or Defense or both. Just how big are these two subcomponents? Here is a stacked area chart to illustrate the relative sizes over time based on the nominal data.

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Here is the first chart, repeated this time ex Transportation, the series usually referred to as “core” durable goods.

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Now we’ll leave Transportation in the series and exclude Defense orders.

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And now we’ll exclude both Transportation and Defense for a better look at a more concentrated “core” durable goods orders.

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Here is the chart that I believe gives the most accurate view of what Consumer Durable Goods Orders is telling us about the long-term economic trend. The three-month moving average of the real (inflation-adjusted) core series (ex transportation and defense) per capita helps us filter out the noise of volatility to see the big picture.

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The Trend in Capital Goods

Finally, let’s take…
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S&P 500 Snapshot: A Plunge on Weak Earnings and (Mostly) Bad Economic News

Courtesy of Doug Short.

Weak earnings and an ugly Durable Goods Report for December apparently took their toll today, despite a stunning surge in Consumer Confidence. The S&P 500 plunged in the opening minutes and hit its -1.81% intraday low at 10:45, seemingly ignoring the 10 AM release of the surprisingly cheerful Consumer Confidence report. A slow upward trend ensued and lasted until the mid-afternoon, trimming the decline to -0.68%. But the selling resumed and the index ended the day with a 1.34% loss.

The yield on the 10-year Note closed at 1.83%, unchanged from yesterday’s close.

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

Here is a daily chart of the SPY ETF, which gives a better sense of investor participation. Volume on today’s selloff was unremarkable (although the storm in the northeast may have trimmed today’s investor activity).

A Perspective on Drawdowns

Here’s a snapshot of selloffs since the 2009 trough. The S&P 500 is 2.92% off its record close on December 29th.

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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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December Durable Goods: A Major Disappointment

Courtesy of Doug Short.

The January Advance Report on December Durable Goods released on today by the Census Bureau was a major disappointment. Here is the Bureau’s summary on new orders:

New orders for manufactured durable goods in December decreased $8.1 billion or 3.4 percent to $230.5 billion, the U.S. Census Bureau announced today. This decrease, down four of the last five months, followed a 2.1 percent November decrease. Excluding transportation, new orders decreased 0.8 percent. Excluding defense, new orders decreased 3.2 percent.

Transportation equipment, also down four of the last five months, led the decrease, $6.8 billion or 9.2 percent to $66.7 billion. Download full PDF

The latest new orders headline number came in at -3.4 percent, well below the Investing.com estimate of 0.5%. This series is up a fractional 0.3 percent year-over-year (YoY). However, if we exclude transportation, “core” durable goods came in at -0.8 percent MoM, also below forecast. Without the volatile transportation series, the YoY core number was up 3.8 percent.

If we exclude both transportation and defense for an even more fundamental “core”, the latest number was down -0.4 percent MoM but up 2.5 percent YoY.

The Core Capital Goods New Orders number (nondefense capital goods used in the production of goods or services, excluding aircraft) is another highly volatile series. It was down -0.6 percent MoM, its fourth consecutive month of decline, and up only 1.7 percent YoY.

The first chart is an overlay of durable goods new orders and the S&P 500. We see an obvious correlation between the two, especially over the past decade, with the market, not surprisingly, as the more volatile of the two. Over the past year, the market has certainly pulled away from the durable goods reality, something we also saw in the late 1990s.

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An overlay with unemployment (inverted) also shows some correlation. We saw unemployment begin to deteriorate prior to the peak in durable goods orders that closely coincided with the onset of the Great Recession, but the unemployment recovery tended to lag the advance durable goods orders.

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Consumer Confidence "Rose Sharply" in January

Courtesy of Doug Short.

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through January 15. The headline number of 102.9 was an dramatic increase from the revised December final reading of 93.1, an upward revision from 92.6. Today’s number was substantially above the Investing.com forecast of 95.1.

Here is an excerpt from the Conference Board press release.

Lynn Franco, Director of Economic Indicators at The Conference Board, said: “Consumer confidence rose sharply in January, and is now at its highest level since August 2007 (Index, 105.6). A more positive assessment of current business and labor market conditions contributed to the improvement in consumers’ view of the present situation. Consumers also expressed a considerably higher degree of optimism regarding the short-term outlook for the economy and labor market, as well as their earnings.”

Consumers’ assessment of present-day conditions was considerably more favorable in January than in December. Those saying business conditions are “good” increased from 24.7 percent to 28.1 percent, while those claiming business conditions are “bad” decreased from 18.9 percent to 16.8 percent. Consumers were also much more positive in their assessment of the job market. Those stating jobs are “plentiful” increased from 17.2 percent to 20.5 percent. Those claiming jobs are “hard to get” decreased from 27.3 percent to 25.7 percent.

Consumers’ optimism about the short-term outlook improved in January. The percentage of consumers expecting business conditions to improve over the next six months rose from 17.8 percent to 18.4 percent, while those expecting business conditions to worsen declined from 9.9 percent to 7.7 percent.

Putting the Latest Number in Context

Let’s take a step back and put Lynn Franco’s interpretation in a larger perspective. The table here shows the average consumer confidence levels for each of the five recessions during the history of this monthly data series, which dates from June 1977. The latest number is 33.5 points above the recession mindset and 8.7 points below the non-recession average.

The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end I have highlighted recessions and included GDP. The exponential regression through the index data shows…
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Richmond Fed Manufacturing Composite: "Expanded Modestly" in January

Courtesy of Doug Short.

As a resident of the Fifth District, this is a regional manufacturing index I pay close attention to. The Fifth District includes Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia. The Federal Reserve Bank of Richmond is the region’s connection to the nation’s Central Bank.

The complete data series behind the latest Richmond Fed manufacturing report (available here) dates from November 1993. The chart below illustrates the 21st century behavior of the diffusion index that summarizes the individual components.

The January update shows the manufacturing composite at 6, down from 7 last month. Numbers above zero indicate expanding activity. Today’s composite number was spot on the Investing.com forecast of 6.

Because of the highly volatile nature of this index, I like to include a 3-month moving average, now at 5.7, to facilitate the identification of trends.

Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

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Here is the latest Richmond Fed manufacturing overview.

Fifth District manufacturing activity expanded at a modest pace in January, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments increased at a faster pace this month, while the volume of new orders remained steady. Manufacturing employment and average wages grew at a slower pace this month. However, the average workweek grew more quickly.

Manufacturers were optimistic about future business conditions. Firms expected faster growth in shipments and new orders in the six months ahead. Additionally, survey participants expected order backlogs to increase and anticipated faster growth in capacity utilization. Expectations were for little change in vendor lead times.

Producers expected faster growth in hiring in the months ahead. They also expected solid growth in average wages and a pickup in the average workweek.

Prices of raw materials and finished goods rose at a slower pace compared to last month. Survey participants expected faster growth in prices paid and prices received over the next six months.

Here is a somewhat closer look at the index since the turn of the century.


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Small Caps Outperform.

Courtesy of Declan.

A good start to the week was kicked off with Small Caps adding nearly 1%. The Russell 2000 hasn’t reached a point of challenging major support or resistance, but today’s action cleared the 20-day MA, and accelerated the relative advance against the S&P. Technicals for the index also shifted net bullish.


The S&P held on to its 50-day MA. Although, the 20-day and 50-day MAs have flat-lined. However, it’s nicely set up for bulls tomorrow.

The Nasdaq is close to a challenge of highs, and has the benefit of net bullish technicals. Like the S&P, it experienced a relatively small gain, but it did register an accumulation day.

The Semiconductor Index also performed, and is close to breaking declining resistance.

Tomorrow is looking favorable for bulls, particularly for the Russell 2000 and Nasdaq.  Shorts don’t have much to work with – at least from today’s close.

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





The Four Totally Bad Bear Recoveries: Where Are We Now?

Courtesy of Doug Short.

Note from dshort: At the request of The Advisory Group in San Francisco, here’s updated comparison of four major cyclical bear markets. The numbers are through the January 23rd close.


This chart series features an overlay of the Four Bad Bears in U.S. history since the market peak in 1929. They are:

  1. The Crash of 1929, which eventually ushered in the Great Depression,
  2. The Oil Embargo of 1973, which was followed by a vicious bout of stagflation,
  3. The 2000 Tech Bubble bust and,
  4. The Financial Crisis following the record high in October 2007.

The series includes four versions of the overlay: nominal, real (inflation-adjusted), total-return with dividends reinvested and real total-return.

The first chart shows the price, excluding dividends for these four historic declines and their aftermath. As of Friday’s close are now 1835 market days from the 2007 peak in the S&P 500.

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Inflation-Adjusted Performance

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Nominal Total Returns

Now let’s look at a total return comparison with dividends reinvested. The recovery following the 1973 Oil Embargo Bear is the top performer, up 57.4% from the 2007 peak, with the current post-Financial Crisis recovery a relatively close second.

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Real (Inflation-Adjusted) Total Returns

When we adjust total returns for inflation, the picture significantly changes. The spread between three of the four markets narrows, and the current real total return has pulled far ahead of the others. Second place, by this metric, goes to the recovery following Crash of 1929.

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Here is a table showing the relative performance of these four cycles at the equivalent point in time.

For a better sense of how these cycles figure into a larger historical context, here’s a long-term view of secular bull and bear markets, adjusted for inflation, in the S&P Composite since 1871.

These charts are not intended as a forecast but rather as a way to study the…
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Real Median Household Income: A Significant December Increase

Courtesy of Doug Short.

Summary: The Sentier Research monthly median household income data series is now available for December. The nominal median household income was up $537 month-over-month and $2,072 year-over-year. That’s a 1.0% MoM gain and a 4.0% YoY gain. Adjusted for inflation, the numbers were up $738 MoM and $1725 YoY. The real numbers equate to a 1.4% MoM increase and a 3.3% YoY increase, thanks to -0.37% drop in the Consumer Price Index.

In real dollar terms, the median annual income is 5.1% lower ($2,900) than its interim high in January 2008 but well off its low in August 2011.

Background on Sentier Research

The traditional source of household income data is the Census Bureau, which publishes annual household income data in mid-September for the previous year.

Sentier Research, an organization that focuses on income and demographics, offers a more up-to-date glimpse of household incomes by accessing the Census Bureau data and publishing monthly updates. Sentier Research has now released its most recent update, data through November (available here). The numbers in their report differ from the Census Bureau’s in three key respects:

  1. It is a monthly rather than annual series, which gives a more granular view of trends.
  2. Their numbers are more current. The Census Bureau’s 2012 data will remain its latest until September 18, 2014.
  3. Sentier Research uses the more familiar Consumer Price Index (CPI) for the inflation adjustment. The Census Bureau uses the little-known CPI-U-RS (RS stands for “research series”) as the deflator for their annual data. For more on that topic, see this commentary.

Monthly Median Household Income Since 2000

The first chart below is an overlay of the nominal values and real monthly values chained in November 2014 dollars. The red line illustrates the history of nominal median household, and the blue line shows the real (inflation-adjusted value). I’ve added callouts to show specific nominal and real monthly values for January 2000 start date and the peak and post-peak troughs.


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In the latest press release, Sentier Research spokesman Gordon Green summarizes the recent data:

The significant change in median income between November and December adds to the upward trend in median income since


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Chart School

Moving Averages: Month-End Preview

Courtesy of Doug Short.

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

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


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



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Zero Hedge

Drink Up World: The 4 Companies That Control Global Whiskey Production

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While there are eighty people who hold half the world's wealth, ten 'people' who run the world, and ten corporations that control nearly everything you buy... these four companies control what is - to some - the most precious commodity in the world... world whiskey production.

...



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Phil's Favorites

Conscription of People, Cars, Businesses in Ukraine for Mindless Slaughter; Entire Villages Leave to Avoid Servitude; Hop on the Bus Gus

Courtesy of Mish.

Ukrainians Fighting Ukrainians

Forced military conscription (slavery is a better word) imposed on citizens of Ukraine has reached new heights recently.

The government in Kiev now demands those forced into slavery to hand over their cars for military use. As one might expect, avoidance of needless military slaughter has also reached new heights.

Before we get to those stories, I have a video to share. It is in Russian, but with English subtitles. I am told by reader Jacob Dreizin the translation is essentially correct, but a couple things were translated too literally.

I do offer this warning. The video is graphic and it does contain a lot of harsh language. The video is about captured Ukrainian POWs on a fool's mission to retake the Donetsk airport. After about 12 minutes or so it gets gruesome, the beginning...



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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Sabrient

In the News: An ETF Rush to Bet on Insiders

Courtesy of Sabrient Systems and Gradient Analytics

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

...

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Market Shadows

What Would You Do?

What Would You Do?

Courtesy of Paul Price

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

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

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

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



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OpTrader

Swing trading portfolio - week of January 26th, 2015

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

 

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

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

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

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



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Digital Currencies

Jitters After Bitcoin Exchange Suspends Services

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

Jitters After Bitcoin Exchange Suspends Services 

By 



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Pharmboy

2015 - Biotech Fever

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

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

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

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



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Stock World Weekly

Stock World Weekly

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

Here's this week's Stock World Weekly.

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

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

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



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Help One Of Our Own PSW Members

"Hello PSW Members –

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

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

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

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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