Archive for the ‘Appears on main page’ Category

Fed Speak Week – 11 Fed Speakers Aim to Steer the Markets

Let the manipulation begin!  

After a 0.25% rate hike did nothing to deflate the market bubble, the Fed will take another swing at things this week by speaking to us 11 times and it will be Evans (Dove), Evans (Dove), George (Hawk), Mester (Hawk) and Rosengren (Dove) on Monday and Tuesday followed by Yellen (Dove), Kashkari (DOVE), Kaplan (Neutral) , Evans (Dove), Bullard (Hawk) and Williams (Neutral) on Thursday and Friday.  So an edge to the doves but the doves had a 3:1 edge last year, so it's a change in tone towards hawkish for sure.  Kashkari was the dissenting voter who did not wish to raise rates at last week's meeting – he speaks Thursday at noon.  

In their recent statement, the Fed says "The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal."  The word symmetric was added since January and indicates the Fed is warning that they do not intend to let inflation move over 2% for any period – that should be clarified a bit this week and it's a key indicator that the free money party is really winding down. 

As we noted in our Friday Morning Report, the recent Fed action has driven the Dollar to the bottom end of its range, back to where we bottomed out at the Feb 1st meeting, after which we climbed back 2.5% over the next month and, unless the Fed speakers come off surprisingly doveish this week, we can expect the Dollar to rapidly move back to its mid-range at 101.50 and that will put pressure on commodities as well as the indexes.  

Oil (USO) is already under rollover pressure with 3 days to trade April contracts (/CLJ7) and already we're down to $48.50 ($47.90 on April) and we hit our $49.50 shorting goal on the May contracts (/CLK7 – also from Friday's report) so you are welcome for that $1,000 per contract winner to start your week off with a smile.  Our index shorts (same post) have had minor pay-offs so far but, as noted in the Report, we're confident enough in our index shorts at this point that we're beginning to short specific stocks ahead of a broad-market "adjustment."

As we expected, our
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The Three Types of Contrarians

 

The Three Types of Contrarians

Courtesy of 

It seems like everybody wants to be a contrarian these days. Predictably, there were a lot of “Bill Ackman is out of Valeant, that’s your buy signal” comments this week. I want to talk about the three different types of contrarians: those who are early, those who are late, and those that are right.

On the early side, for example, are those who have argued that U.S. stocks are too expensive, or people saying this bull market is long in the tooth. With the length of this current run (however you measure it), and more importantly, with rich valuations, it’s hard to go a few hours without seeing a headline that a “rug pull” is imminent. So it’s really difficult to tell where the line is these days, it almost feels like it’s consensus to be a contrarian.

contrairan

By definition, a contrarian is going to be early, but in order to be successful, they can’t be too early. It’s in this small window that greatness exists.

Professional investors tend to be early while non-professionals tend to be late. Remember all the black swan funds that were launched in 2009? Or what about this pure contrarian fund, which launched in September 2009, when stocks had already bounced 57% off their lows. This was a brilliant marketing play; stocks had recovered, but investor’s psyche was still mangled.

I will give this fund credit because their returns, at least so far, have been completely divorced from the market. They crushed the S&P 500 last year, but how many investors stuck around for these gains after getting crushed in the previous year?

pure-contrarian

People want to be different from the market when it’s too late. They run away from risk when they ought to be running towards it.

In the third bucket of contrarians are those rare individuals that are often right and have made a career out of it, like Howard Marks. In his interview with Barry Ritholtz, he said:

“Oaktree invested extremely aggressively between September 15th of 2008- which was the day Lehman went under, and the end of the year. We invested over half a billion dollars


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Is Mr. Market Playing the Role of Pavlov’s Dog?

 

Is Mr. Market Playing the Role of Pavlov’s Dog?

Courtesy of John Mauldin

David Rosenberg is one of the most respected voices in the investing world. His Breakfast with Dave goes out to thousands of appreciative subscribers nearly every business morning. He has also been the leadoff hitter at my Strategic Investment Conference every year for several years running – and this year will be no exception. He is always one of our top-rated speakers, and his energy gets the conference up and rolling.

To everyone’s surprise, Rosie turned bullish in a big way at SIC six years ago. Now he’s cautious – in a big way – as you’re about to see. Rosie is the Data Meister, and in today’s Outside the Box he runs the numbers on today’s economy and markets and comes off as downright incredulous:

It is amazing, I have to say, to see Mr. Market respond to the same [“Trump rally”] language over and over and over. It is a present-day version of Pavlov’s Dog.

More discussion of tax cuts, deregulation and infrastructure, and again, the market soars on what really is old news by now. Or should be.

The fact that this is all still rhetoric, with no details or timetable provided, should be a bit worrisome.

I am in a very cold New Jersey surrounded by lots of snow, but the roads are clear. Dallas shuts down with a few inches of snow, but NJ is up and going the next day. Even the park across the street has shoveled all its sidewalks. Not that I will be taking a stroll in 20 degrees with 30-mph winds.

I am here doing three speaking events in two days to what I am told will be packed rooms. Lots of Q and A, which really gets me going as there is just so much to talk about.

And between sessions life is filled with meetings, research, and writing. Always writing. O, deadline, where is thy sting?

I note with sadness the recent passing of two of the older stalwarts and longtime friends in the investment writing world, Bill


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TGIF – Fed Week Ends, G20 Begins

So far the markets are staying "strong".  

That's good for our longs, bad for our hedges but that's why we have both – along with plenty of CASH!!! on the sidelines – just in case.  Unfortunately, the Fed action, along with the out-of-control Trump budget, took the Dollar down 1.5% and that made the markets seem stronger than they actually are (because the currency they are priced in got weaker).  This also boosted commodites, which kept the materials and energy sectors from dropping and now we'll see if they can hold up as the Dollar comes off the floor at 100 (and yes, long USD at 100 is a good FX play with tight stops below).

Our target range for the Dollar is 100 to 103 so we expect to be back at 101.50 soon and THEN we will have a better idea of what the real reaction to the Fed was.  So far, as we predicted (and you are welcome if you took yesterday's index shorts for huge wins), the post-Fed rally has pulled back a bit but the Russell (/TF) still makes a good short at 1,385, especially if the Dow (/YM) is below 20,900 and the S&P (/ES) is below 2,380 and the Nasdaq (/NQ) is below 5,420 AND the Dollar is over 100.  

Today is option expiration day and quarterly expirations can be very tricky so a good day to take off and come back Tuesday (Mondays are pointless) to see what's up.  By the way, if you don't feel comfortable walking away from the markets for a few days – you REALLY need our help because a good portfolio should run itself – not run you!  

The weak Dollar has also pushed oil back to $49.50 into the weekend and, hopefully, they either test $50 today or hold $49.50 into Monday so we can short them again (/CL).  Again, since we don't think the Dollar is going any lower then, other than the US manipulation into the weekend – we don't see any reason for oil to be stronger.

Tesla (TSLA) is another short we are…
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Munger: Buffett’s Wingman & the Art of Stock Picking

 

Munger: Buffett’s Wingman & the Art of Stock Picking

Courtesy of Wade of Investing Caffeine

Simon had Garfunkel, Batman had Robin, Hall had Oates, Dr. Evil had Mini Me, Sonny had Cher, and Malone had Stockton. In the investing world, Buffett has Munger. Charlie Munger is one of the most successful and famous wingmen of all-time –  evidenced by Berkshire Hathaway Corporation’s (BRKA/B) outperformance of the S&P 500 index by approximately +624% from 1977 – 2009, according to MarketWatch. Munger not only provides critical insights to his legendary billionaire boss, Warren Buffett, but he was also Chairman of Berkshire’s insurance subsidiary, Wesco Financial Corporation from 1984 until 2011. The magic of this dynamic duo began when they met at a dinner party 58 years ago (1959).

In an article he published in 2006, the magnificent Munger describes the “Art of Stock Picking” in a thorough review about the secrets of equity investing. We’ll now explore some of the 93-year-old’s sage advice and wisdom.

Model Building

Charlie Munger believes an individual needs a solid general education before becoming a successful investor, and in order to do that one needs to study and understand multiple “models.”

“You’ve got to have models in your head. And you’ve got to array your experience both vicarious and direct on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.”

Although Munger indicates there are 80 or 90 important models, the examples he provides include mathematics, accounting, biology, physiology, psychology, and microeconomics.

Advantages of Scale

Great businesses in many cases enjoy the benefits of scale, and Munger devotes a good amount of time to this subject. Scale advantages can be realized through advertising, information, psychological “social proofing,” and structural factors.

The newspaper industry is an example of a structural scale business in which a “winner takes all” phenomenon applies. Munger aptly points out, “There’s practically no city left in the U.S., aside from a few very big ones, where there’s more than one daily newspaper.”

General Electric Co. (GE) is another example of a company that…
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PhilStockWorld.com Weekly Trading Webinar

 

PhilStockWorld.com Weekly Trading Webinar – 03-15-17

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here

Major Topics:

00:01:48 Checking on the Markets
00:07:08 Silver Chart
00:14:55 USD Charts
00:17:49 Pivot Points on Charts
00:21:42 Oil
00:31:02 Active Trader
00:35:42 Coal
00:37:41 XOM
00:46:18 XOM Trade Ideas
00:49:49 REITS
00:50:53 NLY
00:52:24 Stock Dividend
00:57:03 NLY Trade Ideas
00:59:03 Checking on the Markets
01:00:39 Fed Interest Rates
01:05:39 FOMC Minutes
01:11:15 More Trade Ideas
01:14:55 Silver
01:16:36 DXY
01:19:57 TLT
01:22:54 CLF Trade Ideas
01:28:28 Active Trader
01:33:12 Dollars

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!

 





Thursday Thrills – A Chance to Short at Dow 21,000 Again!

Evolution of Atlanta Fed GDPNow real GDP forecastI love a good short!  

As you can see from the Fed's own GDP forecast, Q1 expectations are now down to 0.9%, down 0.3% from just last week on weaker than expected Consumer Spending Growth which went hand-in-hand with weaker than expected Retail Sales Reports.  

Nonetheless, on the same day the Fed was releasing a 25% downgrade to our GDP, they also chose to raise rates 0.25% and the market went crazy and rallied us all the way back to our highs, which you would think we'd be upset about but now we can (as I noted to our Members this morning) put on the following shorts:

  • Dow Futures (/YM) at 2,100
  • S&P Futures (/ES) at 2,390
  • Nasdaq Futures (/NQ) at 5,440
  • Russell Futures (/TF) at 1,390

These are dangerous plays and we need to be mindful that the markets are very irrational and could go higher so if any two are over the line, it's a no play.  At the moment, on the Nasdaq is at the line so that's our short for the moment (and we also have Nasdaq Ultra-Short ETF (SQQQ) as a hedge, see yesterday's post).  Those contracts pay $20 per point and a 25-point move in the Nasdaq is a big day so $500 would be a nice win but $250 is just fine on a pullback if the markets aren't looking too weak.

If the Futures start heading lower we begin using a strategy called "shorting the laggard" where we wait for 2 of the 4 indexes to cross below the next support and then short the others with tight stops (and out if either of the first two go back above). 

Aside from the Fed's downgrade to our overall GDP, we're very concerned with the effect Trump's Budget will have on the market as these spending cuts are effectively money that will come straight out of the economy and, as you can see from this chart, it's impacting every sector but Defense/HomeSec/Veterans and Transportation and before you get excited about
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The $40 Trillion President

 

The $40 Trillion President

Courtesy of 

From the first quarter of 2009 through the end of the year 2016 – roughly the span of President Barack Obama’s administration – the United States of America added about $40 trillion in household wealth.

Here you go:

via WSJ:

U.S. household net worth climbed to a record $92.8 trillion in the fourth quarter of 2016, as the end-of-year surge in stocks and a steady climb in home prices added more than $2 trillion of wealth to household balance sheets.

The biggest contributor to the increase was the stock market, which added $728 billion to household balance sheets in the fourth quarter, according to the Federal Reserve’s quarterly financial accounts report.

Since the first quarter of 2009, however, wealth has soared by $38 trillion, driven by an eight-year rally in stocks and eventually by a robust recovery in home prices.

I don’t attribute this fact to Obama or to his policies. I’m just pointing out how ludicrous the scorekeeping over this sort of thing has become.

There’s an element of right time, right place. There are other variables such as demographics, tax and interest rate regimes, the condition of financial markets before and after a president’s term, the global macro environment, the ebb and flow of armed conflicts and manufacturing needs pertaining to them, etc, etc, etc unto infinity.

BTW, it’s amazing how much the Democrats suck – on a national level – at tooting their own horn with this sort of data. The way they talked about the economy this last go-round has been as if they had something to apologize for.

Granted, overall levels of wealth do not describe the breakdown and distribution across income levels. Suffice it to say, Obama’s record – if it actually is his fault at all – has not been great. In the article below, you’ll see that the wealth-to-income level is now absurdly high – net worth is 6.5 times greater than disposable personal income vs 5 times before Obama’s inauguration.

In America today, you have to start with assets – real estate or stocks – in order to get anywhere. There’s not much about the new president’s policies so far that lead me to believe this might change.

Source:

U.S. Household Net Worth Reaches Record $92.8 Trillion (Wall Street Journal)





Why higher interest rates should make you happy

 

Why higher interest rates should make you happy

Courtesy of Jay L. Zagorsky, The Ohio State University

The Federal Reserve just lifted short-term interest rates a quarter point and signaled that more hikes are to come over the course of the year. The Conversation

The Federal Open Market Committee raised its benchmark lending rate to a range of 0.75 percent to 1 percent, as expected, and projected two more increases would be likely in 2017.

Numerous commentators have focused on who is hurt by rising rates, particularly those with lots of floating rate debt, such as a credit card balance, or anyone in need of a loan.

Not everyone, however, is negatively affected by rising rates.

There are some individuals and businesses cheering the Fed on as it pushes up rates, including savers, people traveling abroad and foreign exporters and businesses with large cash balances.

Let’s look at why each group may be celebrating the Fed’s action with a champagne toast.

Savers are happy

Interest is the economic inducement – or bribe – that compensates savers for waiting to spend their money in the future instead of squandering it today.

For eight years, the Fed has been giving us virtually no inducement to save because its target interest rate has hovered around zero ever since the 2008 financial crisis. People have been essentially punished for saving money because inflation meant at times you’d be better off stuffing cash in your mattress than in a savings account.

Rising rates means people who save money in certificates of deposits, money market funds and bank accounts will see higher returns. Many elderly people and retirees live off their Social Security checks plus interest and dividends from their savings. Retirees and people with large amounts of cash savings will now earn more money, which enables them to spend more and makes them big fans of the Fed’s current policy.

Even if you don’t have a single penny in savings but live or work in an area with a large number of retirees like southern Florida, Arizona or parts of California, the higher rates should translate into more economic activity and
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Rate Hike Wednesday – How Will the Markets React?

Image result for Fed hike gdpThere is a 100% chance the Fed will raise rates today.

That's the consensus and I, of course, agree as I've been saying they HAVE to hike since the last meeting.  Now that everyone agrees with me, let's move on to contemplating the result of the Fed hiking and what it means for the year ahead.  Clearly, as you can see from the chart, the Fed is not hiking rates because the economy is booming.  The Fed is hiking rates to ward off inflation because a stagnant economy with inflation (stagflation) is even worse than a recession from the Fed's point of view.

Also, the markets are what Allan Greenspan liked to call "irrationally exuberant," which is also clear from the chart and it's also not good to see so much money chasing so little profit as it's a classic misallocation of resources and, while investors may not feel the need to worry about the future consequences of their current actions – the Fed certainly does and it is their job to pop these bubbles – as gently as possible.

We are very well-hedged for a correction in our Member Tracking Portfolios and I began a full review last night in our Live Member Chat Room.  In our Options Opportunity Portfolio, which is tracked over at Seeking Alpha, where we raised more cash and added more hedges on March 1st and that didn't stop our bullish positions from adding $7,000 over the past two weeks – with no adjustments – so I'd have to say we're very well-balanced at the moment.

Having a well-balanced portfolio is the key to long-term success.  You can't only make money in bullish markets or only make money in bearish markets or those dry spells can kill you.  Smart Portfolio Management is more like surfing, where we look for a good wave to ride and then try to stay on board for as long as we can and try to cash out before the wipeout.  When it's over, we paddle our cash back out to sea and look for the next exciting opportunity.  

Image result for stock market correctionsThough
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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

How a ‘Low Volatility’ Stock Plunged 85% in an Hour (The Wall Street Journal)

Reading the label isn’t enough for picking funds. You may need to go into the ingredients list, too.

Take a look at funds that track the MSCI Minimum Volatility Emerging Markets Index.

North Dakota Oil Spills 3 Times Larger Than First Estimated (Associated Press)

A December oil pipeline spill ...



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Zero Hedge

Russophobia - Symptom Of US Implosion

Courtesy of ZeroHedge. View original post here.

Authored by Finian Cunningha, via The Strategic Culture Foundation,

There was a time when Russophobia served as an effective form of population control – used by the American ruling class in particular to command the general US population into patriotic loyalty. Not any longer. Now, Russophobia is a sign of weakness, of desperate implosion among the US ruling cl...



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ValueWalk

Top 5 Myths About Medicare

By VW Staff. Originally published at ValueWalk.

Google Trends data shows Health Care queries in the US is a reaching an all-time high in search engines (peaking at over 100k search volume). As health care changes are currently being discussed by lawmakers, Medicare coverage searches having increased over 250% within the last 7 days. Medicare Part B, which charges beneficiaries’ premium based on their income, has jumped the top search term in Google for Medicare related queries.

United Medicare Advisors has identified the The 5 Medicare Myths that Cause Confusion Among Seniors...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil Executives Are Confident That the Future Is Bright (Bloomberg)

Oil prices are down nearly 10 percent over the past month, leading some to wonder if we're set for a resumption of the plunge seen between 2014 and early 2016. Executives at oil companies, however, are optimistic.

Trump’s Misplaced Priorities Imperil His Economic Agenda (Bloomberg)

Let’s begin by stating the obvious: My priorities are different than yours or Paul Ryan’s or the president’s. We all have a different agenda, motivated by differ...



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Kimble Charting Solutions

Fund flows of this size could mark a top, says Joe Friday

Courtesy of Chris Kimble.

A year ago flows into ETFs were extremely low, actually the lowest in years, as many stock market indices were testing rising support off the 2009 lows. The crowd wasn’t adding money to ETFs as lows were taking place. In hindsight, this was a mistake by the majority. Below I look at ETF flows over the past few years with an inset chart of the S&P 500.

CLICK ON CHART TO ENLARGE

Nearly three months into this year, fund flows have surpassed mone...



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Chart School

Indecision Strikes

Courtesy of Declan.

It was no real surprise to see indices slow down in their recovery. Across the board doji mark a balance between buyers and sellers. The one index which bucked the trend a little was the Russell 2000. It staged a modest recovery which brought it back to former support turned resistance. However, technicals remain firmly bearish, and will stay this way even if there are additional gains.

The S&P closed on light volume with a doji below resistance. The narrow intraday trading range offers a low risk opportunity with a break and ...

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Members' Corner

Natterings

Check out some new posts from our friend The Nattering Naybob. 

The Big Lebowski Sequel?

Taking a "resp-shit" or "potty break" from "in the Toilet Thursday" or "Thursday's in the Loo"... One of our favorite scenes from the 1998 cult classic The Big Lebowski, the ash can scene where Walter Subchak (John Goodman) eulogizes the departed Donnie (Steve Buscemi) with Jeffrey Lebowski (Jeff Bridges) looking on.

Keep reading: ...



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OpTrader

Swing trading portfolio - week of March 20th, 2017

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

 

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

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

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

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



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Digital Currencies

Bitcoin Tumbles Below Gold As China Tightens Regulations

Courtesy of Zero Hedge

Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.

A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.

As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates th...



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Mapping The Market

Congress begins rolling back Obama's broadband privacy rules

Courtesy of Jean Luc

I am trying to remember who on this board said that people wanted to Trump because they want their freedom back. Well….

Congress begins rolling back Obama's broadband privacy rules

By Daniel Cooper, Endgadget

ISPs will soon be able to sell your most private data without your consent.

As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the res...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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Biotech

The Medicines Company: Insider Buying

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

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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All About Trends

Mid-Day Update

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

Click here for the full report.




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

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FeedTheBull - Top Stock market and Finance Sites



About Phil:

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

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About Ilene:

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

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