Archive for the ‘Phil’s Favorites’ Category

Weekly Market Summary

 

Weekly Market Summary

Courtesy of The Fat Pitch

Summary: All of the US equity indices made new all-time highs again this week. Treasuries were the biggest winner. A drawdown of at least 5-8% in SPX is odds-on before year end, but there are a number of compelling studies suggesting that 2017 will probably continue to be a good year for US equities.

* * *

On Friday, SPX and DJIA made new all-time highs (ATH). During the week, COMPQ, NDX, RUT and NYSE also made new ATHs. All the indices moving to new highs together suggests that this is a broadly based rally. The trend remains up.

For the week, SPX and DJIA gained 1%. NDX notched a 0.4% gain and RUT closed lower. The biggest gain came from treasuries, with TLT gaining 1.4%. We continue to like the set up in treasuries, as explained in detail last week (here).

Little has changed from last week's summary. Instead of repeating those the same messages, we'll highlight four new studies that show a favorable longer term outlook for US equities.

First, SPX has now gone 76 days since the last 3% drawdown ended on November 4, right before the US election. That is the longest streak since July 2006 to February 2007, when the SPX went 150 days without a 3% drawdown. The chart below shows the duration and magnitude of the current rally relative to other long streaks in the past 14 years (yellow highlighting equals the current rally). Enlarge any chart by clicking on it.


The message from this chart is twofold.

First, the current uninterrupted rally is rare and extended from a historical perspective, but these periods can last much longer.

Second, when the current uptrend ends, it is not likely to lead directly into a more significant downturn. Momentum like this weakens before it reverses. In each of the cases highlighted above, after a 3-5% drawdown, SPX either continued higher or retested the prior high before falling lower. Mid-2011, 2012 and 2014 are recent examples of the latter case (shown below). That would be our expectation now as well.


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Uber Under Attack for Sexism, Running Red Lights, Stealing Google’s Technology

Courtesy of Mish.

Uber faces attacks on multiple fronts.

For starters, Susan Fowler, a reliability engineer, unleashed a firestorm with a 3,000-word document describing multiple instances of sexual harassment over the course of a full year, starting with a first-day proposition from her manager.

Next, Uber’s credibility is at stake after one of its self-driving vehicles ran a red light. Uber claimed a human was at the wheel, but it turns out Uber lied.

Finally, Uber also has to deal with a Google lawsuit regarding stolen technology.

susan-fowler

The Financial Times reports Susan Fowler, the Techie Taking on Uber.

Travis Kalanick, Uber’s chief executive, started the week by launching an investigation into claims of sexism at the ride-hailing start-up. Within days, a wave of consumers had quit the app to protest at its treatment of female developers.

The revelation that shook Mr Kalanick, Uber and the technology industry came from Susan Fowler, a 25-year old site reliability engineer, who had worked at the company for a little over a year. She wrote an entry on her personal blog called simply: “Reflecting on one very, very strange year at Uber”.

Ms Fowler detailed in almost 3,000 words, each alleged incident of sexism by her superiors. It was shared on Twitter just under 22,000 times. According to her account, Uber’s human resources department refused to discipline her manager when he propositioned her on her first day, despite his having harassed other women. She describes being told something “personal” might be holding her back from moving teams despite a perfect performance review, as well as subtle discrimination, such as female engineers being denied leather jackets given to men, because there were too few women for a bulk discount. “I feel a lot of sadness, but I can’t help but laugh at how ridiculous everything was. Such a strange experience. Such a strange year,” she summed up.

Uber Lies About Running Red Light

The New York Times reports A Lawsuit Against Uber Highlights the Rush to Conquer Driverless Cars

Late last year, Uber, in defiance of California state regulators, went ahead with a self-driving car experiment on the streets of San Francisco under the leadership of Anthony Levandowski, a new company executive.

The experiment quickly ran into problems. In one case, an autonomous Volvo zoomed through a red


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Why Facts Don’t Change Our Minds

Courtesy of Jean Luc

Good article about facts and why we reject them:

WHY FACTS DON’T CHANGE OUR MINDS

New discoveries about the human mind show the limitations of reason.

By Elizabeth Kolbert

In “Denying to the Grave: Why We Ignore the Facts That Will Save Us” (Oxford), Jack Gorman, a psychiatrist, and his daughter, Sara Gorman, a public-health specialist, probe the gap between what science tells us and what we tell ourselves. Their concern is with those persistent beliefs which are not just demonstrably false but also potentially deadly, like the conviction that vaccines are hazardous. Of course, what’s hazardous is not being vaccinated; that’s why vaccines were created in the first place. “Immunization is one of the triumphs of modern medicine,” the Gormans note. But no matter how many scientific studies conclude that vaccines are safe, and that there’s no link between immunizations and autism, anti-vaxxers remain unmoved. (They can now count on their side—sort of—Donald Trump, who has said that, although he and his wife had their son, Barron, vaccinated, they refused to do so on the timetable recommended by pediatricians.)

The Gormans, too, argue that ways of thinking that now seem self-destructive must at some point have been adaptive. And they, too, dedicate many pages to confirmation bias, which, they claim, has a physiological component. They cite research suggesting that people experience genuine pleasure—a rush of dopamine—when processing information that supports their beliefs. “It feels good to ‘stick to our guns’ even if we are wrong,” they observe.

The Gormans don’t just want to catalogue the ways we go wrong; they want to correct for them. There must be some way, they maintain, to convince people that vaccines are good for kids, and handguns are dangerous. (Another widespread but statistically insupportable belief they’d like to discredit is that owning a gun makes you safer.) But here they encounter the very problems they have enumerated. Providing people with accurate information doesn’t seem to help; they simply discount it. Appealing to their emotions may work better, but doing so is obviously antithetical to the goal of promoting sound science. “The challenge that remains,” they write toward the end of their book, “is to figure out how to address the tendencies that lead to false scientific belief.”





It`s All About The 2018 Mid-Term Elections (Video)

Courtesy of EconMatters

We discuss the obstructionist strategy that both political parties utilize in the all out fight for more party power, and gaining additional seats at the Midterm Elections in this video. The Republicans will turn on Donald Trump at the drop of a hat!





Dutch Parliament to Debate Leaving the Eurozone: Nexit on the Way?

Courtesy of Mish.

Potential Eurozone disruption possibilities keep compounding. The Netherlands Parliament will now debate leaving the Eurozone.

For example, the Netherlands Parliament will now debate leaving the Eurozone.

In long-winded wording for a potential “Nexit”, Reuters reports Dutch relations with euro up for debate after lawmakers commission probe

The Netherlands’ future relationship with the euro will be comprehensively debated by its parliament following elections in March after lawmakers commissioned a report on the currency’s future.

The motion approving the investigation by the Council of State, the government’s legal advisor, coincides with a rising tide of euroscepticism in Europe, which populist parties are hoping to tap into in a series of national elections this year also taking in eurozone powerhouses France and Germany.

The probe will examine whether it would be possible for the Dutch to withdraw from the single currency, and if so how, said lawmaker Pieter Omtzigt.

Omtzigt, of the opposition Christian Democrats, tabled the parliamentary motion calling for the investigation, which legislators passed unanimously late on Thursday.

It was prompted by concerns the ECB’s ultra-low interest rates are hurting Dutch savers, especially pensioners, and doubts as to whether its bond purchasing programs are legal, he said.

Its findings will be presented in several months, by which time the make-up of parliament will have changed dramatically.

While most Dutch voters say they favor retaining the euro, the eurosceptic far-right party of Geert Wilders is expected to book large gains though it is unlikely to win enough votes to form a government.

The most probable outcome of the March 15 vote is a new centrist coalition including some parties, such as Omtzigt’s Christian Democrats, that have been vocal in their opposition to current ECB policy.

“The problems with the euro have not been solved,” Omtzigt said. “This is a way for us to look at ways forward with no taboos.”

Analysis

Geert Wilders is likely to “win” the Dutch election. In this case, “win” means get more votes than any other political party.

However, the odds that Wilders can form a stable coalition with Wilders heading up the government is slim.

Netherlands Polls

dutch-elections-2017-02-24

The first line in the above table of Netherlands Polls is from the 2012 election, the rest of the lines are from February of this year.


Continue reading here…





News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Oil Slips From 19-Month High as Ample Supply Offsets OPEC Cuts (Bloomberg)

Oil retreated from the highest close since July 2015 in New York as record U.S. crude inventories offset OPEC production curbs.

Sales of New U.S. Homes in January Were Slower Than Forecast (Bloomberg)

Purchases of new U.S. homes in January were slower than forecast, signaling an increase in mortgage rates may be giving some potential buyers pause.

Standard Chartered 'War-Gaming' Trump Trade Battles (Bloomberg)

One of the world’s biggest emerging-market banks says it’s "war-gaming" trade disruptions after U.S. President Donald Trump’s election.

The Murky Future of Nuclear Power in the United States (NY Times)

The Three Mile Island meltdown was two generations ago. Since then, engineers had developed innovative designs to avoid the kinds of failures that devastated Fukushima in Japan.

A leading economist explains why bitcoin isn't money (Business Insider)

Ann Pettifor, leading economist and author of "The Production of Money" told Business Insider that bitcoin is flawed as money because it is a "finite asset."

J.C. Penney to Shut as Many as 140 Stores as Industry Slumps (Bloomberg)

J.C. Penney Co. plans to shutter as many as 140 stores and trim thousands of jobs, becoming the latest department-store chain to make big moves in a world of lower mall traffic and fierce online competition.

GUNMAKER CEO: People are buying guns because cops are backing off and crime is 'soaring to the roof' (Business Insider)

There's never been a better time to be a gun owner, according to gunmaker Sturm Ruger. 

While he was campaigning, President Donald Trump promised voters fewer restrictions on assault-weapon sales. The National Rifle Association endorsed him as a candidate.

FCC chair to block stricter broadband data privacy rules (Reuters)

The U.S. Federal Communications Commission will block some Obama administration rules that subject broadband providers to stricter scrutiny than websites, a spokesman said on Friday, in a victory for internet providers such as AT&T Inc, Comcast Corp and Verizon Communications Inc.

ETFs might do
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News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Stocks across Europe dived into the weekend (Business Insider)

Stocks all over Europe dived Friday, as markets took a cautious approach and investors took profit after US stocks hit record highs Thursday evening.

Trump Is on the Verge of His Own Bull Market (Bloomberg)

Consecutive gains in the Dow Jones Industrial Average have left it at the doorstep of history, including a 20 percent surge in futures from the early hours of Nov. 9 that could be loosely framed as the president’s own bull market.

Here’s Why Bull Markets Create Bad Habits in Investors (Fortune)

Most people would unhesitatingly reply, “Yes.” That assumption doesn’t say as much about King James’s skills as it does about the inner workings of your own brain.

Asian Stocks Fall Amid Trump Trade Policy Fears, Strong Yen (Associated Press)

Asian markets slipped in muted trading Friday amid worries over U.S. trade policies that may affect regional economies. A stronger yen weighed on Japan's exporters.

China, France Overtake US As Top German Trade Partners (Associated Press)

Germany's Federal Statistical Office reported Friday that trade between the country and China in 2016 totaled some 170 billion euros (currently $180 billion) worth of goods. Import and export trade with France was second at 167 billion euros.

Global stocks ease as ‘Trumpflation trade’ loses momentum (Reuters)

Commodity-related sectors led European shares lower for a third straight session on Friday while the dollar was poised for a weekly losses as the “Trumpflation trade” lost momentum.

Wind and solar power are disrupting electricity systems (The Economist)

Almost 150 years after photovoltaic cells and wind turbines were invented, they still generate only 7% of the world’s electricity. Yet something remarkable is happening.

US Stocks Eke Out Last-Minute Gain As Utilities Rise (Associated Press)

A late push helped U.S. stocks finish higher Friday after indexes spent most of the day lower. There was far more selling than


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Seeking truth among ‘alternative facts’

 

 

Seeking truth among 'alternative facts'

Courtesy of Peter Neal Peregrine, Lawrence University

Part of what I do as an archaeologist is judge between competing claims to truth. Indeed, you could say this is the entire purpose of science. Before we make a judgment about what is true, there are facts that have to be examined and weighed against one another.

When Trump’s senior advisor Kellyanne Conway made her now infamous reference to “alternative facts,” many viewers were stunned. But I am a scientist. I spend my days trying to pull “facts” out of the remains of the past. After thinking about what Conway said, I realized that it was not ridiculous at all.

There are always “alternative facts.” What matters is how we decide which of those alternative facts are most likely to be true.

Science or authority?

What made Conway’s suggesting “alternative facts” about the size of the crowd at Trump’s inauguration seem so ridiculous was that, from a scientific perspective, it was obviously false. In science, we use empirical observations to generate “alternative facts” that we judge against one another using established bodies of method and theory and logical argument. Photos of the relatively small crowd at Trump’s inauguration gave empirical evidence that Conway’s “alternative facts” that the crowd was enormous were unlikely to be true.

 

Neanderthal stone tools, c. 50,000 to 70,000 years old in Landesmuseum Württemberg, Stuttgart, Germany. Wikimedia Commons

 

I’m often asked how archaeologists know whether an object is a stone tool rather than a fragmented rock. We don’t always. Looking at the same rock I might see a tool, while another archaeologist might not. Through science we can usually determine what is true.

We look at how the rock was broken, and whether the breaks were more likely from natural or human processes. We look at wear on the stone to see if it matches that of other known tools. In short, we use empirical observations and methods to decide which description best represents reality.

Conway’s statement was not based…
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The Revenge Of Comet Pizza

Courtesy of James Howard Kunstler

Remember that one? It was about as weird as it gets. A meme generated out of the voluminous hacked John Podesta emails that some conspiracy connoisseurs cooked up into a tale of satanic child abuse revolving around a certain chi-chi Washington DC pizza joint. I never signed on with the story, but it was an interesting indication of how far the boundaries of mass psychology could be pushed in the mind wars of politics.

Sex, of course, is fraught. Sex and the feelings it conjures beat a path straight to the limbic system where the most primitive thoughts become the father of the most primitive deeds. In our American world, this realm of thought and deed has turned into a political football with the Left and the Right scrimmaging ferociously for field position — while the real political agenda of everything important other than sex lies outside the stadium.

The Comet Pizza story was understandably upsetting to Democrats who didn’t like being painted as child molesters. Unfortunately for them, it coincided with the bust of one Anthony Weiner — and his infamous laptop — disgraced former “sexting” congressman, husband of Hillary’s top aide and BFF, Huma Abedin. The laptop allegedly contained a lot of child porn.

That garbage barge of sexual allegation and innuendo couldn’t have helped the Hillary campaign, along with all the Clinton Foundation stuff, in the march to electoral loserdom. I suspect the chthonic darkness of it all generated the “Russia-did-it” hysteria that cluttered up the news-cloud during the first month of Trumptopia. The collective superego of America is reeling with shame and rage.

On the Right side spectrum stood the curious figure of Milo Yiannopoulos, the self-styled “Dangerous Faggot,” who has made a sensational career lately as an ideological provocateur, especially on the campus scene were he got so into the indignant faces of the Maoist snowflakes with his special brand of boundary-pushing that they resorted to disrupting his events, dis-inviting him at the last moment, or finally rioting, as in the case at UC Berkeley a few weeks ago.

Milo’s battles on campus were particularly…
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Interest Rate Differentials Increasing Financial Market Leverage To Unsustainable Levels

Courtesy of EconMatters

We discuss the rate differentials between Switzerland, Britain, Europe, Japan and the United States and how this Developed Financial Markets carry trade is incentivizing excessive risk taking with tremendous leverage and destabilizing the entire financial system in the process in this video. You want to know what is behind weekly market records, borrowed money via punchbowl central bank liquidity. This ends badly every time Central Banks. You can run this model 1 Million iterations, and it plays out the same way, the financial bubble implodes in on itself where liquidity evaporates into nothingness. It is ironic that when the bubble pops, given all the Central Bank infused liquidity to create this bubble paradigm, that all liquidity dries up, and all the sudden there is no real liquidity at all in the system when everyone direly needs it!

 
Conclusion:
 
Central Banks need a coordinated response to figure how they get out of this Developed World interest rate differential problem that risks blowing up the entire Global Financial System because of poor incentives in regards to promoting excessive leverage, poor risk management and imprudent investment decision making processes. My solution would be for the first four Central Banks to tighten Monetary Policy more than the US Federal Reserve. However, the status quo relationship is untenable, and the next alternative would be for the Fed to surprise market participants, showing traders to be on their toes, that there are risks to excessive leverage with borrowed central bank carry funds in a Risk-Off Environment.
 




 
 
 

Phil's Favorites

Weekly Market Summary

 

Weekly Market Summary

Courtesy of The Fat Pitch

Summary: All of the US equity indices made new all-time highs again this week. Treasuries were the biggest winner. A drawdown of at least 5-8% in SPX is odds-on before year end, but there are a number of compelling studies suggesting that 2017 will probably continue to be a good year for US equities.

* * *

On Friday, SPX and DJIA made new all-time highs (ATH). During the week, COMPQ, NDX, RUT and NYSE also made new ATHs. All the indices moving to new highs together suggests that this is a broadl...



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Zero Hedge

"Where Does This Crisis End?" - Kurt Schlichter Lays Out The Left's Violent Endgame

Courtesy of ZeroHedge. View original post here.

Submitted by Kurt Schlichter via Townhall.com,

The Democrat Party, its Media serfs, and Social Justice Incorporated are all outraged because we uppity normals are again presuming to rule ourselves, and their agony is delightful. Less delightful is how, in the process of trying to claw their way back into power, they are incinerating the norms and rules that preserve our political order. That stuff Hillary babbled about honoring the legiti...



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ValueWalk

Aswath Damodaran - Session 9: Historical, Analyst & Fundamental Growth

By VW Staff. Originally published at ValueWalk.


In this session we continued our discussion of growth by first looking at the limitations of analyst estimates of growth and then examining the fundamentals that drive growth. Starting with a very simple algebraic proof that growth in earnings has to come either from new investments or improved efficiency, we looked at how best to estimate growth in three measures of earnings: earnings per share, net income and operating income. With each measure of earnings, the estimation of growth boiled down to answering two questions: (1) How much is this company reinvesting to generating for future growth? (2) How well is it reinvesting? (3) How much growth is added or lost by changes in returns on existing investments? In the next session, we will continue this discussion after the quiz.

Start of the class test: ...



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Mapping The Market

Why Facts Don't Change Our Minds

Courtesy of Jean Luc

Good article about facts and why we reject them:

WHY FACTS DON’T CHANGE OUR MINDS

New discoveries about the human mind show the limitations of reason.

By Elizabeth Kolbert

In “Denying to the Grave: Why We Ignore the Facts That Will Save Us” (Oxford), Jack Gorman, a psychiatrist, and his daughter, Sara Gorman, a public-health specialist, probe the gap between what science tells us and what we tell ourselves. Their concern is with those persistent beliefs which are not just demonstrably false but also potentially deadly, like the conviction that vaccines are hazardous. Of course, what’s hazardous is not being vaccinated; that’s why vaccines were created in the first place. “Immunization is one of the triumphs of modern medicine,” the Gormans no...



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Market News

Breaking News And Best Of The Web

Courtesy of John Rubino.

US stocks finish at record high. Gold and silver at multi-week highs. Bitcoin near all-time high. Trump national security adviser scandal evolving, EPA chief controversy ramping up after email release. Debate over Putin and fake news intensifies.  

Best Of The Web

It’s bubble time! – Peak Prosperity

Dazed & confused… Treasury buying vs. asset valuations? – Econimica

...



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Digital Currencies

As Bitcoin Surges To Record High, China Prepares Its Own Digital Currency

Courtesy of Mike Shedlock (Mish)

Bitcoin hit an all-time high over $1200 today.

Traders are happy because the SEC is expected to rule on a Bitcoin ETF by March 11.

Meanwhile, Bloomberg reports China Is Developing its Own Digital Currency.
 

After assembling a research team in 2014, the People’s Bank of China has done trial runs of its prototype cryptocurrency. That’s taking it a step closer to becoming one of the first major central...

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Kimble Charting Solutions

Crude Oil; Energy stocks suggesting its about to fall, says Joe Friday

Courtesy of Chris Kimble.

Below takes a look at the price action of Crude Oil, Energy ETF (XLE) and Oil & Gas Exploration ETF (XOP) over the past three years.

Could Energy stocks be suggesting the next big move in Crude Oil again? Which direction are they suggesting?

CLICK ON CHART TO ENLARGE

At this time the intermediate trend in Cru...



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Members' Corner

The Manchurian President

 

The Manchurian President

Courtesy of  at BillMoyers.com

As the Trump presidency unravels, unraveling the country along with it, there is no real political antecedent, no lessons from American history on which to draw and provide guidance. We are in entirely uncharted waters.

But there is an antecedent in our popular culture that provides a prism through which to view the contemporary calamity, especially the alleged collusion between Trump’s henchmen and Russian intelligence to deny Hillary Clinton the presidency. I am not the first observer who has ...



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Chart School

Good Recovery

Courtesy of Declan.

In early morning action it was a clear swing to sellers after yesterday's non-event. However, buyers came back and were able to make a good chunk of these losses into today's close.

Large Caps remained the most attractive as defensive stocks often are during times of doubt. The S&P registered higher volume accumulation as intraday action proved to be relatively tight.

The Nasdaq suffered larger losses, but there was no distribution to go with it. Technicals were relatively immune to today's action.

...

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OpTrader

Swing trading portfolio - week of February 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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Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



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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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