Archive for the ‘Phil’s Favorites’ Category

Bookies See Almost 90% Chance Of Macron Becoming French President

Courtesy of Zero Hedge

As results begin to trickle in (with pollsters showing Macron leading and official French Interior Ministry showing a Le Pen lead), betting odds (according to Betfair) are now giving Macron comfortably over 80% chance of becoming France’s next President.

As the evening has gone on and the picture becomes clearer, his odds continue to increase. The market is clearly expecting a ‘Front Republicain’ to form, as it did in 2002, to rally behind Emmanuel Macron and to deny Marine Le Pen.

Of course, bookies didnt quite get Brexit and Trump right…





Target2 and Secret Bailouts: Will Germany be Forced Into a Fiscal Union with Rest of Eurozone?

Courtesy of Mish.

Project Syndicate writer, Hans-Werner Sinn, explains why the ECB’s asset purchases and Target2 imbalances constitute “Europe’s Secret Bailout”.

Under the ECB’s QE program, which started in March 2015, eurozone members’ central banks buy private market securities for €1.74 trillion ($1.84 trillion), with more than €1.4 trillion to be used to purchase their own countries’ government debt.

The QE program seems to be symmetrical because each central bank repurchases its own government debt in proportion to the size of the country. But it does not have a symmetrical effect, because government debt from southern European countries, where the debt binges and current-account deficits of the past occurred, are mostly repurchased abroad.

For example, the Banco de España repurchases Spanish government bonds from all over the world, thereby deleveraging the country vis-à-vis private creditors. To this end, it asks other eurozone members’ central banks, particularly the German Bundesbank and, in some cases, the Dutch central bank, to credit the payment orders to the German and Dutch bond sellers. Frequently, if the sellers of Spanish government bonds are outside the eurozone, it will ask the ECB to credit the payment orders.

In the latter case, this often results in triangular transactions, with the sellers transferring the money to Germany or the Netherlands to invest it in fixed-interest securities, companies, or company shares. Thus, the German Bundesbank and the Dutch central bank must credit not only the direct payment orders from Spain but also the indirect orders resulting from the Banca de España’s repurchases in third countries.

The payment order credits granted by the Bundesbank and the Dutch central bank are recorded as Target claims against the euro system.

For the GIPS countries [Greece, Italy, Portugal, and Spain], these transactions are a splendid deal. They can exchange interest-bearing government debt with fixed maturities held by private investors for the (currently) non-interest-bearing and never-payable Target book debt of their central banks – institutions that the Maastricht Treaty defines as limited liability companies because member states do not have to recapitalize them when they are over-indebted.

If a crash occurs and those countries leave the euro, their national central banks are likely to go bankrupt because much of their debt is denominated in euro, whereas their claims against the respective states and the banks will be converted to the


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Hedge Fund CIO Asks If We Have Reached The “Capitulation” Point

Courtesy of Zero Hedge

Excerpted from the latest weekly note from Eric Peters, CIO of One River Asset Management

Capitulation

“He was extremely intelligent, high-profile, and operated with data and models that people didn’t understand back then,” said the historian. “But nine days before the 1929 Crash, Irving Fisher abandoned his long-held bull market skepticism and said that stock prices had reached a permanently high plateau.” Irving went all in, leveraged up, and was eventually bankrupted.

“On the first leg down, he claimed the market was simply shaking out the lunatic fringe.” It kept falling. “Thoroughly discredited, he wrote about debt-deflation. No one listened.”

“Are we at that point yet?” asked the same historian. “Are we at the point in the cycle where people conclude that it’s been going on for so long that it can’t possibly ever end?”

The Shiller P/E ratio was 32 at the 1929 peak. It was 44 in 1999. Those were the only other times in history when it’s been higher than today’s level of 29 (it’s now 73% above the 135yr mean of 16.8).

“It’s hard to argue that we’re there yet. Valuations are high, but investors still seem to be concerned. They remain obsessed about the unsustainability and fragility of this bull market.”

“I’m going to make an educated guess,” said the historian, lifting his head from a book and walking to his looking glass. “This cycle ends not because things go wrong, but rather, because they go right.”

Every great bull market ends in fabulous fashion. And this one started in 1981 – with a Shiller P/E of 6.7 – and after decades of declining bond yields it’s been turbo-charged by $14trln in central bank purchases.

“Financial asset prices finally crack once economies heat up, skeptical investors fall in love, capitulate, and we get an interest rate shock.”

And some bonus thoughts on today's French election outcome though the eyes of traders vs investors:

“Traders trade prices, investors trade outcomes,” said the trader. “You may love the Patriots, but there’s a spread where you can no longer be in that trade.” [my emphasis ~ ed.]

Lose sight of the line, and you lose your grasp of risk-reward.


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Surplus or Stimulus

Courtesy of The Automatic Earth



René Magritte Le Cri du Coeur 1960 

Austerity is over, proclaimed the IMF this week. And no doubt attributed that to the ‘successful’ period of ‘five years of belt tightening’ a.k.a. ‘gradual fiscal consolidation’ it has, along with its econo-religious ilk, imposed on many of the world’s people. Only, it’s not true of course. Austerity is not over. You can ask many of those same people about that. It’s certainly not true in Greece.

IMF Says Austerity Is Over

Austerity is over as governments across the rich world increased spending last year and plan to keep their wallets open for the foreseeable future. After five years of belt tightening, the IMF says the era of spending cuts that followed the financial crisis is now at an end. “Advanced economies eased their fiscal stance by one-fifth of 1pc of GDP in 2016, breaking a five-year trend of gradual fiscal consolidation,” said the IMF in its fiscal monitor.

In Greece, the government did not increase spending in 2016. Nor is the country’s era of spending cuts at an end. So did the IMF ‘forget’ about Greece? Or does it not count it as part of the rich world? Greece is a member of the EU, and the EU is absolutely part of the rich world, so that can’t be it. Something Freudian, wishful thinking perhaps?

However this may be, it’s obvious the IMF are not done with Greece yet. And neither are the rest of the Troika. They are still demanding measures that are dead certain to plunge the Greeks much further into their abyss in the future. As my friend Steve Keen put it to me recently: “Dreadful. It will become Europe’s Somalia.”

An excellent example of this is the Greek primary budget surplus. The Troika has been demanding that it reach 3.5% of GDP for the next number of years (the number changes all the time, 3, 5, 10?). Which is the worst thing it could do, at least for the Greek people and the Greek economy. Not for those who seek to buy Greek assets on the cheap.

But sure enough, the Hellenic Statistical Authority (ELSTAT) jubilantly announced on…
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Neil deGrasse Tyson on the Threat of Science Denial

 

Neil deGrasse Tyson on the Threat of Science Denial

Courtesy of 

This post first appeared on BillMoyers.com.

Just in time for Earth Day, astrophysicist Neil deGrasse Tyson releases a short film on Facebook that he says "may be the most important words I have ever spoken." It's already been viewed nearly 20 million times.

DeGrasse Tyson highlights some of the points he made in his three-part series of conversations with Bill Moyers in 2014, which explored a variety of topics, including the beauty of the scientific method in the search for truth, the value of innovations in science and technology in the ascendency of America, and how political debates about established science are delaying critical conversations about the best ways to combat climate change.

“You have not fully expressed your power as a voter until you have a scientific literacy in topics that matter for future political issues,” he told Bill. “This requires a base level of science literacy that I don’t think we have achieved yet.”

Dig deeper and watch all three episodes.





Why the French presidential candidates are arguing about their colonial history

 

Why the French presidential candidates are arguing about their colonial history

Courtesy of Jennifer Sessions, University of Iowa

When the French presidential elections begin on April 23, the world will be watching closely. The Conversation

Polls are tightening up, but Marine Le Pen, of the far-right National Front (FN) Party, seems likely to get through to the second, runoff ballot on May 10. Will the xenophobic populism that brought Brexit to the U.K. and Donald Trump to the White House claim the Elysée Palace, too?

Le Pen’s expected advance has been one of the few constants in a campaign marked by surprising, dispiriting twists. To a historian of French colonialism like me, one of the most revealing is the renewed debate over the memory and teaching of the colonial past. The candidates’ positions on this issue can be seen as a revealing barometer of French attitudes toward immigration, race and multiculturalism today.

Sixty million subjects

At its height in the 1930s, the French empire encompassed some 60 million colonial subjects, from the Caribbean to Southeast Asia. But after decolonization in the 1950s and 1960s, the French relegated imperial racism, slavery and colonialism to the “historical back burner.” The eruption of the history wars finally broke this public silence in the mid-1990s.

There were two main triggers for the decade-long fight about how to remember France’s colonial history.

The first was the 150th anniversary of the French abolition of colonial slavery in 1998. Angered by the self-congratulatory celebration of French abolitionists, black and Afro-Caribbean activists demanded greater attention to enslaved Africans’ suffering.

Christiane Taubira. Wikicommons/Claude Truong Ngoc

Their efforts culminated in a 2001 law sponsored by Guyanese deputy Christiane Taubira. The “Taubira Law” “recognizes the slave trade and slavery as crimes against humanity.”

The second came in 2000, with revelations about the French army’s systematic use of torture during the Algerian War of Independence (1954-1962). Memoirs published by an Algerian nationalist and a French military officer and studies by two young French historians unleashed harsh condemnation
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‘Public goods’ made America great and can do so again

 

'Public goods' made America great and can do so again

Courtesy of Marina v. N. WhitmanUniversity of Michigan

Image 20170414 25875 n1x0xj

Public goods come in many forms, from highways to magnificent mountains. Road sign via www.shutterstock.com

All Americans are lucky to live in a country brimming with public resources that everyone can share. The Conversation

Many are provided by government and funded with our tax dollars, such as the highways that crisscross the country, the 84 million acres of national parks and the roughly 100,000 public schools that give all children access to education.

Others come from nature, like mountains, lakes and rivers, which also depend on a reliable government and meaningful regulations to preserve and protect them.

While the collective value of these “public goods” is probably incalculable, the economic impact of schools, clean air and vast highways has been significant. In fact, I would argue that public goods are what have made America great.

Unfortunately, our stock of public goods has been declining for half a century, particularly those that require the government’s purse strings. President Trump’s proposed budget would make things even worse by cutting, among many other things, funding for national parks, the cleanup of the Great Lakes and efforts to minimize climate change.

So if Trump is serious about making America as great as it can be, investing in our public goods – as well as those equally vital ones we share with other nations – would be a good place to start.

Nonexcludable and nonrivalrous

The formal definition of a public good is that it’s something that is nonexcludable and nonrivalrous. That’s a fancy way of saying that everyone can take advantage of it and that one person’s use doesn’t reduce its availability to others.

Setting aside for a moment natural public goods, the ones provided by the government have been on the decline. U.S. public capital investment, net of depreciation, fell to just 0.4 percent of GDP in 2014 from 1.7 percent in 2007 and about 3 percent in the 1960s.

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Why are we dragging our feet when more automation in health care will save lives?

 

Why are we dragging our feet when more automation in health care will save lives?

Courtesy of Thomas HoovenColumbia University Medical Center

Image 20170418 32726 ro3ifj

From closed-loop ventilators to smarter vital sign monitors, automation has untapped potential to improve medical outcomes. From www.shutterstock.com

As a neonatologist, I worry about patients with pulmonary hypertension. This unforgiving disease, sometimes seen after premature birth, can end with sudden death from constricting blood vessels in the lungs. One minute a baby in the neonatal ICU may be sleeping comfortably; moments later, doctors and nurses are giving chest compressions and rescue medications. The Conversation

A pulmonary hypertension crisis, as these frightening episodes are called, starts with a drop in the blood oxygen level. That drop triggers a monitor to beep. It’s up to the nurse to hear the sound, come to the bedside and take action.

The first and most effective step in stopping a pulmonary hypertension crisis is simple: Give oxygen. But a nurse caring for another patient might be delayed for 30 seconds, and the loss of that time can lead to brain injury or death.

In an age of self-driving cars and 400-ton airplanes that can land themselves in blinding fog, it makes no sense that hospitalized patients are surrounded by lifesaving machinery that can be activated only by a person pressing a button or turning a knob.

Modern transportation augments human judgment and reaction times with a computer’s superior ability to continuously respond to dozens of fluctuating variables. Yet in medicine, safety remains stubbornly reliant on human intervention.

FDA regulation impedes innovation

My patients with pulmonary hypertension are often attached to a respirator with adjustable oxygen settings. The respirator sits inches below the monitor that indicates how much oxygen is in the blood. But the two machines can’t communicate with each other. If they could, it would be possible to increase the flow of oxygen automatically the moment a crisis is detected.

In 2009, engineers developed just this kind of closed-loop respirator and introduced it in several hospitals as part of a feasibility study.…
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Can the Electric Grid Handle Self-Driving Electric Trucks?

Courtesy of Mish.

In response to some of my recent posts on self-driving and electric vehicles, several readers asked if the electric grid could handle the increase. Other readers flat out stated the electric capacity was insufficient.

What’s the real story?

An electrical engineer in the utility industry emailed his thoughts in a pair of emails yesterday.

Mish,

I agree with you 100% about autonomous trucking. The driver plus insurance represent 39% of the cost per mile of operating a truck, according to the ATRI.

Something you might consider is that autonomous trucking will make electric trucks inevitable. It is easy to build a 200-mile range electric truck today. There are a few on the market. Driving this across the country makes no sense if you’re paying a driver to sit around for 1.5 hours every 200 miles (based on a 400kWh battery and a 350kW charger). Once autonomous trucks work, only electric makes sense. The value of fuel savings is much more than the lost productivity from frequent stops.

Electric trucks require 2kWh/mi to operate and will have dramatically lower repair and maintenance costs. ATRI says a diesel truck’s fuel plus R&M is 58.3c/mi plus 15.8c/mi. At the national average 10c/kWh and 90% lower R&M costs, the electric truck fuel plus R&M will be 70% cheaper.

If you are concerned about battery life replacement costs, Tesla has already demonstrated that properly operating a battery can dramatically reduce degradation. They see about 5% of range loss per 100k miles of operation. Some of this is related to aging and some to use. Either way, oversizing the battery pack so it provides a reasonable range for its life is pretty economic.

With reasonable assumptions, autonomous driving will make freight 40% cheaper per mile. Autonomous electric will be 55% cheaper per mile compared to today.

I asked the responder what his background was, whether or not I could quote him, and whether or not he had any links or supporting evidence to back his claims.

He said the company he worked for would not like the publicity but he had a link and a personal spreadsheet to back his claims.

I said I would call him EEUI (Electrical Engineer Utility Industry).

Second Email from EEUI

I’m an electrical engineer in the utility industry. I’ve been studying this question


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Visualizing The Collapse Of The Middle Class In 20 Major U.S. Cities

Courtesy of Zero Hedge

When future historians look back at the beginning of the 21st century, they’ll note that we grappled with many big issues. They’ll write about the battle between nationalism and globalism, soaring global debt, a dysfunctional healthcare system, societal concerns around automation and AI, and pushback on immigration. They will also note the growing number of populist leaders in Western democracies, ranging from Marine Le Pen to Donald Trump.

However, as Visual Cpitalist's Jeff Desjardins notes, these historians will not view these ideas and events in isolation. Instead, they will link them all, at least partially, to an overarching trend that is intimately connected to today’s biggest problems: the “hollowing out” of the middle class.

VISUALIZING THE COLLAPSE OF THE MIDDLE CLASS

The fact is many people have less money in their pockets – and understandably, this has motivated people to take action against the status quo.

And while the collapse of the middle class and income inequality are issues that receive a fair share of discussion, we thought that this particular animation from Metrocosm helped to put things in perspective.

The following animation shows the change in income distribution in 20 major U.S. cities between 1970 and 2015:

The differences between 1970 and 2015 are intense. At first, each distribution is more bell-shaped, with the majority of people in a middle income bracket – and by 2015, those people are “pushed” out towards the extremes as they either get richer or poorer.

A BROADER LOOK AT INCOME INEQUALITY

This phenomenon is not limited to major cities, either.

Here’s another look at the change in income distribution using smaller brackets and the whole U.S. adult population:

It’s a multi-faceted challenge, because while a significant portion of middle class households are being shifted into lower income territory, there are also many households that are doing the opposite. According to Pew Research, the percentage of households in the upper income bracket has grown from 14% to 21% between 1971 and 2015.

The end result? With people being pushed to both ends of the spectrum, the middle class has decreased considerably in size. In 1971, the


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Phil's Favorites

Chart o' the Day: Small Caps and Seasonality

 

Chart o’ the Day: Small Caps and Seasonality

Courtesy of 

My friend Jon Krinsky (MKM Partners) is out with a new note arguing that the 5-month consolidation for small caps (Russell 2000) is about to be resolved with a big move in one direction or the other. Krinsky says a bullish breakout is more likely. Notably, it appears to be small cap growth stocks leading as opposed to small cap value.

I’ll note that the small cap growth side of the Russell 2000 is comprised of 25% tech, 21% healthcare (think small biotechs), 16% industrials and 15% consumer discretionary (little chain restaurants and retail stores).

Amongst a blitz of charts on what&...



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ValueWalk

Our Military Has Been Hijacked

By The Sovereign Investor. Originally published at ValueWalk.

Last Monday I wrote about the size of the U.S. military budget, and compared it — unfavorably — to the situation of the late Roman Empire.

Given the high status of the U.S. Armed Forces in our society, I expected some critical responses.

But I didn’t get any.

By Karl wilhelm Wach (http://www.nodulo.org/ec/2007/n066p13.htm) [Pu...

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Zero Hedge

Does America Have A Technology Platform Monopoly Problem?

Courtesy of ZeroHedge. View original post here.

Authored by Mike Krieger via Liberty Blitzkrieg blog,

Last week, I wrote a post titled, ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

China Risks Spoiling Global Markets Party as Stocks Tumble Again (Bloomberg)

While global risk appetite returned on Monday on the heels of France’s presidential election, shares in China bucked the trend, dropping the most in three months. The Shanghai Composite Index has lost almost 5 percent since its mid-April peak, worse than all other national benchmarks in the world.

10 things you need to know before the opening bell (SPY, SPX, QQQ, DIA, CHOO) (Business Insider)

The currency trades up 1.2% at 1.0859 versus the d...



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OpTrader

Swing trading portfolio - week of April 24th, 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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Kimble Charting Solutions

Fear Index tanking, after hitting this resistance!

Courtesy of Chris Kimble.

Below looks at the VIX (Fear Level) over the past few years. A rally had taken place in the VIX, driving it up to falling resistance and its 50% retracement level at (1), in the chart below.

CLICK ON CHART TO ENLARGE

We shared the chart above last week on Twitter last week (S...



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Digital Currencies

BDC's Crypto Corner

Hello fellow PSW-ers, it's biodieselchris here. I've been interested in cryptocurrencies (informally, "cryptos" or "coins") since 2011 when I first heard about Bitcoin, Since that time I've become somewhat of a subject matter expert and personal investor in Bitcoin and other alternative cryptocurrencies ("altcoins"). I have even started one of my own!

I've been posting comments about cryptos in Phil's daily post from time to time. Recently, Phil and I got on a call and he asked if I would like to run a blog on his site specifically about cryptos, which I thought was a great idea. My goal would be to educate members on what I know about how coins work, how I research coins (what I find interesting), how exactly one can invest (buy, hold, and sell) coins and a basic, easy-to-follow general how-to on all things crypto. In addition, other members have expressed an interest in learning more directly...



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Chart School

The Tax Cuts are Coming! It's the Stock Trader Weekly Recap.

Courtesy of Blain.

Forgetting the traditional market news, as we began last week both the NASDAQ and Russell 2000 were at critical support.  A rally Monday showed those support levels held, giving bulls breathing room.  We’ll discuss this more below after we get through the more fundamental news items that transpired.   Traders seemed to breath easier on Monday seeing no escalation with North Korea and came in ready for a bit of a relief rally.

The lack of a nuclear test from North Korea over the weekend did much to reverse defensive positions adopted by traders heading into the weekend, said Ian Winer, director of equity trading at Wedbush Securities.

It was a very heavy week of S&P 500 type earnings with banks leading the way in the first half of the week. Then a series of large sized companies ac...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

...

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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Biotech

CAR-T & CRISPR - the Future is Now

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

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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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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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.

Market Shadows >>