Archive for 2006

Freaky Friday

It’s options expiration day so anything can happen and probably will!

In Asia, that anything has translated into 400 point gains for the Nikkei and the Hang Seng (we’ll be lovin’ those Toyota calls today!) with all of Asia making a very strong recovery. India is up another 3.5%, making 11% in 2 days! Europe is up across the board but not by too much as they are waiting for us to open before committing.

It should be noted that, just last Friday and this Monday, the Nikkei made a 300 point recovery in 2 days before dropping 400 points on Tuesday (from where it has bounced almost 1,000 points since!):

Before we get too excited about our own markets, let’s remember our lesson on Fibonacci retracement which is, unfortunately, right where we are at the moment:

The Dow is up 338 points in 2 days from it’s low of 10,698 after dropping from 11,670 making a 35% retracement so far so, according to Fibonacci, we could turn right about here or we could just as easily make another 120 points and still be considered just a bounce. Personally, I usually feel fairly comfortable once we get past 40% but with the speed of the drop and recovery cycle, I am going to be looking at 30 more Dow points as the beginning of the danger zone which will last through 11,200 after which I would have to say we are firmly on the way to new highs.

The Bull scenario for this is the longer view that we climbed from 10,156 in October to 11,670 in May (1,514 pts) and have retraced just over 50% of that gain in one month. Taking the long view, the Dow took a much needed bounce off the 40 week moving average as it sets up for another run at its all-time high. The 50% mark is dead on if you look at the 200 dma of 10,900 and throw out the quick dip below it (that has been just as quickly erased).

Back in the simpler world of basic stock charting, the S&P is still the one to watch as it attempts to break the 200 dma of 1,260 this morning and nothing matters more than it breaking and holding that level to give us an indicator of market movement.

Oil is off…
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Thursday Wrap-Up

Remember on Monday when I said “I never could get the hang of Thursdays?” Well this was a good example! Holy cow that was fun! Let’s do it again… Although I am still mortified by the commoditiy rally I’m very pleased with this broad based 300 points in 2 days retracement, especially with a strong, high volume finish. We can thank Uncle Ben for finally figuring out how to make a speech without shocking the markets, it took Greenspan 2 years to realize he should never say anything anyone can understand. Bernanke’s style is more of a teacher so he needs to learn to be clear but avoid negative suppositions which get misquoted. Today he did a very good job of it. So the Dow did just what we wanted: moved quickly up to 10,900, consolidated and broke through and rallied – we just didn’t think it would all happen in one day! The Nasdaq was the star of the day, which made this a real rally with a 3% gain led by the SOX which pulled a 4% gain. The index finished just shy of my 2,150 goal, briefly touching it just before a small pullback near the end: Tomorrow we keep our eye on the S&P which is resting just shy of its 200 dma of 1,260 and hopefully will gap over it in the morning so we don’t have all that annoying drama as to whether or not it can break out. Oil barely moved and, in fact, retreated from $70 near the close to finish up slightly at $69.50 but the oil sector was greatly encouraged by Bernanke’s analysis of an economy which can shrug off $70 oil and will continue to innovate our way out of it as time goes by. He mentioned Canadian oil (SU) and Coal (BTU) specifically and those stocks got an extra big boost in the afternoon. Gold had a wimpy day, finishing up just $4 to finish at $570 but the oversold miners flew up over 5% on the average as anything over $500 is still very, very profitable! We erased a full week’s worth of losses today – an incredible recovery – but let’s not forget that incredible means “hard to believe” so let’s continue to keep our eyes open, especially with options cashing out tomorrow! ====================================== Now call me chicken but you should have been…
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Thursday Morning

How will the Dow handle 10,880?

This is all I care about today. If this is a real rally, it should blow through it like tissue paper on the way to another 100 point gain. If not, that may be all she wrote for the bounce. Don’t forget there is a lot of short covering on a bounce like yesterday so it will take a lot more than this before we can say real money is coming in to the market.

We discussed our levels last night so I won’t repeat but we are a long way from recovery so I am still mainly in cash, especially until options expire and the week sorts itself out.

Asia was up about 2% with India pulling a huge 7% recovery and Europe is looking up about 1.5% across the board but waiting for US confirmation to set their afternoon trading.

One big reason for the Asian turnaround was the Bank of Japan indicating they are not as anxious to raise rates as we were led to believe.

As I said yesterday, with oil, copper, gold, etc. leading a rally we are only setting ourselves up for another collapse.

We did get some SOX action yesterday, up 1.4%, with INTC up 3.5% and SNDK posting 3% with a strong finish:

On the whole I am encouraged but not excited yet. TXN still can’t get it going and GE is having trouble with the 200 dma of $34 so I will be watching both of those today. I also want to see if AAPL is forgiven and whether or not YHOO can find a buyer.

I wish I could be more optimistic but a slew of homebuilders got downgrades today and $70 oil is nothing to base a rally on when a hurricane or a terrorist attack can put us up to $80 in days so I’ll be day trading momentum but really looking to just take small gains and run until we get a real Nasdaq recovery, at least 2,150 would be about right.


All these trades are dead if the Dow can’t break 10,900 or if any of the indices are down in the morning! As usual, I will be looking for the ones that go the wrong way and get cheaper, then pick some up as they turn my way.

I would still rather…
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Wednesday Wrap-Up

Wow, we avoided an end of day sell-off!

Other than that, I’m not too excited yet – it will depend on whether or not we get serious follow through tomorrow and, even then, there is the danger that this is just an option expiration move and not a real rally.

However, with the end of the quarter rapidly approaching, it is easy to construct a bull scenario where big money starts pouring in to dress up virtual portfolios in time to report profits in which case we may be in for a nice rally.

I know it hurts not to jump right in but we still have 800 points of Dow upside in a “recovery” so missing the first 100 never going to hurt if the rally is real. The 200 dma on the Dow is 10,880 and crossing that will give us our first clear buying signal.

The S&P is 30 points below the 200 dma at 1,260 and the Nasdaq is a mile below it’s 200 dma at 2,229 so unless we get a 5% jump tomorrow, there will be plenty of time to get on board and pick winners.

Commodities were up 3% in today’s rally and BA made up 20% of the Dow’s gain, Exxon another 20% and Alcoa 5% so I’m still a little concerned overall.

Gold blew right through my target yesterday and barely made it back to close today at $555 but gold stocks did well anyway so at least they feel the bottom is made. I still want to see gold back over $583 to feel safe but miners are off about 30% on the average.

Oil bounced off $69 to finish at $69.62 but that was all it took to set that sector on fire again.

All in all, a nice bounce but let’s not forget the famous words of our president in this video link:


CME thankfully opened way too high to play as the open was the last time it saw $450. I was far too confused by today’s poor performance in a bad market to play this again.

OXPS also got away from us with a stunning 15% drop, way overdone I think but again, not too interested now.

ADBE went down like someone knows something, we’ll find out in the morning!

Wednesday Morning

Now I understand what happened to PD yesterday…

The commodity boys have put their foot down and are attempting to rally gold, oil, copper, etc. in the global markets. We should get a pop in materials at the open but let’s remember that a commodity led rally is the last thing in the world we want as it was runaway commodity prices that got us into trouble in the first place. Higher than expected CPI numbers may derail that plan though.

In last night’s comments, somebody asked if I think this is a real repeat of last spring, when we had a similar 900 point drop over 6 weeks and it was this pattern that I was warning about this April as we roared up and I kept saying we shouldn’t get too excited. I have been giving it some thought as a lot of traders are hanging their hat on that 900 number but you really have to look at the percentage, not the number. For this to repeat that pattern we have to fall another 100 points as we started with a bigger number. Also, last year’s drop ended with a single week plunge of 500 points that gave the clear bottom signal we’ve been looking for.

What brought us out of that slump was a retreat of crude prices from $58 (all time high) to $48 (2004 average) although it bounced right up again, we attributed it to hurricanes and a fear factor that we thought would go away. In fact, even though oil hit $70 in early August, Exxon did not retake its February high until September as no one believed that kind of pricing would last. Oil and copper are not really down much at all now and any rally based on materials pricing continuing to be out of control is shakey at best, despite this don’t worry, be happy article from the Journal:

Asia was up slightly today but Europe is down so I don’t put a lot of faith in any bounce we get that’s less than 200 Dow points and I still maintain that any move in the Nasdaq that isn’t led by the SOX will also be meaningless. I’m sure the Nikkei watchers thought their downturn was over when they bounced off a 5% drop but let this chart be a warning to you:

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Tuesday Wrap-Up

Another day another hundred points, well only 87 today but at least there was some volume today.

We had good PPI reports and Bernanke wasn’t too scary but the market still couldn’t get things going. The Dow finished just above 10,700 but made a few valiant attempts to go positive today but finished at about the low for the day, saved by the bell.

The Nasdaq and the S&P followed suit but I’m starting to see a little firming up in things that aren’t commodities.

A lot will depend on Asia tonight as a continued sell-off there will simply reduce the amount of money available for US equities as well as US notes.

Gold got hammered right to my $583 target but the dollar is up so there may be another $10-15 to go before we may get a bounce. Copper also lost 7% today but PD made a nice comeback at the end of the day for reasons unknown.

Oil dropped all the way to $68.50 as Bush stopped by in Iraq to say “all is well.”

All in all, another awful day.


INTC did make 1.5% but that’s $17.12 down from $26.50 in January so excuse me if I don’t break out the champagne…

ADBE made another half a point. I have those July $30s which are $1 (up 40%) but they’d better have some spectacular earnings on Friday! I’m going to take half off the table I think…

GOOG pulled out a $5 gain today but CME went from an $8 gain to a $5 loss as people seem to be just taking profits on anything that has a gain early in the day.

GS lost 4% after announcing they doubled revenues over last year. This was a great early indication to run far away from the markets this morning:

We made a few good calls in comments this afternoon, catching a top on SUN and PD but I was wrong on APPL which held up well against a sad Nasdaq:

I kept the puts into tomorrow as no one would pay me .65 at the close and I refused to break even (famous last words).

Tuesday Mornng

Today may be the day!

Way back on May 15th (600 points ago) I predicted this was going to happen and I am not really happy to be right. That was when we talked about the roller coaster called Oblivion that takes a huge drop straight down into a black hole so you have no way of knowing where the bottom is. Wheeeee!

All you can do on a day like today is throw up your hands and scream…

One thing I can tell you about roller coasters is that I’ve never been on one that goes straight down and then makes a sharp turn right back, physics prevent that. Market physics prevent a massive reversal too so let’s be very careful and patient, tempting though it may be to call a bottom.

BBY had huge earnings! .47 vs. .36 expected with same store sales up 5%. Much like LEH yesterday, if that doesn’t get this stock going then there is no hope at all for the markets. In a normal market this would be great for Apple, Sony, HP, GLW… but I’m not touching it today!

GS also looks like blow-out numbers and we will see if the market treats them better than LEH, which got an upgrade today.

The danger is that this plus strong retail numbers may bring some buyers in this morning but we have CPI numbers and Bernanke speaking this morning so be very, very careful.

The Nikkei dropped 4% today, 616 points! The Hang Seng dropped 372 points and Europe is down about 2% across the board. At this point we would rather have a similar drop here and hopefully get it over with than another 100 point down day and we really need some serious volume to confirm any kind of bottom.

Interest are dropping and continue to be inverted so I’m looking for a reverse in home builders to signal, if not a bottom, at least some sort of turning point.

Gold is plunging $20 and, as I predicted yesterday, copper is too – down 3% so far in European trading so this is another day I will just walk away and find other things to do.

Oil is off another dollar this morning so we can still play the majors down with Valero but SUN got an upgrade today as one analyst decided 40% may be a bit much of a…
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Monday Mop-Up

Arthur Dent said he “could never get the hang of Thursdays” but Mondays seem to be very bad mojo for the market this year. I almost stayed home this morning when the markets opened up (I know I said I wasn’t going to look but I’m an addict) but the Nasdaq never looked healthy and one glance at the SOX and I was out the door for the day! The Nasdaq lost another 2% today! That’s a full 10% in a month while the Dow and the S&P are down around 7% but the Nasdaq is like a stone around the neck of the other indices which are now all firmly below their 200 dmas. Volume wasn’t even there today so there is no reason at all to think this is over.,%5EIXIC Jim Cramer is calling for a bottom because someone needs to start recruiting buyers before we lose another 10% but I can’t see any reason to catch this knife of a market the way things look. He’s a little right calling the oil bottom but crude lost another dollar today, very close to my prediction of $70 but the oil stocks took it very badly and dropped another 3%. Hopefully (and I know this sucks) we will get a nice 500 point drop this week and then maybe we can talk about a bottom – we’ll see in a few hours how Japan takes today’s action but I’d be betting Asia down today. Even Sears gave up ground today and that’s very, very bad! Gold dropped just a bit but I’ll be watching copper tomorrow which has been holding up the metals but just dropped below its 50 dma of $3.28 and has a mile to go to the 200 dma at $2.40. If Global growth is really slowing, this is the earliest indicator we will get. Gold is off 20%, oil is only off 7%, the dollar is up 2% in a week but still down 5% for the month, the Nikkei is off 15% and other foreign exchanges are off as much as 25% so do not go thinking this is as bad as it can get! ===================================== I should have stayed and played oil down as Valero made that very obvious this morning but I think the sector drop of 20% in a month vs. oil down 7% is a little too dangerous…
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Monday Morning

I have no idea where this is heading! The markets are a total mess and the technicals are pointing straight to hell but the fundamentals say we are globally in great shape so who knows what is going on. I’m more of a mindset to wait and hope for a huge drop so I can start buying but there are so many things I want to buy right now I can hardly stand it… Asia is mixed and Europe is down a bit so the markets are waiting to see what we are doing and we are waiting to see what Bernanke says today (anyone want to bet it goes well?) so don’t expect too much today. The S&P needs to retake the 200 dma at 1,260, the Nasdaq is a mile below its 200 of 2,230 so I’m watching the Dow, which is sitting right on its 200 of 10,875 and the NYSE which is just above the mark of 7,910. The short of it is that another bad day will put us firmly on a trend to make new lows for the year and put us very close to moving back into the lower end of last year’s range. I would so much rather see the Dow move on down to 10,200 than see it move up from here as a turn here will be fairly meaningless and easily reversed. At least a test of 10,700 could reestablish the Fall floor but it will take a real power move back over 11,100 to bring upward momentum back to the Dow. Nothing will happen without a SOX recovery. I’ve been saying this since March! Nothing. The global economy runs on electronics and if chips aren’t moving, nothing is. We had our first named storm already but it was wimpy and missed the Gulf oil patch. It might be close enough to give small bump to that sector but not much as inventory looms ahead on Wednesday and, with the holdiday weekend gone, there may be an ugly build in the works. Iran is back to sabre rattling which should keep the floor at no less than $70 but I wouldn’t be surprised to see another run up on almost any excuse. Gold is holding $610 in Europe but not looking very promising and I am still targeting $583 before we can have a turn but this target will be…
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Weekly Wrap-Up

All in all it was a miserable week for the markets. In general, all the indices are back to where they were on Jan 1st while oil remains over 20% higher and the Fed seems more determined to tighten than ever. This is not the sideways consolidation we hoped for at the beginning of the week, this was a clear drop back to what will only be a lower trading range if we are lucky but, with the Dow resting down at the 200 dma of 10,875, we may be on the way to an even lower range than the one we established in November. Any failure by the majors at this floor level has the danger of sending us al the way back to last year’s lows, which is incredible given the basic growth in the economy but sentiment is so negative at this point that it may take a strong catalyst to get the markets moving again. Friday’s rally failure got me right back in cash and after being burned last week it will be very difficult for me to dip my toe back in the water until we get a more serious correction. ===================================== As I said all week, these were not generally trades to make but ones to watch and watching them confirmed it was no week to play the markets! Still it is interesting to see how things held up in the worst market week since April ’04: ADBE (6/15) had a terrible week as people have lost faith in tech and the $30s are fairly pointless at .25 (down 60%). I will wait until Wednesday and take a look at the Jul $27.50s, currently at $1.80. AET had a great week and the $40s finished at $1.90 (up 200%) but I cashed that out Friday too! COH Jul $30s made just a nickel at .80. Even with a big buyback the CSCO Jul $20s went nowhere at .75. After dumping the GE Jul $35s for .50 (even) last week I will be looking to buy them back when/IF the market turns. They are currently at .35. GOOG just cannot break $395 in this market! HOV only lost $1 for the week but confidence in the homebuilders was smashed and the Jul $35s lost half their value at .40. IBM $80 puts went well into the money at $2.65 (up 85%). We stopped out…
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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...

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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...

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The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...

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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...

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Digital Currencies

Transparency and privacy: Empowering people through blockchain


Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...

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Insider Scoop Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ... more from Insider

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...

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Members' Corner

Why Trump Can't Learn


Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...

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Opening Pandora's Box: Gene editing and its consequences

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


Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.


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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...

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Swing trading portfolio - week of September 11th, 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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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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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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