Archive for 2006

Weekend Update

I guess you can tell I’ve been excited about the market lately as my posts have gotten a little longer and more frequent. Last weekend I was aiming to put down some research notes so you could get an idea of how I think (and several phychiatrists have already offered their services) but I keep getting sidetracked by this oil foolishness. So we will try to avoid that topic today… First off, I demand credit for calling the bottom on the Nasdaq on July 17th when I said that the market was being artificially sold off for very bad reasons. I concluded that it was coming to a head with sellers being flushed out of the market and said: “I am starting to embrace the conspiracy theory that big money was short tech long-term over Sarbanes-Oxley and that the destruction of tech has been engineered to cover the lower than expected impact of options expensing we had last quarter. It’s very cynical but the timing fits like a glove (attn. Johnny Cochran!).” 3 days later, with the index back down at 2,020 I said: “the Nasdaq has plenty of room to bounce (75 pts) before hitting any real resistance other than the psychological 2,100.” Later that day (7/20) I upped my call: “We are no longer oversold so we will get a more realistic idea of market direction today than yesterday when there was a lot of short covering. This will test my conspiracy theory that the Nasdaq was forced down unnaturally and that we can ignore the very bad looking charts that show the 50 dma crossing under the 200 dma. The Nasdaq has miles to go before retesting the 50 dma at 2,150 but let’s see how it handles 2,100 first.” Of course I put my money where my mouth was with this call: “Another general play I like is the QQQQs at this level. Again this is just because we may be closer to a bottom than a top so I like the Aug $36s for $1.15 but getting out/not playing if the ETF goes below $36. If we have a big down move prior to Bernanke, I like them at whatever cheaper price on a gamble against a move up tomorrow.” ===================================== August is like Wednesday, it’s hump month for the markets and if we can get through August we have pretty smooth sailing through the…
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All that Glitters May Not for Long!

There was a huge gold sector pump into the weekend that put the oil manipulators to shame as very low volume pumping followed very high volume selling that exhausted itself by mid-day. The fact of the matter is that gold did close below the 50 dma of $619 for the second day in a row against virtually no dollar movement. The World Gold Council estimates there is currently a 52 ton surplus of gold, which makes sense since miners have now been ripping it out of the ground as fast as speculators would buy it for a full year now. This contrasts sharply with the Virtual Metals report which says there is only a 10 ton surplus. Virtual Metals is a research company employed by mining companies… The big Kahuna in the gold market will be September 26th when an agreement that limits the amount of gold that can be sold by Central Banks expires. Just like any savvy investor, it will be hard to find a Central Bank that has been sitting on $20Bn worth of gold for many years and now sees a $40Bn value not to take a little off the table before the price evaporates on them. If they do not come to a new agreement (this is an oil country vs. mineral country kind of thing) we may see literal tons of metal being dumped on the markets in short order. While you may hear figures that gold demand is up 12% from last year (more VM PR), the fact is that physical demand actually fell 24% by weight, it just cost a lot more per ounce! One big thing Virtual Metals ignores in its reports (because they only look at mined metal) is the supply of scrap gold, which rose 57% over last year as people melted down everything they could for $600 an ounce or more! It is looking like the opening of the gold ETF, GLD, soaked up 109 tons in Q1 as speculators rushed in (they take physical possession of the gold) but ordered just 39 tons in Q2. Should investors leave the ETF they will be forced to dump gold on the open market just as the price is going down! To see a train wreck in motion, take a look at these numbers from Canadian miner WDO, who just put out tepid earnings yesterday as 25% of the gold…
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Freaky Friday

Options Expiration Day! Have a nice Weekend – end of column. Ok, I’ll say something… Nothing that happens today is real. We have chased the white rabbit through the looking glass after eating a mushroom and pretty much anything goes today. I will not be surprised if we have a massive sell-off nor will I be surprised if we have another huge day. The healthiest thing would be to have a sideways day which would set us up for a good week next week as a big gain will certainly lead people to think we are overbought (see Trader Mike’s 8/17 post). Is Apple overbought? It was at $50 on July 15th. Just last Friday it was at $62. The p/e is 31, about double the S&P average. I’m going to say right now that it isn’t Apple that’s too high, it’s the S&P that’s too low! First of all, we are 20% below the normal S&P p/e of 18, second of all forward earnings are based on a worst case scenario: Rising oil, higher inflation, runaway material pricing, rising labor costs, slowing productivity, war(s), terror, Sarbanes-Oxley, rising consumer debt and slowing consumer spending in a collapsing housing market. Did I miss anythng other than the slowing global economy? What if some of these things don’t happen? Have we even considered that? OK, back to work then… Asia was up outside of China – the bank of China raised rates .27% in another move to slow that economy. In the real world, that should hurt commoditiy pricing but we will have to see how things go here in Wonderland. Europe is flat and waiting for US direction. We held our levels very nicely yesterday and hopefully will today as well. Holding 11,300 would be just fine on the Dow and its amazing that the S&P is holding 1,290 and the NYSE is right between 8,300 and 8,400, up from 7,824 on July 17th. The Nasdaq needs to hold 2,150 today to make me a believer. Lets watch the SOX and the TRANQ for early trouble indicators. The transports rest right on resistance at 2,450 and will be a big surprise if it breaks up before the weekend. The SOX are on their own special journey but got big rejection at 450 yesterday afternoon.$TRANQ Tech will take a hit today as Dell is blaming “market conditions” for its troubles.…
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You Call that a Pullback?

That was another great day!

Unfortunately tomorrow is options expiration so anything that happens is meaningless but we held our levels great today as the market resisted all attempts at a sell-off. With the oil and mineral sectors down close to 2 points, holding levels is all we could ask for.

Gold took a real plunge around lunch and finished the day way down at $625 and copper showed signs of worry dropping half a point.

Oil barely stayed above $70 and finished at $70.06 but you would thnk it was $76 the way the oil sector rallied in the afternoon.

This was another one of those days when stops were king as many doubles turned into small gains over the course of the day.

I tried to sell my late day picks AXP and YHOO but they just kept going up and I couldn’t pull the trigger. I also couldn’t pull the trigger on an ill-fated XOM put that reminded me why I should just stay out of that stock.


DT had a nice day but VOD opened low and stayed there. No real movement on our new leaps.

Dell performed as expected with a in-line earnings but they gave us a spectacular .20 entry on the $22.50 puts that will hopefully work tomorrow.

AMD gave us a nice open on a 7% gain and the Jan $27.50s were the right play at $2.05 (up 60%).

BTU came in nicely a couple of times and my entry on the Sept $52.50s was just .75, a nice hedge against my oil puts.

ACI Oct $40s came down to $1.45 so we will see how these play out.

CAT never gave us an entry.

HD finally got it in gear and the Sept $35s are up .10 at .80. The November (oops this morning) $35s are also up .10 at $1.80.

Boy did we get a big SHLD sell-off! No reason to play the current calls with that drop but the Sept $150s for $2.30 are an amazing deal. This is why we wait to see reactions to earnings, also why we always sell into the initial overreaction.

SUN was the right call today with Sept $75 puts running up to $2.55 (up 35%) and the Sept $70 puts hitting $1.05 (up 95%). The correct move was to sell the $75s and ride the $70s out for…
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Thursday Morning

Despite the article just below this, I remain cautious.

Not to be repetitive (as I say this every time we trend up) but, if it’s a real rally, we have all the time in the world to jump in. This is a very, very important thing to understand. Did you miss out not buying the first VCR or the first IPod? If things are worth buying they get better, faster and cheaper over time.

Stocks are not very different. A good stock is a good stock for a long time. Of course we hope to catch the momentum plays (heck, that’s pretty much all I do!) but when we missed Google from $80 to $175 (60 days) we could have bought it for $180 six months later as it went to $300 over the next 45 days. Having missed that we could have caught it any time in the next 5 months before another $150 leg up. You get the idea.

The same could have been said for Apple, Sears, BTU – any really good stock (or market) rally is something you may miss a big leg of but they unfold over weeks and months, not days. Don’t let the sales guy tell you to pay a premium or you will “miss a big opportunity,” if the product is real, someone will still be selling it tomorrow – probably for less of a premium than you pay in today’s excitement.

My concern today is the same as it was yesterday afternoon when I called for lightening up in comments. I slept rather well most of taking our 100% profit trades off the table even though some (like BA) continued to go up. You really don’t need a grandparent to tell you that 100% profit in cash is better than 120% on paper do you?

As I am not the only person in the world who feels that way, my concern is that there will be some profit taking – which will give true believers another chance to get in. I am also very concerned that the oil sector will snap and drag the markets down, at least for a day or so.

Profit taking is likely to hit the early movers like MRK and JNJ into the weekend and I will be watching those closely to see what kind of support they really have.

As I said below, I am…
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Dow 12,000?

I feel like I have been looking for my SOX all year and we finally found them. Turns out they were in the last place we looked (by the way, everything is in the last place you look because when you find it, you stop looking!) as every other index gave us positive indicators 2 weeks earlier. If we get the same kind of breakout on transports (another 100 pts) we could be seeing a new all-time high for the Dow and S&P.$TRAN I don’t generally watch the Russell but it’s a valid indicator and happens to be sitting just under its 200 dma at 713 so I’m going to be keeping an eye on that, as well as the Nasdaq 2,150 for my breakout indicators. I don’t expect the S&P to break 1,300 until the oil sector bottoms out as oil still makes up 15% of the S&P. We never really care what the Dow does but the headline number is critical to market psychology so we need it to hold 11,300 to keep the party going. If we can break up out of these levels (bad news if we don’t by the way) then we may have one of the best Augusts in market history. Why? Because nobody believes in this rally! This is a graph of the Dow’s Bullish Percent Indicator which shows that this rally is happening despite the fact that 47% of the traders are still bearish on the market!$BPINDU That’s nothing compared to the Nasdaq though where sentiment is a shocking 70% bearish:$BPNDX What happens when those traders get off the sidelines? The last time the Nasdaq was this bearish was August of 2004, when the index bottomed out at 1,750 from which point it went on a 4 month 400 point rally. Back in that same period, the Dow went from 9,800 to 10,800 but, unlike the Nasdaq, it experienced a serious pullback along the way. This rally came in the face of the initial rounds of Fed tightening as well… So while I remain cautious that world events can quickly throw us back into an annoying range, I also see the potential for one of the great rallies of the 21st century!

Wednesday Wrap-Up

Wow! And the hits just keep on coming… Dow cracked 11,300, the S&P hit 1,295 (big test at 1,300) the NYSE 8,357 and the Nasdaq is just under 2,150 (also a test)! To top it all off HPQ came in with great earnings and great guidance. This is just great! The Nasdaq should be in great shape as the SOX gained 4% today, rocketing up to 443 on all day strength. Oil also chipped in with a very nice $1.20 dip to $71.90, a level not seen since late June but the contract rolls over on Friday so get ready for the fireworks next week. Tomorrow we have natural gas inventories which should hopefully give the oil sector another nudge down. Gold once again couldn’t break $640 rising 1% against a falling dollar. Fed Gov. Poole rattled the sabre to shore up the dollar but now people are talking about a rate cut in the winter so there’s not much teeth in what the Fed says. Another fun day in the markets. I cashed out a lot of positions today as we had a lot of big gainers and I didn’t want to push my luck – there’s always something to trade tomorrow. ====================================== HPQ had a great week so far but I can’t wait for tomorrow to see how we do. The Sept $35s are already $1.20 (up 100% so far) while the Jan $37.50s ended the day at $1.75 (up 25%). TGT is way in the money and the Sept $47.50s are $2.60 (up 250%). STX had a heck of a day with the Mar $22.50s at $2.50 (up 60%). If I knew it was going to recover so quickly I would have played August! I’m crying over those CSCO’s I sold way back at $20! DIS is being held down for options and the Sept $30s are just .60 (down .05 from last week’s pick). XOM Sept $67.50 puts hit $1.45 (up 140%). The recall of the current $67.50 puts have already doubled to .45. INTC made another huge move with the Sept $17.50s at $1.40 (up 180%). Even the nice, relaxing Jan $17.50s are up to $2.20 (up 45%). EBAY Oct $25s shot up to $2.40 (up 50%). Remember when we bought out that TXN Sept $32.50 call for .15? It’s worth $1.35 now! A 10 bagger! The Jan ’09 $30s are doing quite well…
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Wednesday Wheee!

Let’s hope we can keep this party going with a benign CPI.

There is a lot of data today including oil inventories and critical housing data but we can afford a small pullback as long as we don’t break back down.

Asia is, of course up, as it is almost every time we rally. The EWJ (Japan ETF) has options and it seems people do take advantage of it as the US markets rally. I’m going to start watching this one to see if there’s a way to play but I think others must play this as it is so obvious. I’m also not happy that it is just $13.84.

The Nikkei was up, breaking out of a serious range it has held since May and flew up to 16,071 – possibly on the way to a huge breakout. Europe is totally without direction and waiting for our CPI report at 8:30, a sign that bears are very, very scared and that bulls remain non-commital. There is a lot of money on the sidelines and there is a lot more available fuel to spark a major rally than most people think.

Now we can watch for signs of a healthy pullback, although no pullback would be nice too!

  • I would like to see the Dow hold 11,200, almost any positive move will be a nice breakout.
  • The S&P is well above 1,280 and 1,293 is the mark to beat.
  • The NYSE is right at 8,300 and should guide our trades today. Another 100 points and we can buy with abandon. Consolidation above 8,260 would be OK but I will be taking things off the table below that.
  • The Nasdaq popped over the “death cross” 50 dma for the first time since May 10th but has a long hard road ahead of it to get to the 200. Just be happy if it holds 2,100.

Please note: As with yesterday I write these things very far ahead of the CPI and I prefer to leave my original thoughts in, despite any changes in direction the data may cause.

In a desperate attempt to pump oil, they are now throwing out numbers like “BP’s shutdown will lock in 50M barrels of oil.” This is a worst case scenario based on a total shutdown of 4 months, which already is not going to happen but that doesn’t stop it from being…
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Take-Off Tuesday


Isn’t this fun?

And AMAT is coming through in the AH with huge numbers to keep it going tomorrow! Don’t say there wasn’t anything you could buy as this one just sat there all day (showing how nervous people still are of making bets).

We got lots of good numbers including a crushing 425 on the SOX! Dow 11,230, S&P 1,285, NYSE 8,296 and even the Nadaq looked good at 2,115! We got a nice consolidation pattern with a solid finish across the board and I think it will take a really bad CPI number to bring us down tomorrow.

I regret not being around as there were some great opportunities to short oil but we will likely get those in the morning ahead of inventory. This run-up is because commodities are going down, so I don’t know why the sector was having a party.

Oil was trending straight down all day but literally jumped up .30 between 2 and 2:35 then fell right back to finish the day at $73.05. Whoever is goosing the price doesn’t have charting skills since the additional failure to break $73.50 actually sent a very bad signal to oil bulls.

I’m dreading the shenanigans around tomorrow’s oil numbers as somehow “analysts” are calling for a very mild drawdown in crude despite the fact that BP failed to deliver 2.8M barrels last week. I can’t even pretend to see where that could come from, you can’t divert tankers that fast and if there is anything other than a 2M-3M barrel draw, then these numbers have been fudged beyond repair (as we already proved this weekend).

As we said Monday night, inflation data trumped dollar movement today as the dollar sold off on a big 50 dma rejection (imagine what gold would have done if it hadn’t) but the PPI kept gold in check. Gold closed at $625 after taking its own bounce off the 50 dma of $620.

All in all, a very good day for the bulls…


I’m never that proud of my picks on a day like today when a monkey with a dartboard could have done as well so I’m not going to waste too much space on review. We had a very precient call to pull back on oil and I’m hoping for a generous reentry tomorrow, we’ll talk about that in the morning.

Some of…
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Timid Tuesday

It’s kind of like groundhog day today.

With the economy clearly slowing (even in China) but still strong and $75 oil fading away the market will see the PPI number and will either break out of the range we’ve been stuck in or break down for another 6 weeks of lethargic trading.

[8:30 update - Holy cow the PPI fell off a cliff! Down to 1%! Rally Time, Rally Time, Woo Woo!]

Asia had holidays today and the open markets did nothing of note. Europe is is on the move with the US futures but the oil sector is still holding things down as we await new leadership (so far no takers).

If tomorrow’s CPI is lower than the .4% expectation as well, we may finally break our ranges. Tomorrow also gives us Housing Starts which will “only” be about 1.8M, roughly 50% higher than the norm but a disappontment against last year’s 2M plus rate.

I’m out today but the key trading points are the same as they were yesterday, hopefully we can get through today without a reversal.

I am currently keeping faith that the S&P will not break down (despite the charts) and that we are setting up for a huge run in the 4th quarter but if the markets see the shadow of inflation, we certainly face 6 more weeks of sideways trading.

A Japanese tanker spilled 1.4M gallons of oil in the Indian Ocean, somehow colliding with another ship. Last year I pointed out that we hadn’t had a spill since oil had started going up in price as people were actually being more careful so I guess we can consider this a sign that oil really is on the way down!

A very minor recovery (.50 after a $2 drop) in oil was enough to kill yesterday’s rally. The oil sector was off about 2% in general but has miles more to go in a better world. Let’s see how we handle $73 today (with $73.50 still being the line in the sand) ahead of inventory but it might be a good idea to take some of the profits off the table on a strong dip.

Helping oil down today is BP finally taking my advice and rerouting the oil. It took them this long to notice that they have another pipeline, Endicott, which has (I do not make this up) 90,000 barrels a…
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Zero Hedge

Auto Shares Surge As Fiat, Renault Confirm Merger Talks

Courtesy of ZeroHedge. View original post here.

With President Trump in Japan for a state visit and most of Europe headed to the polls to vote in the quinquennial EU Parliamentary elections, there was enough news to keep market watchers occupied during what was supposed to be a quiet holiday weekend in the US. 

But on top of these political headlines, on Saturday afternoon, the news broke that Italian-American carmaker Fiat Chrysler had approached France's Renault with a merger proposal that would leave the shareholders of each carmaker with half of the combined company, in a tie-up that would create the world's third-largest au...

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Phil's Favorites

Trump and the problem with pardons


Trump and the problem with pardons

Courtesy of Andrew Bell, Indiana University

As a veteran, I was astonished by the recent news that President Trump may be considering pardons for U.S. military members accused or convicted of war crimes. But as a scholar who studies the U.S. military and combat ethics, I understand even more clearly the harmful long-term impact such pardons can have on the military.

My researc...

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Insider Scoop

Jefferies Sees 60-Percent Upside In Aphria Shares, Says Buy The Dip

Courtesy of Benzinga.

After a red-hot start to 2019, Canadian cannabis producer Aphria Inc (NYSE: APHA) has run out of steam, tumbling more than 31 percent in the past three months.

Despite the recent weakness, one Wall Street analyst said Friday that the stock has 30-percent upside potential. 

The Analyst

Jefferies analyst ... more from Insider

Kimble Charting Solutions

DAX (Germany) About To Send A Bearish Message To The S&P 500?

Courtesy of Chris Kimble.

Is the DAX index from Germany about to send a bearish message to stocks in Europe and the States? Sure could!

This chart looks at the DAX over the past 9-years. It’s spent the majority of the past 8-years inside of rising channel (1), creating a series of higher lows and higher highs.

It looks to have created a “Double Top” as it was kissing the underside of the rising channel last year at (2).

After creating the potential double top, the DAX index has continued to create a series of lower highs, while experiencing a bearish divergence with the S...

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Chart School

Brexit Joke - Cant be serious all the time

Courtesy of Read the Ticker.

Alistair Williams comedian nails it, thank god for good humour! Prime Minister May the negotiator. Not!

Alistair Williams Comedian youtube

This is a classic! ha!

Fundamentals are important, and so is market timing, here at we believe a combination of Gann Angles, ...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control


Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...

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DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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


DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University


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More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism


The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...

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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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