Archive for 2006

Weekend Ramblings

It’s going to be a tough call on the economy for the Fed.

4.4% unemployment and rising wage pressures say tighten but home sales data says we just can’t take it any more:

Inventories are just starting to level off but, at this stage it’s hard to tell whether that is due to demand picking up or if people are just unwilling to list their homes at 10% less than they were worth last year.

Builders have stopped building and are working their inventories down but, as we reported on October 12th’s note on Kara Homes, it just isn’t enough to save them all.

==================================

The fact that investors are “excited” about the probability of gridlock in Congress shows how short-sighted Wall Street really is. 

We have major pressing issues of deficits, social security, Medicare, global warming, peak oil (if we are to believe them) and, of course, Iraq, Iran, Afghanistan, Nigeria, North Korea and so many Mexicans coming in we need to build a wall…

Our military budget alone has gone from $289B in 2000 to $462B this year and that does not include Iraq and Afghanistan which are funded from a “special” budget (ie. not counted in the deficit).

How much is that “special” budget?  Guess.

Guess again.  No, much higher.  No, higher.  Really, higher…

$549Bn through 2007!  Ka-Ching!

Maybe another two years of ducking our heads in the sand isn’t going to be the best thing.

===================================

The most surprising market statistic I’m looking at is that, out of 3,300 NYSE companies, only 20 made new lows yesterday vs. 104 that made new highs.

I don’t usually watch the RUT but they added a third of a point yesterday after being down almost 2% on the week.

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I’m still dumbfounded by the jobs numbers.  They added 97,000 jobs to September’s 51,000 reported (190% off) and they added 42,000 jobs to August’s 188,000 (22% off). 

Is the administration manipulating the reports or are they genuinely grossly incompetent?

One thing they are competant about is timing!  Saddam will be found guilty (oh sorry, I mean the verdict may be decided) tomorrow, just in time for the pre-election papers.

Whatever you do, don’t question the fact that this trial, which started in December of 2003, is suddenly drawing to a close.

Zalmay Khalilzad, the American ambassador to Iraq, last week denied the verdict was set to coincide with U.S.
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I Have a Proposition For You

The big issue in this election may not be whether the Democrats take the Senate or not but how our National Energy Policy will be shaped for the next decade.

The battleground is being set in California where Bill Clinton and Al Gore are running a test platform for 2008 to see if voters are ready to plan for the future.

If they win this, it will be a tide turner for Big Oil as it shows that something substanative can be done despite all the BS from Washington.

This will be a blueprint for national energy policy if the Dems take back the White House.

California is the ONLY state that currently does not derive any revenue for the oil that the drillers take out of their land (an “extraction fee“).  As much of a joke as these fees are in the US compared to other oil producing nations (Alaska 15%, US offshore 12%, even Texas charges 4.6%) , California goes all the way and gives energy companies a completely free ride.

Proposition 87 proposes a 6% fee, almost as low as the President’s home state.

Needless to say the oil companies are not to thrilled with this – they have ponied up over $100M to fight this bill (a new record) to keep the world safe from clean energy.

Perspective:  George Bush “only” spent $300M on his last national campaign!

From an investment point of view we can see who stands the most to lose by looking at who has contributed the most.  No surprise that CVX, OXY and XOM’s Aera Energy are the biggest “contributors” to the No On 87 campaign.

Aera has put up $40M in order to alert the people of California to the dangers of taxing oil companies while Chevron has put up $30M, OXY $9M, BP $3M and, of course the California Republican Party kicked in $1.5M to help out their pals.

In the best Orwellian tradition, the Republicans and oil companies have formed the “Californians Against Higher Taxes” committee in order to make sure oil companies don’t pay any.

What has got our concerned Californians panties all in a bunch?  Well here’s what Al Gore wants to do.

Oops, wake up!!! 

Sorry, let’s here what President Clinton has to say instead…

He also made a great speech at UCLA on the issue.

Pretty good points.  Let the oil companies pay California $4Bn (out of the $70Bn they are…
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Friday Wrap-Up

Hey I have a hot stock tip for you! 

This is an industrial producer that plays off the global economy, very heavy into consumer products. 

From 1980 to 2000 this was a 10-bagger but it flatlined after 9/11 and is just coming back out of its shell at 119.86 after hitting some resistance at 120.  The p/e is down at 14.71 and it pays a 2% dividend. 

I like the March $121s for just $3.40 with 2/3 Dec $119 puts for $1.40, just in case. 

Sound interesting? 

It’s the Dow silly! 

Talk about getting no respect, the DIA is the basket of 30 Dow components that has gone from $108 to $120 in less than 4 months riding on the back of a strong global economy that is not likely to go away but a pullback from $121.55 to $119.77 has everyone screaming for a duck and cover. 

Of course I am no fan of the Dow as an index and I’d love to be able to jettison some underperformers like GM, but that doesn’t mean the group doesn’t have some steam left. 

As long as oil remains under $60, we should be able to hold our levels, which in comments today, I determined to be 11,922 or, at worst, 11,819.  Upside resistance should come at 12,133 and we should retest it some time after the election. 

DIA lost .69 this week, down to $119.77 and people are writing articles like this declaring it to be all over. Gee, I’m glad I didn’t dump my TM that fast when it pulled back from $109 to $107 back on Sept 22. 

In fact, if the Dow jumped up and down as much as TM on its way to new records, there would be lots of traders doing a whole different kind of jumping! 

So I still like the market after this week but I’m no longer in love with Mrs. Jones and the Dow’s going to have to earn my respect again if he wants me to call him mister. 

The S&P finished the week at 1,364, a little sad but well above our 1,360 worry zone.  The NYSE ended up at 8,716 and I remember wondering if we could ever take out 8.700 at the tail end of a 500-point run since 9/11.

The Nasdaq finished right at 2,330, down 20 points for the entire week after gaining
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TGIF!

Hopefully we can end the week on a high note! 

We ended last week on a sour note, with our first big pullback in over a month while this week marked the biggest pullback since, as I mentioned Wednesday, the Dow broke 11,000 back in early August.  

Asia was positive across the board other than Pakistan, who can’t get it together.  Australia, Hong Kong and India set new records on word that China’s GDP should grow another 10.5% next year.

China is bringing North Korea back to the table with the US for negotiations (yay) but is refusing to sanction Iran (boo) – both moves put downward pressure on oil prices (yay)!

Europe, as usual, has no idea what to do ahead of the US open.  The ECB left rates alone but made a hawkish statement that should keep the dollar in check.

6 am: We’ll see what kind of mood Mrs. Jones is in once she sees the jobs report.  There are 125K jobs expected with 4.9% unemployment and, at this point, I think we want to see something a little stronger, rather than weaker.

8:30 am: Well, we got a little of both as the jobs were lighter (92K) but there were huge upward revisions to previous months.  September was revised up to 148K from 51K – why do we even look at this statistic if it can be so innaccurate?

The numbers are truly spectacular considering how many consruction jobs were lost!

We held our market levels yesterday (barely) but the SOX and the transports both fell below so let’s just say any index in the red is a bad sign while we need to see the SOX retake 453 and the TRANQ retake 2,567 or it is time for cash once again.

Defying all logic, oil is being pumped up in Europe after trading flat in Asia overnight.  We are still watching the $58.56 upside level and, if it sustains a break over that, I don’t think I want to hold November puts into the weekend.

Oil is down 10% for the month of October, following a 10% drop in September which followed a 10% drop in August – I’m not even going to bother discussing how ridiculous it is for energy companies to be near their highs!

It’s not just oil – despite a falling dollar, commodities are simply crashing (actually the dollar is sort of a commodity…
continue reading





Thursday Wrap-Up

 

Come on – is that all the bears have?

 

An Intel downgrade a BA pullback, WMT’s poor sales and HON pulling back .33 made up almost the entirety of the Dow’s losses.  Half the components were positive but all were understandably nervous and only JNJ managed to add a full point.

 

Let’s remember that a true champion has to prove he can take a punch and the Dow is moving into its Rocky phase as we test the 12,000 level.

 

The real story of the day is the 45 point rise between 9:50 and 11:20 that almost took the Dow positive for the day.  After all the nonsense, we ended up just 12 points down on the day at 12,018.

http://stockcharts.com/gallery/?djia

 

The S&P also refused to lose, down just 0.03% for the day while the Nasdaq cut it even closer with a 0.01% loss while the NYSE decided to show off and actually finish up 4 points at 8,722.

 

We got no cooperation from the SOX (down .5%) or the transports (down 1%) but that Just Didn’t Matter today – Lost your SOX?  No means of transportation?  Is it over?  No way!

 

We don’t need housing, we don’t need transportation, we don’t need chips, we don’t even need energy (as they were a sad little group today), we didn’t even need the Bankers as the BKX lost half a point.  Nope we don’t need any of those things!

What did do well today?  As usual, the Brokers did well, as did Hospitals but on the whole it was a lack of bad sectors that kept the markets afloat – things just didn’t go down…  Even retail was a mixed bag despite the bad news this morning.

One thing that went down hard today was crude oil, which dipped down to $57.88 at the close, although you wouldn’t know it from the flat performance of the energy sector.

http://futures.tradingcharts.com/chart/CO/C6

That did not stop us from going in and out of oil puts all day with several 20% gains in XOM $70 puts and XLE $55 puts.  The CVX $65 puts did not work out so far and are in for an average of .45 (down a dime).  The XOM $70 puts remain at an average of .75 and are even now while the 3rd round of XLE $55 puts are up a
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Work in Progress

Sorry about the fonting this morning – I’m still trying to get the hang of the new system!

Hang on tight, we may not crash but we are certainly going to get a major bump today!





Thursday Morning

Limbo high and limbo low! Today looks like a limbo low day with Q3 productivity unchanged and costs up a whopping 3.8%. WMT, TGT and COST came out with disappointing sales numbers today [cue danger music].

We need something to get Mrs. Jones off the ropes and I’m not sure if another round of merger mania will qualify. It is possible that the consumers are feeling so good that they are blowing off the discount sector but that is probably just wishful thinking.

I would have thought MasterCard’s report on charge-o-mania would have qualified as the company “didn’t see any evidence” of slowing U.S. consumer spending. This echoes AXP’s 20% growth in consumer charges last week (I guess they are waiting to hear from Discover).

Hong Kong isn’t playing our game… As I pointed out on Tuesday morning, the Chinese market had a PMA as it came back from a Monday holiday and ignored the pullback. This morning the Hang Seng made a new record high with a 1.4%, 261 point gain in a generally strong Asian market.

Only Pakistan is under performing this week, retracing 1/3 of its gains from the recent run. They are not alarmed so I won’t be either.

In Japan, signs that GS may be losing their mojo are appearing as the IPO of Sach’s own Accordia Golf unit flopped in their debut, coming in 3.6% below the offering price.

Europe is waiting for the US markets to open before committing but they look ready to sell at the drop of a hat. In a preview of corporate America’s worst democratic nightmares – EU officials raided Samsung’s German offices as part of an investigation into memory chip price-fixing. Our pals at Sony got a US subpoena along with CY, MU and Mitsubishi.

UN (the European PG) had great sales showing strong consumer trends in Europe and America (I know we eat those Country Crock mashed potatoes all the time!).

So we have the CVS/CMX merger and TRB going on the block, TWX, EDS, CI, BKC and MA with huge recent earnings reports, sounds good to me…

Let’s just watch our bottoms as I think it is very unlikely we will be breaking out of upside resistance this week. Good signs will be holding the following through tomorrow:

  • Dow – 12,000
  • S&P – 1,360


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Worried Wednesday Wrap-Up

What was that?

 

Are things starting to matter?  We certainly can’t afford that attitude, as there are just so many things to worry about!  Today’s worries seemed to focus on the weak ISM number that confirmed Friday’s weak GDP report.  The 51.2 reading gave us the slowest pace of growth since June 2003.

 

Never mind that between March 1, 2003 and Jan 2004 the Dow gained 3,000 points, that kind of logic certainly doesn’t matter when people are panicking!  Auto sales picked up sharply and Mastercard announced a 20% increase in consumer spending in the past quarter, both great signs that were ignored by a tired Mrs. Jones.

 

There was a general sell-off among the Dow components but nothing alarming outside of INTC’s 1.5% drop.  JPM lost a point because they are buying hedge funds, UTX dragged the Dow down as rumor spread that they lost a contract and the heavily weighted company lost $1.5Bn in market cap on heavy selling. 

 

Funny thing, in the after hours it was revealed they still might get that contract so the stock is back where it started again!  BA, who is partnered with UTX on the bid, sold off as well but held positive for the day.

 

The only other significant pullback was from T, who gave up 1.4 of the 30% they’ve gained since July as TWX announces they will be expanding their VOIP service.

 

This is the problem when your index relies on just 30 companies, a problem with one or two can drag down the whole market!

 

Unfortunately the much broader S&P had a huge sell-off today, dropping all the way down to 1,367 and showing 1,370 no respect at all.  The NYSE was more of a trooper, holding the 8,700 line right at the end of trading. 

 

The Nasdaq also gave up a lot of ground (1.4%) today, closing at 2,334, dragged down by a very poor SOX group (down 2%) while the transports dropped a point but stopped right on the 200 dma at 2,565.

 

I think we need good news tomorrow, as no news is not going to do it!

 

After much hemming and hawing and pumping and dumping, oil did indeed finish right back where it started with an official close of $58.71, just .15 above our recent 5% level.  There is no indication
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Which Way Wednesday?

The dollar is collapsing!

http://stockcharts.com/gallery/?%24usd

Election rhetoric may not fool anyone in this country, but the rest of the world is listening to this nonsense and is losing confidence in our country.

The drop in the dollar against they Yen has gotten so bad that the Nikkei is faltering over it.  The Hang Seng is less affected because they manipulate their currency to be worth whatever they want and thank goodness too because the dollar can’t afford to lose ground to yet another major currency!

This should finally push our SNE puts into the money, so we have that going for us but rising import and commodity prices are not the best recipe for holiday cheer.  The only good thing about this is that we can expect some of the CBs to step in and bail us out.

Lucky for us the Europeans may be feeling generous as the EU’s economic confidence index rose to a 5-year high (in stark contrast to our report yesterday) while their inflation fell to 1.6%.  Unemployment in France (where they were rioting last year) is down to a 5-year low of 8.8% – we have no idea how good we have it!

The robust EU economy is boosting the miners while DCX chipped in with a report of lower-than-expected charges against a massive job cut.

Back home, Mrs. Jones will try to keep the fires burning.  We have construction spending and September home sales at 10 along with the ISM index so don’t trust anything until then.  We would still be thrilled to hold 12K but let’s look upwards as a weak dollar will give a lot of our local boys an initial boost.

The S&P faces a challenge at 1,380 that bears watching and, of course, 1,370 is bad.  The NYSE will lead the markets one way or the other but should have good resistance at both 8,800 and 8,700.  The Nasdaq is also stuck between 2,350 and 2,375 and needs to break up soon if we are going to get this party rolling again.http://stockcharts.com/gallery/?%24comp

The SOX will give us a big warning signal if they slip below 453 but I’m hoping we can stay over that pesky 460 mark today.  The Dow will not be going anywhere without the transports and they will be going nowhere but down if they break below 2,550.

Oil needs to go down and down and down
continue reading





Which Way Wednesday?

The dollar is collapsing!

http://stockcharts.com/gallery/?%24usd

Election rhetoric may not fool anyone in this country, but the rest of the world is listening to this nonsense and is losing confidence in our country.

The drop in the dollar against they Yen has gotten so bad that the Nikkei is faltering over it.  The Hang Seng is less affected because they manipulate their currency to be worth whatever they want and thank goodness too because the dollar can’t afford to lose ground to yet another major currency!

This should finally push our SNE puts into the money, so we have that going for us but rising import and commodity prices are not the best recipe for holiday cheer.  The only good thing about this is that we can expect some of the CBs to step in and bail us out.

Lucky for us the Europeans may be feeling generous as the EU’s economic confidence index rose to a 5-year high (in stark contrast to our report yesterday) while their inflation fell to 1.6%.  Unemployment in France (where they were rioting last year) is down to a 5-year low of 8.8% – we have no idea how good we have it!

The robust EU economy is boosting the miners while DCX chipped in with a report of lower-than-expected charges against a massive job cut.

Back home, Mrs. Jones will try to keep the fires burning.  We have construction spending and September home sales at 10 along with the ISM index so don’t trust anything until then.  We would still be thrilled to hold 12K but let’s look upwards as a weak dollar will give a lot of our local boys an initial boost.

The S&P faces a challenge at 1,380 that bears watching and, of course, 1,370 is bad.  The NYSE will lead the markets one way or the other but should have good resistance at both 8,800 and 8,700.  The Nasdaq is also stuck between 2,350 and 2,375 and needs to break up soon if we are going to get this party rolling again.http://stockcharts.com/gallery/?%24comp

The SOX will give us a big warning signal if they slip below 453 but I’m hoping we can stay over that pesky 460 mark today.  The Dow will not be going anywhere without the transports and they will be going nowhere but down if they break below 2,550.

Oil needs to go down and down and down
continue reading





 
 
 

Phil's Favorites

Overpriced tech IPOs sell grand visions but aren't worth their valuations

 

Overpriced tech IPOs sell grand visions but aren't worth their valuations

rblfmr / Shutterstock.com

Courtesy of John Colley, Warwick Business School, University of Warwick

The year of the tech IPO is 2019. Uber went public on May 10 with a US$82.4 billion valuation. Fellow ride-sharing app Lyft floated in March with a U$24 billion valuation and Pinterest had a US$10 billion IPO in April...



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Zero Hedge

Futures Slides As Trade Tensions Escalate

Courtesy of ZeroHedge. View original post here.

S&P futures were lower on Wednesday as investors sought safety in bonds, the Japanese yen and Swiss franc in muted trade amid renewed worries over the U.S.-China spat after reports Washington is considering cutting off the flow of American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology, the world's largest supplier of video surveillance products, expanding the US crackdown on China beyond Huawei to include world leaders in video surveillance. The dollar and 10Y yield were unchanged ahead of today's FOMC Minutes.

...



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Kimble Charting Solutions

Emerging Markets About To Submerge If 3-Year Support Breaks?

Courtesy of Chris Kimble.

Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!

Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.

EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bo...



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Insider Scoop

Amgen To Buy Danish Collaborator Nuevolution For $167M

Courtesy of Benzinga.

Amgen, Inc. (NASDAQ: AMGN) took a logical step forward in buying a preclinical biotech it has been collaborating with since 2016. 

What Happened

Amgen announced Wednesday an agreement to buy Copenhagen-based Nuevolution for $167 million.

Th...



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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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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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Biotech

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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ValueWalk

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

Excerpt:

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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OpTrader

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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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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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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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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