Archive for 2007

June Jumble – The Plot Thickens!

Wow, what a crazy finish that was!

I said last weekend that we needed to practice James Bond Investing, trusting no stock and no direction, being ready to kiss or kill at a moment's notice as it seemed that virtually every position was out to get us at some point during the week.

Out of 68 closed positions this week, 13 were trades on the DIA, 6 puts and 7 calls – talk about being a double agent!  We flipped flopped and flied through the week, taking 3 different positions on the DIA on Friday alone which yielded a double and a triple in intraday trading.  It wasn't just the index funds we had a treacherous relationship with, we made money buying and selling GOOG and RIMM and ZMan and I were even forced to align ourselves with our arch nemesis, Big Oil, as we took bullish positions on XOM, VLO, EOG and (gasp!) TSO during Wednesday's oil report.  As I said in that wrap-up: "We don’t care if the game is rigged, as long as we know which way it’s rigged!

Speaking of RIG, I did hold those $100 puts into the weekend (even at .80), but that's something we can talk about on Monday as the latest on oil is they are ramming flaming cars into British airports now.

We survived a heavy data week in pretty good shape, although it baffles me how as most of the data was negative but we literally are so far in cash now that it's hard to be concerned.  The week had a finish straight out of a Bond film as well with the release of the IPhone, a gadget so advanced you can almost imagine Q saying to James Bond: "It stores 8 Gigabytes of audio and video files, it's a portable computer with keyless entry, it's a camera, it has internet access and mapping capabilities – oh and it also makes phone calls."  Personally I'm waiting for the model that includes a taser - then I'm ready to go on a mission!

The Fed continued it's mission this week to pretend that inflation is something that doesn't touch the average consumer as we all drive cars that consume no fuel and eat at the government commissary.  Perhaps if we forced these guys to live in the suburbs they would wake up…
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Friday Virtual Portfolio Moves

Posted June 29, 2007 at 9:48 am | Permalink (Edit)

RIMM – oh sorry. If anyone was in on that spread from yesterday the least complicated thing to do is take the loss but you could also either A) buy out a few of your callers or B) wait for a top (maybe $200, maybe $195) and then sell the Augs and wait for a pullback to buy back the very dangerous, naked $165s. No matter what, it is unlikely that the $5 premium for the Aug $175s will last long and the caller has no premium. If you can afford it you can also roll your caller up to the $195s at $7 which is what I’m doing but it means taking a $23 hit which you can offset by rolling the Augs up to $200, now $11.80 when the premium there calms down a bit.

Posted June 29, 2007 at 9:56 am | Permalink (Edit)

RIG – I held half and I’m thinking of getting back in here. If they can’t break $107 at $70.65 oil I’m back to my original premise that they are good to DD and roll.

BIDU could go on forever but I can’t chase them here. BEAV is always one of my favorites but also not a chaser.

Oil – logic will get you nowhere Z! BHI $85s are just $2.22 if you need an upside cover. XXX

Posted June 29, 2007 at 10:06 am | Permalink (Edit)

DIA, a big gamble this close to expiration but fun. I said yesterday I think they will pin 13,500 and there seem to be plenty of sellers above there.

Posted June 29, 2007 at 10:15 am | Permalink (Edit)

T – now you’re gamblin.’ How many subscribers will they report over the weekend and, more importantly, how many come from another carrier? I think Apple is scamming us and there are MILLIONS of these things ready to go as they are letting people in line buy 2, which makes no sense if they have a limited supply as most analysts believe. When in doubt sell half would apply here.

RIG having trouble up here. OIH may roll…
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TGI July!

Wow, we made it through Q2 – congrats to all the survivors!

Actually it's been a fantastic quarter but a very stressful one as we've gone from bullish to bearish so many times I've forgotten which side of the fence I'm on some mornings.

I'm not kidding, we've had the virtual portfolio so well balanced that some day's the market has gone one way or another and I've cursed the thing out until I look at the balance and say – "Oh, I guess I DID want that to happen."  This is probably not the sort of thing an analyst (and soon-to-be hedge fund manager) should admit, so forget I said that and just bask in my omnipotence – It will make both of us feel better!

I got my positioning statement out of the way last night so please read that, as I'm not going to get into it again this morning, but what I do want to get into is this article, brought to my attention by Trader Mike, possibly the only guy I know who reads more than I do:

“The losses are going to be phenomenal'' for funds worldwide holding subprime debt, said Peter Schiff, president of securities brokerage Euro Pacific Capital in Darien, Connecticut. “My guestimate in the subprime world is that the majority of loans are going to go into default. Not just 5 or 10 percent, but the majority.''   This comment came as Caliber Global Investment, a $908M subprime fund had to shut down.  Caliber will seek an “orderly return of all of its capital to investors over the next 12 months in order to maximize value for shareholders,'' Caliber said in its statement.

As of March, about 11 percent of the subprime mortgages included in bonds were delinquent by at least 90 days, in foreclosure or already turned into seized property, the highest since 1997 and up from 5.37 percent in May 2005, according to a June 1 report from Friedman Billings Ramsey Group in Arlington, Virginia.  Buyers of bonds backed by mortgages to people with poor or limited credit histories stand to lose as much as $75 billion, according to an April estimate from Pacific Investment Management Co., manager of the world's largest bond fund.

Barry Ritholz is also on the warpath with this…
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Thursday Thump

Well, we got exactly what we expected from the Fed:

"Economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector. The economy seems likely to continue to expand at a moderate pace over coming quarters.

"Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

"In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

This was just what we were expecting, a Goldilocks view of the economy but tougher language on inflation.  It was not what the markets wanted as most seemed to expect the Fed would continue to pretend that non-core inflation didn't exist.  What really bothers me about this statement is that Bernanke seems to have drunk the low expectation Kool-Aid as the GDP just came in a .7% and they are calling this "moderate growth."  Gosh remind me to stock up the fallout shelter if we ever get into "low growth!"

Meanwhile it ain't over 'till it's over as we have a huge data day tomorrow with Personal Income expected to be up .6%, up from -.1% (inflationary) and Personal Spending expected to outpace it at .7%, up from .5% (imaginary) along with Core PCE Inflation expected to hold .1% for all you non-food, non-energy, non-consuming types.

The Chicago PMI comes out just after the market opens and has the low expectation of .58, down from 61.7 last month and May Construction Spending will sound good up .2% expected but look what we're comparing it to:

They won't tell you this on CNBC, they'll just tell you how great it is that spending is picking up and try to get the builders to rally out of the pit they have fallen into but remember that when they are all trapped down there in the pit, sometimes the only way out is for them to step on each other –
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Thursday Virtual Portfolio Moves

Posted June 28, 2007 at 9:46 am | Permalink (Edit)

TASR – too dangerous here. I’ll be doing something with my leaps soon though.

T had a nice jump today.

Posted June 28, 2007 at 10:14 am | Permalink (Edit)

Oil puts – I’m hoping for a nice run into inventory to start VERY SMALL positions which I will intend to DD, roll, DD, roll, DD, DD and roll. We could go a very long time without a pullback if they get oil over $70.

RIG – my basis is $1.24 right now so I’m certainly going to DD (just 15 contracts ATM). We still have 15 trading days to go and those puts were $1.80 yesterday so we don’t have to get that lucky with a .90 basis. XXX

DIA – if you’re in the June calls from yesterday you should be looking to get out – don’t forget they expire tomorrow!

Long oil – I just can’t do it. They are so massively overpriced I just can’t find any I want for a long…

Posted June 28, 2007 at 10:24 am | Permalink (Edit)

Index puts – I don’t buy them every day but I tinker with them a lot. I just play them as great big momentum trades and, as insurance, what I do with them generally depends on how much I think my other positions need protecting. Don’t be misled by how well I’m doing with these – it’s just an accident of the volatile market, not a plan.

What happens is I will establish a position that protects about 1/3 of my anticipated losses on a 200 point dip, in this case that’s 350 DIA July puts. As a rule of thumb I find whatever contract is around $2 is usually the best mover.

Once I establish it I follow mattress play rules but I’ll usually spend .30 per 100-point down gain to roll them up to the next level but then follow the usual half out rules on a pullback. If the Dow goes up 300 points from where I buy the $135s for $2 I end up owning the $138s for about $3, when the Dow corrects 150 points I get half of…
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Federally Funded Thursday

How low can rates go?

We've been living large off the Fed's largess since 2002, half a decade of easy government money that started out as 9/11 disaster relief but turned into a multi-Trillion dollar entitlement program for corporations and the wealthy that has been fueling our economic boom.

This program has been so successful that last year the world's top .15% (all 9.5M of them) added a staggering $4 Trillion to their assets, THAT IS THE GDP OF JAPAN, the world's second largest economy!  Wake up people – this is not you, you may think you are included in this priviledged group because you have assets of $1-10M but the vast majority of that $37Bn is actually in the hands of less than 1,000 people.

If you want to check your actual standing in the global pecking order, you can enter your salary here, but it breaks at the top 100,000.

Why do I say that low rates are an entitlement program?  In simple terms, because the government does not make a profit lending money at these ratesTherefore they are running a charity at a deficit, which is a burden placed on current and future generations as other services (including defense) have to suffer in order for the Fed to keep making below market loans.  Don't all citizens benefit from this?  Perhaps but you have to imagine that the benefit derived by 48M home renters who's biggest loan is perhaps a $25,000 auto may be getting somewhat less than the benefit Steve Wynn (one of the 1,000) gets when he borrows $1.5Bn at 5.36% to build a casino that those other 48M people can't afford to buy lunch in.

So it's the easy money that's fueling the Dooh Nibor Economy and the question is – how long can they keep it up?  Maybe it's easy to funnel the entire GDP of Japan into the pockets of 1,000 lucky people (it's gone well so far) but let's keep in mind that this year they'd like to do better.  At 11% growth per year on $37T it's only a matter of time before it will take the ENTIRE US economy, currently $13T, just to fuel the growth needs of the 1,000.  That means they will need EVERY dollar, not just the ones you…
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Wednesday Wrap-Up

Wonderful PotterWhat a nice recovery today!

Was it our man Paulson?  He didn't say much about the markets but he did let the Hedging community know he was on their side as he came out strongly in favor of the status quo (raping AND pillaging).

I know there was once a time when a public figure like Paulson would have recused himself from the discussion due to his long history and close associations with the industry possibly having just the slightest hint of conflict with his position AS TREASURY SECRETARY, but noooooooooo!   Secretary Henry Paulson warned that raising taxes on hedge funds and buyout firms may have “unintended consequences'' and said Congress shouldn't “single out'' firms that go public, such as Blackstone Group LP.  “I don't believe it makes sense to single out one industry,'' Paulson said when asked about proposed legislation at a conference hosted by the Wall Street Journal in New York. Senate legislation would force Blackstone to pay taxes at corporate rates of 35 percent instead of as a partnership, with a burden as low as 15 percent. “We need to be careful dealing with something like this piecemeal,'' Paulson said.

Yes, going after the people who are actually causing the problem is no kind of policy for THIS administration!

Bulldozing MoneyAnd it's a good thing too because, as we discussed 2 weeks ago, wealthy people put a substantial portion of their assets into hedge funds and we know they don't like paying taxes (they prefer to give directly to charity I hear..).  According to a brand new Wealth Report, there are now 9.5M people with over $1M in net assets who now control $37.2 Trillion of the World's wealth (up 11.2% from last year!).   For the first time, the 11th annual World Wealth Report detailed philanthropic giving, and estimated that high net worth individuals turned over $285 Billion to charitable causes in 2006.

That's equivalent to someone worth $100,000 giving about $766 to charity, or 0.76 percent of their wealth.  I guess charity does begin at home, but perhaps it begins in the wing that's under renovation – you know, the one you never get around visiting as you're only in that house from Labor Day through Thanksgiving and things are so hectic you just haven't had time to even…
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Wednesday Virtual Portfolio Moves

Posted June 27, 2007 at 9:40 am | Permalink (Edit)

Who is NOT down, that’s what we need to look at today…

Posted June 27, 2007 at 9:42 am | Permalink (Edit)

POT/CROX… Money coming out of high flyers as people taking it off the table.

Posted June 27, 2007 at 9:43 am | Permalink (Edit)

Big tech is working so far – AAPL, INTC, MSFT, SNDK, TXN…

Posted June 27, 2007 at 9:51 am | Permalink (Edit)

From Drogon yesterday:

HOC July 70 puts@.90, stock@73.62 – missed it (genius call)

TSO July 57.50puts@2.15, stock@ 57.81 – damn, I hope you did that one.

RIG July 100 puts@1.40, stock@104.33 – GAME ON, now $1.62 XXX

MRO July 60 puts@1.55, stock @60.62 – missed it.

FSLR July85 puts or 80 puts@ 1.55, stock@87.65 – I like the $80s at $2 (in other words on momentum if it starts to fall but not here at $1.52).

“My favs yet to sell off are the ethanols and Agriculture plays though!”

MON, MOS, AGU, POT, BG – All Brilliant picks by Dragon yesterday afternoon! I’m very sorry I put them off until today but BG is the most playable one left with Aug $75 puts at $2.05 XXX

Great work Dragon!!!

Posted June 27, 2007 at 10:23 am | Permalink (Edit)

Very strange, both my July DIA puts have lost value! VIX coming down a bit too.

BBY did a BBuYback.

SOX and Biotech and the Qs are holding up, here’s hoping for some of that rotation.

DIA July $133 puts active, tight stops on $135 puts (up 135%).

Let’s watch that $67.50 line. Back below that and SU should start to slide but right now I’m watching out for an oil run.

$10KP – time to roll down FWLT again!

Posted June 27, 2007 at 10:59 am | Permalink (Edit)

Sorry been crazy busy – had emergency phone call then right to radio.

What did TRMP do wrong?

VLO – it’s a mo play, when you lose momentum…
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Wary Wednesday Morning

The Fed begins thier 2-day meeting today but there will be no word from the governors until tomorrow's 2:15 statement.

Hank Paulson will jump in to fill the talking head vacuum with a 1:30 speech at a NY Investing Conference and we may get some hints as to the official spin on subprime so let's keep a close eye (ear?) on what he has to say.  Also from the Treasury, we will get the result of a $13Bn 5-year note sale where we should finally find out what those things are worth after seeing them bounce up and down over a quarter point in the past week.

We already got some bad news from the MBA Mortgage Application Index which fell 3.9% last week, a 4-month low.  This was expected by us as I predicted last week that higher rates would put a quick damper on lending activity.  Sadly though, the last time we hit a level this low was February 16th and we all know how that month ended!  Rising mortgage rates, falling prices and a record number of houses on the market may be scaring away prospective buyers, deepening the real-estate recession. A recovery will probably not take hold until 2008 at the earliest, economists said

It should be noted that this index was BOOSTED by refinancing – the purchase index fell by 4.9%!

[China's household bank deposits charts]While Chinese locals continue to plow their hard earned money into the Shanghai A-shares (up 2.6% today), the rest of Asia had a bit of a sell-off with the Hang Seng trading down 98 points and the Nikkei off 216 points for the day.  Money flew out of Chinese savings banks in April ($21Bn) and May ($37Bn) as investors there threw more and more of their savings into, according to our pumper friend from yesterday, the "irreversible uptrend."  The back-to-back reductions marked the first drops in yuan household deposits in six years, and stand in contrast to the period from 2000 to 2006, when such savings ballooned by 2.5 times.

Europe is down about half a point ahead of our open and is likely waiting on our Fed as well so we'll move right on from there.

Over here
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Tuesday Tear-Down

That went about as expected.

Fortunately, in our morning sermon we were reminded to be led not into temptation and we were, in fact, sorely tempted as the Dow went up70, flat, up 50, down 10, and up 110 – all before lunch! 

That last one almost got us but the President's sound advice stayed with us and we were on top of this nonsense all morning taking up positions looking for a top.  At 12:12, right at the top, we got our new favorite market indicator on CNBC as I said: "Uh oh – Pisani looks concerned again" and he was right on the button at the market fell 100 points from there.

Some people are saying that today's crash was caused by the leak of my Fed statement, which I always publish for members the day before the official release (Ben and I were up all night!) but I tip my hat to Bill Gross, who joined my camp earlier in the morning with some chilling views on the subprime market that OptionDragon brought to our attention, causing me to say at 11:29: "Well that statement makes me want to cash out my virtual portfolio, sell the house, auction the art and have a garage sale!"

At 12:36 I was, as is often the case, annoyed by the television and I said: "Wow – CNBC guy says “pretty good rally for the dow” how does a herky-jerky ride to a 50 point lower high than yesterday constitute a pretty good rally? This is what I don’t get about them – don’t they want ratings? To get ratings you need to give good information, not spin."

We were, of course, thrilled by the breakdown in the oil sector but we took the opportunity to lighten up on our puts ahead of inventories but ZMan and I will address the Nation live tomorrow at 10:25 on MN1 with brand new picksMy live selections last week were 4 for 4 as I gave viewers OII $50 puts at .70, now $1; PTR $145 puts at $2.50, now $4.15; VLO $75 puts at $1.30, now $2; XOM $85 puts at $2.90, now $3.55 with a general comment that the gasoline inventories "were horrendously bearish" for the refiners.

As we were generally bearish…
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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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ValueWalk

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

Cars.com 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 ...

http://www.insidercow.com/ 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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Biotech

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 www.shutterstock.com

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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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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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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