Archive for 2011

Euro Zone: Another Crisis, Another Backdoor Taxpayer Bailout?

Courtesy of ZeroHedge. View original post here.

Submitted by EconMatters.

By EconMatters

Exactly 20 years to the day after the creation of the European Union (EU) and the Euro currency, German Chancellor Angela Merkel successfully secured an historic agreement from all 27 current members of the EU, except Britain, forging a deeper economic integration in the euro zone on Friday, 9 Dec.


The Euro crunch summit also came away with an agreement to provide up to €200 billion ($268 Billion) in bilateral loans to the International Monetary Fund (IMF) to help it tackle the crisis, with 150 billion euros of the total coming from the euro zone countries.


The date that the European Stability Mechanism (ESM), capped at €500 billion ($666 billion), operation was also pushed up, the pledge to make private investors absorb losses in any future bailout for a euro nation is also to be scrapped.


While this new pact might be better to prevent future such sovereign debt crisis, others (including the US, andthe IMF) view is that the summit has failed to adequately address the more immediately and urgent issues.


Ticking Euro Debt Bombs


Euro zone has to repay or roll over more than €1.1 trillion, around$1.5 trillion, debt due in 2012, with about €519 billion, or $695 billion, of Italian, French and German debt maturing in the first half alone, according toBloomberg. (See Graphic below from Spiegel with a shorter time frame sans Germany).



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A Reminder Of The EURUSD’s Response To The Historic Announcement At 2:00 PM On March 18, 2009

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Zero Hedge has been lucky to have reported from the front lines on that historic day, March 18, 2009, when at precisely 2 pm the Fed formally expanded its LSAP program to include Treasuries, and more MBS, in what become formally known as Quantitative Easing (Episode 1). On that day, nearly three years ago (when gold was trading at $925) our commentary was the following: “Maybe one should really start buying stocks ahead of the uber-hyperinflation that will imminently ensue. We recommend wheelbarrow stocks.This is textbook back against the wall. But at least the stock market takes another crutch up.” and of course: “Print, print, print… God help us.” Needless to say it has been downhill ever since, and even though the global economy now is in the worst situation it has ever been precisely due to this unbridled printing, it is somehow conventional wisdom that all in Europe will be well… if the ECB does what the Fed did on that Wednesday in March nearly three years ago. The sheer idiocy of the logic is dumbfounding. Yet what we wanted to demonstrate is the intraday kneejerk response in the EURUSD which we caught just as it happened: the European currency moved by 400 pips from 1.31 to almost 1.35 in minutes. Which begs the question: in order to prevent a dollar spike, much as the situation of pre-QE March dictated, is the low 1.30s level the magical threshold where if the ECB does not, then the Fed will print? We make no forecast, and merely want to show that should the Euro proceed to tumble, the Fed has more than enough weapons, well, weapon, in its arsenal to reset the global devaluation game all over again. Because a soaring dollar will be the next inevitable step in the global liquidity collapse, which can and will be delayed (if only briefly) in only possible way: the “way” which will see gold doubling yet again over the next three years (if not far shorter).

How To Buy Stocks In A Santa Rally

Courtesy of David Grandey.

In uptrending markets, it’s all about the Pullback Off Highs pattern — in other words, sitting back and letting stocks come to you and buying them at low risk alternative entry points. 
That’s exactly what we did with ATHN on Friday.  After ATHN cleared resistance at the blue line and got back above its 50-day average, we added this stock to our watch list.
We then patiently waited for ATHN to pullback to support at those levels.  Friday, ATHN blasted above the pink Pullback Off Highs line triggering a long side trade at $59.53.  By the close ATHN was already over $61!

Now take a look at APA.  It looks a lot like ATHN did before it took off to the upside:

Success in today’s market comes from the following game plan:
  • Buy leading stocks at alternative, low-risk entry points
  • Sell stocks that are retesting recent highs
  • Always sell into strength
  • Enjoy your profits and wait for stocks to come back to you

To learn more, sign up for David’s free newsletter and receive the free report from All About Trends – “How To Outperform 90% Of Wall Street With Just $500 A Week.” Tell David PSW sent you. – Ilene

“The Inmates Don’t Know It’s An Asylum”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From Bill Buckler’s latest edition of The Privateer

The Inmates Don’t Know It’s An Asylum


There is a line from Ayn Rand’s The Fountainhead which we have always enjoyed. It is stated by the main villain of the story – Ellsworth Toohey – in a one-sided conversation in which he is explaining that he was always after political power and never hid his ambitions but nobody wanted to  “believe it”. The quote goes like this: “Never bother to examine a folly. Ask yourself only what it accomplishes.”


Lenin had a different take on the same problem faced by all would be power mongers. He knew he had to be reasonably obvious in what he told the people about his plans and goals. But not too obvious. He knew he had to tailor his pitch so that it would have the maximum amount of resonance with the maximum number of unthinking people. He doted on such people. He called them “useful idiots”.


Today, the “movers and shakers” of the financial world abound in such useful idiots. It has been a long road from the 1930s Keynesian mantra that “we owe it to ourselves” to today’s masters of the universe with their incomprehensible computer “algorithms” fuelled by the ability of modern  computers to crunch almost unlimited sequences of “1s” and “0s”. The entire road has been paved with one goal in mind. To convince the “people” that the only road to financial “safety” is to give up their thinking processes and “delegate” them to those who claim to know what they are doing.


The problem today is that the results of this delegation are so obvious that the methods of those who produced them are beginning to be questioned. It has been a long time coming. When we reach a market situation where nobody wants to play unless the game is terminally rigged,  then the whole idea of “markets” has gone by the boards. Nobody wants to “punt” unless their bets are guaranteed in advance. That’s no way to run a horse race – or a global financial system.

Comparing Bureaucracy: No Wonder The Euro Zone Is In Crisis

Courtesy of

By EconMatters

In addition to decades of overspending beyond means, there are also some less discussed contributory factors leading to the current debt crisis in the Euro Zone, particularly when compared to the United States.

The following charts from the Telegraph illustrate how regulations and poor administration have held back Portugal, Ireland, Italy, Greece and Spain’s economies, using data from the Doing Business project, which carried out by the World Bank, measures the time and cost of common business activities.

The charts compare eight European Union (EU) countries (Italy, Greece, Portugal, UK, Germany, France, Ireland, Spain) and the United States, in terms of days it takes to

  • get construction permits, 
  • get commercial electricity connected, 
  • enforce commercial contracts 
  • export goods 

Overall, the United States leads with an average of 100 days to carry out business in the above categories whereas it take 420 days in Italy.  (See Graph Below)

One glaring example is contract enforcement.

Contracting is an essential and integral part of transacting business and contributing to a country’s economic growth.  Enforcing a contract takes about 9 months, which is not that great, yet it takes more than two years to enforce a contract in Greece, and more than three years in Italy.

One interesting statistics is that the U.S. leads the pact in getting construction permit in less than a month, which probably partly explained the housing bubble.  The same process takes more than 8 months in Italy and Portugal to get a construction permit.

Another example is that while it takes 17 days to get commercial electricity connected in Germany, and more than two months in the US (which is bad enough), the same task takes over six months in Ireland and Italy.

Exporting and importing a standardized cargo of goods by ocean transport also takes longer in Italy, Portugal and Greece compared to other European countries as well as the the U.S.  Telegraph also pointed out that it takes nearly three years to resolve a commercial dispute, compared to a year in Germany and France due to Italy’s highly bureaucratic judicial system,.…
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Unreported Bedlam In Treasuries Signals Massive Panic

Courtesy of Lee Adler of the Wall Street Examiner

The following is an extended excerpt from the Wall Street Examiner Professional Edition weekly Treasury update. The subscriber link to the full report is at the end of this summary.

Last week was a light auction week with a net of just $3 billion in new supply settling on Thursday. That took the pressure off stock and bond prices. The fact that neither market could mount a sustained rally suggests that markets are weak. Stocks and bonds gyrated wildly but in the end remained in a tight range, in spite of all the bullish ballyhoo in the media. You would have thought that the Europeans saved the world on Friday. I don’t think so, and within the data there’s plenty of reason to continue to be concerned, if not scared shitless.

Withholding tax collections remain weak and the government had to raise $9 billion (11%) more than forecast last week. Next week the overshoot will be around $13 billion. That means that the economy is significantly weaker than government forecasters had foreseen just 5 weeks ago when these estimates were issued. The clues were available in the data at that time and I correctly guessed that the auctions would begin to balloon in size.

At the same time, foreign central bank purchases of Treasures are falling off a cliff again. But the markets aren’t paying attention or have not noticed these negatives because they have not had to. Massive tidal waves of panic capital flight have been overwhelming the Treasury market in never before seen numbers. The indirect bid tendered on the 4 week bill last week was a mind blowing $61.8 billion, or 5 to 10 times the norm! Even more startling, Primary Dealers (PDs) bid $268 billion on that issue. That’s over a quarter TRILLION! One third of the PDs are foreign banks. Seven of them are European banks. Is something rotten in Denmark, Brussels, Rome, and Paris? You bet your bippy.

Get the full sized chart with analysis in the Professional Edition

Notably, the panic buying was limited to the 4 week bill. The indirect bid was weak on the 13 and 26 week bills. This is short term cash looking for a safe place to park, not long term investable funds. It remains to be seen if this panic will slosh over into longer term Treasuries. With the 10 year at a major inflection point near…
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Forget Copper: Steel Is The True Indicator Of The Chinese Hard Landing

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Last week we pointed out some curious observations from Fortress on commodities and the state of the Chinese market courtesy of secondary industrial metals, notably steel: “The investment landscape for industrial metals is becoming increasingly more difficult to navigate. As highlighted in last month’s letter, we are continuing to see a rapid deceleration of growth in China, specifically within the cyclical industries. A recent trip to visit steel companies outside Beijing underlined the impact of extremely tight liquidity and continued restrictive policy in the Chinese housing market. Steel capacity cuts – through idling or accelerated maintenance outages – are now commonplace and the speed of these cuts has certainly surprised the market. Construction is the principal end-market blamed for this weakness; given the very large inventory overhang and the continued lack of liquidity, this is not surprising. In our equity universe, we have also seen numerous companies expressing concerns regarding China construction demand. Zoomlion, China’s second largest construction machinery company, recently said, “Demand for construction  machinery has shrunken drastically and growth will no doubt continue to slow next year.” Within the context of declining housing starts, plummeting transaction volumes and the beginning of a meaningful move down in housing prices, these shifts in the steel market have been an interesting harbinger of more substantial problems in the Chinese economy. Our principal concern is the extension of housing weakness into the banking system through the mechanism of both failing developers as well as the opaque and informal lending. We are concerned that the recent strength in iron ore, steel and copper has been misinterpreted by the market. In our view, any suggestion that the Chinese market is undergoing a substantial restock is misplaced.” Today, we get a confirmation of just this warning courtesy of Citigroup which has charted weekly Iron Ore China port inventories and of broad steel inventories. Needless to say, domestic steelmakers, who better than anyone know the state of domestic end product demand, have seen the writing on the wall, and have one message for the world: short Brazil and Australia.

h/t David

Guest Post: Risk Ratio Turns Up – We’ve Seen This Before

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From Lance Roberts oF StreetTalkAdvisors

STA Risk Ratio Turns Up – We’ve Seen This Before

sta-riskratio-120911-3The market rallied this past week, albeit in a very volatile manner, to end the week on a positive note as the hopes of a final resolution to the Euro crisis has been reached.   In reality, today’s announcement of the EU treaty is only the first step and there are many legal challenges that will still have to be resolved.  While the reality is that there is still a very long road ahead before anything will actually be accomplished the implication that the with the ECB willing to buy bonds, at least for the moment, and the coordination of two bailout funds the Eurozone can play “kick the can” for a while longer.  Those headlines, even without much substance were enough to drive return starved managers into the market for the year end rush. 

Even with the rally today the markets have made very little progress since the beginning of this year.   With that I thought it was time update our STA Risk Ratio indicator to see where we currently stand.   For reference the STA Risk Ratio indicator is a weekly composite indicator comprised of the Rate of Change of the S&P 500 Index, two different ratio of bullish and bearish sentiment, new highs versus new lows and volatility.  This indicator is weighted and then smoothed using an 8 week average.    The purpose of the indicator is not to provide trading signals for speculative stock trading but longer term asset allocation changes to adjust for market trend changes and risk management.  

As shown in the chart as the indicator rises above 50, and eventually above 100 on the index, the market is becoming overly bullish.  Therefore, as a contrarian investment indicator we begin to look for a turn down in the indicator as a sign to begin reducing portfolio risk by raising cash, increasing fixed income exposure, reducing portfolio beta or adding hedges.  Conversely, as the indicator falls below 0, and eventually -50 on the index, the market is becoming excessively bearish and we begin to reverse the allocation process.

For example, back in April, and early May, of this year we reduced our portfolio equity allocation levels to…
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Clive Hale On “Rule Britannia”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From Clive Hale’s View From The Bridge

Rule Britannia

If you have never heard the rendition of this anthem of anthems (up there with “Jerusalem”) at the Last Night of the Proms you will not understand the British psyche and the glue that binds this nation together. We have been branded the pariah of Europe for rejecting the treaty amendments, proposed by Germany and reluctantly seconded by France, which, in the great scheme of things, will achieve the square root of very little.

Alexander Graf Lambsdorff, head of Germany’s FDP group, part of the European Liberals, says it was “a mistake to let the British into the EU”. Over here some of us would lay the blame for accession at Edward Heath’s door… “Britain must now renegotiate its relationship with the EU,” he said. “Either  hey do it on their own initiative, or the EU refounds (sic) itself – without Great Britain. Switzerland is a model towards which Britain can turn itself.” Bring it on!

Meanwhile Daniel Cohen-Bendit, joint leader of the Greens in the European Parliament has labelled Mr Cameron “a weakling”. That’s up there with being savaged by a lamb Geoffrey Howe style, although Danny la Vert is in all probability a vegetarian…

Surprisingly it was the French newspaper Le Monde, seemingly keen to avoid further damaging relations between the French and English, which spoke to its readers of all the things they love about the UK, which, it said, are “impossible to number”; but they gave it their best shot. “From the concept of habeas corpus to the BBC, to Elizabethan poetry to John Le Carre, from rock to the invention of the Sixties, from London springtime concerts to  Wimbledon, via Liverpool FC.” And all that from a French newspaper! Well one thing is for sure; we will “never walk alone”!

That this meeting of small minds has been hailed as a triumph – German Chancellor Angela Merkel said that the European Union summit achieved a “breakthrough” to a “lastingly stable euro” – leaves me lost for words, but not expletives, although I will spare your blushes dear reader.

She would like you to believe, as obviously she does and presumably along with the 25 other governments that can find no other place to hide, that by March the “fiscal compact”…
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Currency Wars: “Strong Yen Is Destroying Japanese Industry”

Courtesy of John Rubino.

The thing to understand about inflation is that if one major country does it, all the others have to do it too. A single country can benefit by making its currency less valuable, because a falling exchange rate gives its exporters a pricing edge in global markets. But the pop in exports comes at the expense of competitors who then demand that their governments join the currency race-to-the-bottom.

This happened to Switzerland in September, as global capital poured into what was seen as a financial safe haven. The Swiss franc soared, traumatized local exporters complained, and the government pegged the Swiss franc to the euro, in effect putting it on the same road to oblivion as Europe’s doomed common currency.

Now it’s Japan’s turn:

Toyota Slams on the Brakes

Car Maker Cuts Profit Goal by 54%; Strong Yen Is ‘Destroying’ Japanese Industry

TOKYO—Toyota Motor Corp. slashed its profit outlook by more than half, reflecting the corrosive effect of the strong yen and signaling a deeper threat to car maker’s recovery.

The Japanese auto giant Friday also lowered its global sales outlook to 7.38 million vehicles for the fiscal year ending March 31, an admission Toyota could lose its crown as the world’s largest car maker this year, a title it took from General Motors Corp. three years ago.

Toyota has been wounded by two natural disasters and the rise of the yen against other currencies. Just as the company’s production was rebounding after Japan’s massive earthquake in March, it was hit by flood damage to key component suppliers in Thailand and a record yen.

Those setbacks have eroded Toyota’s position against global rivals including Hyundai Motor Co. and Volkswagen AG, and pose longer-term worries for one of Japan’s most important industrial giants. Toyota has lost 2.5 percentage points of the U.S. auto market for the 12 months ended in November. Its stock price in New York has fallen 33% since the end of February.

Toyota officials have said that at exchange rates below 80 yen to the dollar, the company loses money on subcompact exports such as the Yaris. The dollar and euro weakness against the yen reduces the price competitiveness of Japanese exports in overseas markets and erodes the value of foreign profits on corporate Japan’s balance sheets.

Satoshi Ozawa, Toyota’s chief financial officer, said one of the

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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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