Archive for 2011

Ongoing Overnight Short Squeeze Takes Silver To Fresh 31 Year High

Courtesy of Tyler Durden

Silver takes out $33.10, hitting a fresh 31 year high, as the relentless short squeeze leads to more body bags, and the only flight to safety currency is now the non-dilutable one (with gold on the verge of $1,400). Only $20 more to go until the all time Hunt Brother record is smashed – one/two more revolutions should do it; even better: hopefully the CME hikes margins next week: that would bring $40 silver 24 hours later. And on a more somber note, please join us for a moment of silence in remembrance of the great, the legendary, the soon to be departed Blythe Masters whose most recent zero margin, infinite PM short contraption has just sang its swan song.

18 Sobering Facts Which Prove That The Middle Class Is Not Being Included In This “Economic Recovery”

This article by Michael is filled with despair and presents evidence that the recovery in the stock market resembles the price of bread in Zimbabwe more than it does a real economic recovery. – Ilene 

18 Sobering Facts Which Prove That The Middle Class Is Not Being Included In This “Economic Recovery”

Courtesy of Michael Snyder, Economic Collapse

Have you heard the news?  The stock market is absolutely soaring and according to the U.S. government and the Federal Reserve we are in the beginning stages of a robust economic recovery.  Yippee!  The S&P 500 is up 6.8 percent so far in 2011, and the stock market recently hit a two and a half year high.  So shouldn’t we all be celebrating?  Well, if stock market performance was an accurate measure of economic health, then Zimbabwe would have had one of the healthiest economies on the entire globe during the last decade. 

But just like Zimbabwe’s stock market was artificially pumped up with "funny money" that was rapidly being devalued, so is ours.  All of the "quantitative easing" that the Federal Reserve has been doing is pumping plenty of money into the financial markets and is helping to inflate a false stock market bubble, but it is doing very little to alleviate the suffering of the U.S. middle class.  In fact, when you take a closer look at the numbers you quickly find out that the suffering of the middle class is getting even worse.

According to Gallup, the unemployment rate is now over 10%.  The number of Americans that have given up looking for work recently set a new all-time record.  The number of mortgages in foreclosure tied a record high during the fourth quarter of 2010.  Gas and food prices are rising rapidly.  The number of Americans on food stamps continues to increase every single month.

Yes, right now the economic situation is not in free fall like it was a couple years ago.  We should be thankful for that.  Periods of relative stability such as we are enjoying now will be few and far between in the years ahead.  This "bubble" of economic calm is a great opportunity that we should all be taking advantage of.

However, those that are hoping that this is an economic "turning point" and that things will soon be back to "normal" are going to be greatly disappointed.  This is about as "normal"…
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A Tale of Crudes: Anybody Got A Big Rig?

Courtesy of asiablues

By Dian L. Chu, EconForecat Big Rig Tanker Truck

On Wednesday, Feb. 16 Israel said Iran is sending two warships into the Suez Canal on way to Syria, and that the action is considered a “provocation.”  Due to the long history of bad blood between Israel and Iran, this very possible scenario was enough to even send the bear-infested NYMEX crude oil futures volume surging midday.

West Texas Intermediate (WTI) on Nymex rose to just below $85, while Brent crude on the ICE futures exchange spiked $2.17 higher to $103.81 a barrel--a 29-month high--widening the WTI-Brent spread to a new record near $19. 

High Middle East Tension

Then on Friday, Feb. 18, AFP reported that permission has been granted for Iranian warships to transit the Suez Canal into the Mediterranean.  Canal officials say it would be the first time Iranian warships have made the passage since the 1979 Islamic revolution, while Israel has labeled the Iranian action as “hostile’ and said Israel was closely monitoring the situation.

As the worst Israel-Iran conflict scenario failed to materialize, at the close Friday Feb. 18, Brent crude oil for April settled at $102.79 while WTI for April delivery rose to $89.71, narrowing the spread to $13.11.   

Crude Glut at Cushing, OK

Since WTI is lighter and sweeter crude which requires less processing, it has historically enjoyed a $1 – $2 a barrel price premium to Brent crude oil.  According to Bloomberg, the WTI-Brent gap averaged only 76 cents last year.

However, WTI’s premium disappeared about a year ago and in recent days it has been trading at more than a $10/bbl discount to Brent mainly due to rising inventory levels at Cushing OK, the delivery and price settling point of Nymex crude futures (See Chart).  ??

Source: Bianco Research via The Absurd Report

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On Rick Santelli’s “Meet The Press” Appearance, A $113 Trillion Future Rounding Error, And The Metamorphosis Of The American Dream To A Nightmare

Courtesy of Tyler Durden, Zero Hedge 

Today, appearing on Meet The Press, in addition to Susan Rice, Dick Durbin, Lindsey Graham, Jennifer Granholm, Harold Ford, and Ed Gillespie was CNBC’s uber contrarian voice, Rick Santelli. The topic: reigning in government spending, a topic which will be with America until its last bond issuance, sometime in the next 5 years. And while Rick was quite subdued this time around (it seems the CBOT voice only sees red when confronted with the likes of Steve Liesman), he did compare the crisis facing America now to the events from 9/11… "I think this is an issue that needs to be put out into the air and see--many, many other states, ultimately, might have--not have the same balance sheet as Wisconsin, but I think, ultimately, collective bargaining, even from a federal level, these are big issues, and these costs need to be put under control.  If the country is ever attacked like it was in 9/11, we all respond with a sense of urgency. What’s going on on balance sheets throughout the country is the same type of attack."

He also noted the critical Illinois muni situation whose alternative is a forced austerity plan (and considering that various Wisconsin politicans received death threats over what is finally being perceived a loss in some entitlement benefits, the outcome of inevitable austerity in America will not be pretty): "Senator Durbin is from my state:  $3.7 billion muni issuance that they need to bring to the market.  They haven’t paid vendors.  You know, it has come to the crossroads where if we don’t start to make the changes that the governor and the congressman know are going to take time, we will have austerity forced on us, and that type of austerity is going to be much messier.  There really isn’t much opportunity for debate here.  We do need action." But most importantly is the realization that nobody has any idea what to do, and as an article just penned by the Global and Mail screams, "Wake up, Americans. Your economic dream is a nightmare." Luckily, with everyone’s head in the sand, nobody really minds.

Clip from Meet the Press (and full transript here):

Visit for breaking news,…
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Are Wisconsin Protests a Harbinger of Doom for Municipal Bonds?

Courtesy of Jr. Deputy Accountant

 pic credit: moonbattery

Are Wisconsin protests a harbinger of doom for muni bonds? John Carney seems to think so.

While muni bond holders in Wisconsin shouldn’t have much to worry about in the weeks and months ahead, there are greater fools out there (like California debt-holders) who should be sweating right about now. 

Martin J. Bennett argues via California Progess Report that California public employees aren’t the problem:

According to the California Budget Project (CBP), [California has] the second lowest ratio of state workers per 10,000 residents in the nation. In addition, more than 70,000 public sector jobs have been eliminated in California since the crash of 2008, and public sector job loss is proportionately greater in California than in most other states.

Does the CBP calculate that number counting California’s 2.5 million illegal immigrants or whatever official number it is we’re using today? (It’s supposed to be somewhere around 7% of California’s entire population) Perhaps a large reason why illegal immigrants are not demonized in the state is because it can be really convenient to add them in to prove our statistical points, especially when defending not only the large number of public employees in California but the large lifetime benefits they reap for being such.

Anyway, how many there are doesn’t matter. It comes down to the political choices lawmakers in broke states will make when it comes to paying the bills and keeping their promises. What’s scarier, an angry mob of teachers or a bunch of hedge fund guys ticked off at you?

Carney via CNBC:

But a victory by the unions in Wisconsin could embolden state workers in states with far worse finances. Politicians worried about similar revolts might consider it better politics to force muni bond holders to accept haircuts. After all, hedge fund and mutual fund managers are not likely to fill the streets of the state capital or win the sympathy of members of the state legislatures.

Much of the bullish case for munis depends on the belief that states and localities will behave rationally and predictably when it comes to their debt payments. In Wisconsin, however, we’re seeing these assumptions fall apart. Political risk is alive and well.

Better politics? I doubt politicians have the ability to adopt a fuck or be fuckedposition when it comes to staying…
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Weekly Market Commentary: Nasdaq Breakout

Courtesy of Declan Fallon

It was another good week for bulls. The Nasdaq was finally able to break above 2,818 resistance – turning it into new support.



The Nasdaq 100 continued to add to its breakout. It has gone well beyond nearest support and is some 300 points off a measured move target. Can it make it to 2,700?



However, the Nasdaq Bullish Percents are struggling at overbought levels; not many new stocks are available to support the rally.



With the bearish divergence more evident in the Percentage of Nasdaq Stocks above the 50-day MA. Since the peak in the 80s from the 2009 low the percentage of Nasdaq Stocks above the 50-day MA is down at 63%. When it drops below 50% rapid declines in the market frequently result.



Small Caps added a second week of gains. The push off the bull flag continues to gather bullish momentum.



The S&P was good enough to add a percentage point on the week.



The same bearish divergences are playing out in S&P market breadth as for the Nasdaq. The NYSE Summation Index is just shy of resistance. Although a ‘buy’ trigger was generated in the supporting MACD.



And at 89% the S&P Bullish Percents can’t get more bullish.



The rally is still very much in play. While it’s hard to expect every week to be a winner it’s going to be a hard rally to break. Bearish divergences in supporting market breadth suggests a correction is likely to occur sooner rather than later. But this correction is unlikely to break the broader trend higher. The cyclical bull market continues…

Seeing Red

Seeing Red on the chart below signifies the worst of the worst. Gold is good. There are five categories in which the U.S. rates among the worst of the worst: income inequality, food insecurity, life expectancy at birth, prison population and math scores. The life expectancy at birth score may be misleading because some countries may not keep as thorough records of live births as the U.S. does, and I believe the definition of "live birth" is not straight-forward — that would be something to look into if so inclined. – Ilene

Courtesy of Michael Panzner of Financial Armageddon 

I don’t necessarily agree with New York Times’ columnist Charles M. Blow’s underlying premise in "Empire at the End of Decadence" that now is not the time to "scrimp on nonsecurity discretionary spending."

Among other things, a great many of the decisions — spending and otherwise — that our leaders made before and after the financial crisis struck contributed to (and exacerbated) the fiscal mess we are in today.

That said, it’s hard to argue against his assertion that the United States is not what it was.

It’s time for us to stop lying to ourselves about this country.

America is great in many ways, but on a whole host of measures — some of which are shown in the accompanying chart — we have become the laggards of the industrialized world. Not only are we not No. 1 — “U.S.A.! U.S.A.!” — we are among the worst of the worst.

Yet this reality and the urgency that it ushers in is too hard for many Americans to digest. They would prefer to continue to bathe in platitudes about America’s greatness, to view our eroding empire through the gauzy vapors of past grandeur.

In fact, a graphic accompanying Mr. Blow’s commentary makes it clear — to all but the most color-blind of observers -- just how far down the economic, political, social, and geopolitical ladder we’ve fallen [highlighting mine].


 Click on chart to enlarge.

Does A Surging Gold Price Mean The Fed Will Be Forced To Sell Treasurys?

Courtesy of Tyler Durden

As part of GATA’s ongoing crusade against the Fed’s gold price manipulation efforts, the organization recently succeeded in extracting some novel clues on how and why the Fed views its sworn duty as keeping the price of gold low. While much of the requested documents demanded by GATA in a lawsuit with the Fed have been exempt from disclosure under the law, one that was made public consists of the minutes of a private meeting of the G-10 Gold and Foreign Exchange Committee in April 1997. And while we will leave it up to our readers to parse through the bulk of the comments (attached below), we would like to draw attention to one, attributed to Peter R. Fisher, head of open market operations and foreign exchange trading for the Federal Reserve Bank of New York, or in other words the equivalent of our very own Brian Sack. Fisher’s comment relates to what would happen to the Fed’s securities portfolio should there be a sudden or gradual revaluation in the price of gold. His conclusion is that in order to keep the Fed’s balance sheet stable, an (acknowledged) surge in the price of gold would lead to a forced selling in Treasurys. Of course, that would mean that the Fed would have to actually value gold at its actual market price, instead of that relic price of $42.22 per ounce. Which means that valuing gold at fair market value would result in dumping over $300 billion in Treasurys, something the Fed can not afford to do at a time when it is engaged in purchasing $100+ billion each month.

To wit:

Fisher explained that U.S. gold belongs to the Treasury. However, the Treasury had issued gold certificates to the Reserve Banks, and so gold (by these means) also appears on the Federal Reserve balance sheet. If there were to be a revaluation of gold, the certificates would also be revalued upwards; however [to prevent the Fed's balance sheet from expanding] this would lead to sales of government securities. So the net benefit to Treasury would need to be carefully calculated, since sales of government securities would expand the public portfolio of government securities and hence also expand the Treasury’s debt servicing burden.

To an extent we agree with GATA’s summary of the…
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ETF News Update:The Little Market That Could (SPY, IWM, SLV, DIA)

Courtesy of John Nyaradi

Today’s ETF market reminds me of the classic children’s story, “The Little Engine That Could” and its unforgettable refrain, “I think I can, I think I can” as the little engine struggled up the hill against seemingly insurmountable obstacles.

On low volume and in the face of revolution abroad and at home, gathering inflationary storm clouds and weakness in Europe, “the little market that could” keeps climbing and passing significant milestones along the way

At Wall Street Sector Selector we remain positioned to take advantage of “the little market that could,” and recently closed an ETF option position in our Option Master Portfolio for a 48% gain in 11 calendar days. Positions in our ETF Standard portfolio show unrealized gains/losses of -3%, 0%, +2.7%, +3.1% and +1.3% for recently entered trades while the High Conviction (leveraged ETF) Portfolio has unrealized gains of +4.4% and +4.7% in its two positions. So after a rocky start in January, it seems that we’re on a more positive vector for February.

Premium Products Members will receive your ETF Trade Alert on Monday evening this week due to markets being closed Monday for President’s Day.

On My Radar

Chart courtesy of

Looking at the “big picture” of “the little market that could,” we see a chart that seems to be “forever overbought,” as demonstrated by RSI in the top of the graph and Stochastic at the bottom.

Plus the S&P cleared the psychologically significant level of 1332 which is roughly a 100% gain off the lows of March, 2009, so that has been quite a rapid recovery, indeed.

Now “dips” are little more than momentary burps as markets have become convinced that any “correction” will be quickly be repaired by the easy money of the Fed and the world has absolutely become addicted to the flow of liquidity that has been coursing around the world for lo these many months.

Of course, as the old saying goes, “nothing lasts forever,” but for now we will climb the mountain with the little engine, even though the ride down the other side promises to be terrifying indeed for those who fail to get off at or near the summit. But the downside will offer equal opportunity by virtue of our ability to “short” the market using inverse ETFs.

The View From 35,000 Feet

This week seemed to be…
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What Inflation Means to You: Inside the Consumer Price Index

Courtesy of Doug Short

Note from dshort: The charts below have been updated to include the latest Consumer Price Index news release for the January data.

The Fed justified the current round of quantitative easing “to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate” (full text). In effect, the Fed is trying to increase inflation, operating at the macro level. But what does an increase in inflation mean at the micro level — specifically to your household?

Let’s do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I’ll refer to hereafter as the CPI.

The slices are listed in the order used by the BLS in their tables, not the relative size. The first three follow the traditional order of urgency: food, shelter, and clothing. Transportation comes before Medical Care, and Recreation precedes lumped category of Education and Communication. Other Goods and Services refers to a bizarre grab-bag of odd fellows, including tobacco, cosmetics, financial services, and funeral expenses. For a complete breakdown and relative weights of all the subcategories of the eight categories, see table 3 in the BLS’s monthly Consumer Price Index Detailed Report.

The chart below shows the cumulative percent change in price for each of the eight categories since 2000.

Not surprisingly, Medical Care has been the fastest growing category. At the opposite end, Apparel has actually been deflating since 2000. Another unique feature of Apparel is the obvious seasonal volatility of the contour.

Transportation is the other category with high volatility — much more dramatic and irregular than the seasonality of Apparel. Transportation includes a wide range of subcategories. The volatility is largely driven by the Motor Fuel subcategory. For example, the spike in gasoline above $4-a-gallon in 2008 is readily apparent in the chart.

The Ominous Shadow
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Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.


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Phil's Favorites

A 2019 Earnings Recession?


A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...

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D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...

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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...

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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ... more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...

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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 failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 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.

Market Shadows >>