Archive for 2016

Gann Angles on the Russell 2000

Courtesy of Read the Ticker.

gann-angles-on-the-russell-2000It is amazing how price is bound within Gann Angles!



Gann Angles



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RUT


Long term channels…



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RUT Channel




NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net



Investing Quote…



…“My satisfaction always came from beating the market, solving the puzzle.  The money was the reward, but it was not the main reason I loved the market.  The stock market is the greatest, most complex puzzle ever invented – and it pays the biggest jackpot…it was never the money that drove me.  It was the game, solving the puzzle, beating the market that had confused and confounded the greatest minds in history.  For me, that passion, the juice, the exhilaration was in beating the game, a game that was a living dynamic riddle”..



Jesse Livermore





..”The stock market is filled with individuals who know the price of everything, but the value of nothing”..



Philip Fisher





..“I buy on the assumption they could close the market the next day and not reopen it for five years” and “Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.”..



Warren Buffet





In the short run, the market is a voting machine, but in the long run it is a weighing machine.



Benjamin Graham





..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”..



John Templeton











Regression to Trend: The Latest Look at Long-Term Market Performance

Courtesy of Doug Short’s Advisor Perspectives.

Quick take: At the end of July the inflation-adjusted S&P 500 index price was 87% above its long-term trend, up slightly from 82% the previous month.


About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let’s apply some simple regression analysis (see footnote below) to the question.

Below is a chart of the S&P Composite stretching back to 1871 based on the real (inflation-adjusted) monthly average of daily closes. We’re using a semi-log scale to equalize vertical distances for the same percentage change regardless of the index price range.

The regression trendline drawn through the data clarifies the secular pattern of variance from the trend — those multi-year periods when the market trades above and below trend. That regression slope, incidentally, represents an annualized growth rate of 1.79%.

Regression to Trend

The peak in 2000 marked an unprecedented 142% overshooting of the trend — nearly double the overshoot in 1929. The index had been above trend for two decades, with one exception: it dipped about 15% below trend briefly in March of 2009. At the beginning of August 2016, it is 87% above trend, near the top of the 69% to 91% range it has hovered in for the past 33 months. In sharp contrast, the major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be around the 1151 level.

Incidentally, the standard deviation for prices above and below trend is 40.6%. Here is a close-up of the regression values with the regression itself shown as the zero line. We’ve highlighted the standard deviations. We can see that the early 20th century real price peaks occurred at around the second deviation. Troughs prior to 2009 have been more than a standard deviation below trend. The peak in 2000 was well north of 3 deviations, and the 2007 peak was around two deviations, the same level as the latest data point.

Stanrdard Deviations


Footnote on Calculating the Regression: The regression on the Excel chart above is an exponential regression to match the logarithmic vertical axis. We used the Excel…
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China PMI Crosses Into Positive Territory, But Barely

Courtesy of Mish.

The Markit China Manufacturing PMI crossed into positive territory, but barely. This is the first positive reading in operating conditions since February 2015.

July survey data signalled a renewed upturn in operating conditions faced by Chinese manufacturers, with output, new orders and buying activity all returning to growth. However, employment continued to decline and at a solid pace, which in turn contributed to the quickest rise in outstanding business since March 2011. Meanwhile, increased prices for raw materials led to a marked rise in average input costs, which companies generally passed on to clients in the form of higher output charges.

Key Points

  • Renewed expansions in output, new orders and purchasing activity
  • Payrolls cut again and a solid rise in backlogs of work was recorded
  • Marked increases in input costs and output charges

Comment

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Manufacturing PMI came in at 50.6 for July, up significantly by 2.0 points from the reading for June, marking the first expansion since February 2015. The sub-indexes of output, new orders and inventory all surged past the neutral 50-point level that separates growth from decline. This indicates that the Chinese economy has begun to show signs of stabilizing due to the gradual implementation of proactive fiscal policy. But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued.”

China PMI

China PMI 2016-07-31

Comment on the Comment

There were signs of stabilization in 2015, 2014, 2013, and 2012. So let’s not get excited over a one month expansion that is barely positive.

Where this all heads is more likely to depend on the global economy than internal demand in China. Export demand is as likely to weaken as anything else.

A global trade war may be on the horizon regardless of who wins the US election in November.

Mike “Mish” Shedlock

[Original article published here.]





Is War Inevitable In The South China Sea?

Courtesy of ZeroHedge. View original post here.

Authored by Pepe Escobar, originally posted Op-Ed via RT.com,

Since the recent ruling by The Hague in favor of the Philippines and against China over the South China Sea, Southeast Asia has been engulfed on how to respond. They dithered. They haggled. They were plunged into despair.

It was a graphic demonstration of how “win-win” business is done in Asia. At least in theory.

In the end, at a summit in Vientiane, Laos, the 10-nation Association of Southeast Asian Nations (ASEAN) and China finally settled for that household mantra – “defusing tensions”.

They agreed to stop sending people to currently uninhabited “islands, reefs, shoals, cays, and other features” after ASEAN declared itself worried about land reclamation and “escalations of activities in the area”.

And all this without even naming China – or referring to the ruling in The Hague.

China and ASEAN also pledged to respect freedom of navigation in the South China Sea (which Washington insists is in danger); solve territorial disputes peacefully, through negotiations (that happens to be the official Chinese position), also taking into consideration the UN Convention on the Law of the Sea (UNCLOS); and work hard to come up with a Code of Conduct in the South China Sea (that’s been going on for years; optimistically, a binding text will be ready by the first half of 2017).

So, problem solved? Not really. At first, it was Deadlock City. Things only started moving when the Philippines desisted to mention The Hague in the final statement; Cambodia – allied with China – had prevented it from the start.

And that’s the heart of the matter when it comes to ASEAN negotiating with China. It’s a Sisyphean task to reach consensus among the 10 members – even as ASEAN spins its role as the perfect negotiation conduit. China for its part prefers bilaterals – and has applied Divide and Rule to get what it wants, seducing mostly Laos and Cambodia as allies.

That threat by a peer competitor

The strategic geopolitical centrality of the South China Sea is well known: A naval crossroads of roughly $5 trillion in annual trade; transit sea lanes to roughly half of global daily merchant shipping, a third of global oil trade and two-thirds of all liquid natural gas (LNG) trade.

It’s also the key hub of


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Breaking News And Best Of The Web

Courtesy of John Rubino.

Doug Noland and Jim Grant on the global credit bubble. The Telegraph on negative interest rates. US and Chinese numbers disappoint. Most financial markets directionless on first day of August. Oil, however, still falling, now back in technical bear market. Polls give Clinton slight edge but very close in battleground states.

Best Of The Web

Weekly commentary: Bubble battles – Credit Bubble Bulletin

Jim Grant is bullish on gold, bearish on Craft – Barron’s

Negative interest rates: necessary evil or symbol of greed? – Telegraph

IMF admits disastrous love affair with the euro – Telegraph

Biggest companies in the S&P 500 use made-up earnings numbers – MarketWatch

This is how independent central banks are – Gold Republic

Why real reform is impossible – OfTwoMinds.com

Plutocracy, then and now – the lesser of two evils – Jesse’s Cafe Americain

How to profit form these massive, Brexit-induced trends – Casey Research

5 reasons why Trump will win – Michael Moore

An upside down world – Financial Sense

IceCap asks what happens when the bond bubble finally pops – Zero Hedge

It’s all connected – Globe And Mail

—————————————————————–

Breaking News

The Economy

8/01    US factory activity dips, construction spending weak – Yahoo!

8/01    Growing oil glut shows investors theres’ nowhere to go but down – Bloomberg

8/01    Did Germany just blink? – Wolf Street

8/01    The Fed that cried wolf – Seeking Alpha

8/01    Abe’s fiscal plan follows a long road of packages that failed – Bloomberg

8/01    Skewed interest rates – Talk Markets

8/01    CSLA, like Gundlach, warns of “nasty surprise” amid negative rates – ValueWalk

8/01    “Time’s up – the pain must begin now” – Zero Hedge

8/01    italian banks crash despite ‘all clear’ from EU stress tests – Zero Hedge

8/01    Satyajit Das slams policymaker ignorance – Zero Hedge

8/01    


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Yuan Strengthens Most Since 2010 As China Manufacturing Spikes To 17-Month Highs AND Tumbles To 7-Month Lows

Courtesy of ZeroHedge. View original post here.

In a miracle of modern goal-seeking, China’s Manufacturing PMI clung to within an inch of ‘stable’ 50 level for the 20th month (actually missing expectations of 50.0, printing 49.9) But while manufacturing is its lowest since Feb, the non-manufacturing PMI jumped to 53.9 – its highest since Dec 15. Even better, just 45 monutes after this data, Caixin released their manufacturing PMI data which smahed expectations, surging to 50.6 – its highest since Feb 2015. Following the notable USD weakness on Friday (thanks to BoJ disappointment), and the apparent recovery of the Chinese economy (just need another trillion or two of credit to keep the dream alive), PBOC strengthened the Yuan fix by 0.35% – the most since mid-June… extending the 9-day gain to the most since Sept 2010.

Manufacturing slipped to a 5-month low…

Services hits 7-month (2016) highs…

But Caixin Manufacturing (weighted more towards smaller-caps rather than official PMI’s weighting towards SOEs) surged to 19 month highs… thanks to the quickest rise in outstanding business since March 2011.

Commenting on the China General Manufacturing PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Manufacturing PMI came in at 50.6 for July, up significantly by 2.0 points from the reading for June, marking the first expansion since February 2015. The sub-indexes of output, new orders and inventory all surged past the neutral 50-point level that separates growth from decline. This indicates that the Chinese economy has begun to show signs of stabilizing due to the gradual implementation of proactive fiscal policy. But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued.”

Evercore ISI notes the following a China’s most crucial recent developments… 

  • “Severe challenges” in the China economy says Beijing, worse than “persistent downward pressure” – their characterization of the last several months. 
  • Two components to this change.  One, managing expectations down. Two, showing the upcoming G20 (Sep 4-5) attendees that the officials are on the case. 
  • Conflicting Beijing comments.  Saying ‘foundation of stable economic development not solid’ – bad.   Then saying the ‘long-term positive trend in fundamentals has not changed’ – good.   
  • China budget deficit now 4.2% of GDP, vs. 2.2% in worst of 2008-09 global crisis amid a big


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What If?

Courtesy of ZeroHedge. View original post here.

Presented with no comment…

Source: Townhall.com





America’s Recent Achievements In The Middle East

Courtesy of ZeroHedge. View original post here.

Authored by Eric Zuesse,

Here are before-and-after pictures of what the U.S. government has achieved, in the Middle East:

What’s especially interesting there, is that in all of these missions, except for Iraq, the U.S. was doing it with the key participation of the Saud family, the royals who own Saudi Arabia, and who are the world’s largest buyers of American weaponry. Since Barack Obama came into the White House, the operations — Libya, Yemen, and Syria — have been, to a large extent, joint operations with the Sauds. ‘We’ are now working more closely with ‘our’ ‘friends’, even than ‘we’ were under George W. Bush.

As President Obama instructed his military, on 28 May 2014:

When issues of global concern do not pose a direct threat to the United States, when such issues are at stake — when crises arise that stir our conscience or push the world in a more dangerous direction but do not directly threaten us — then the threshold for military action must be higher. In such circumstances, we should not go it alone. Instead, we must mobilize allies and partners to take collective action. We have to broaden our tools to include diplomacy and development; sanctions and isolation; appeals to international law; and, if just, necessary and effective, multilateral military action. In such circumstances, we have to work with others because collective action in these circumstances is more likely to succeed.

So: ’we’ didn’t achieve these things only on our own, but instead in alliance with the royals of Saudi Arabia, Qatar, UAE, Kuwait, and other friendly countries, which finance jihadists everywhere but in their own country. And, of course, all of ‘us’ are allied against Russia, so we’re now surrounding that country with ‘our’ NATO partners before we do to it what we’ve previously done to Iraq, Libya, Yemen, and Syria. America is becoming even more ambitious, because of ‘successes’ like these in Iraq, Libya, Syria, Yemen, and Ukraine.

The United States has been the great champion of ‘democracy’ throughout the world. And these are are some of the results of that ‘democracy’. ‘We’ are spreading it abroad.

‘Our’ latest victory has been ‘our’ spreading it to Ukraine. No country is closer to Russia than that.

Inside America, the term that’s used for referring to anyone who opposes this spreading of


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If You Disagree With This Harvard Economist You May Be Stupid And A Racist

Courtesy of ZeroHedge. View original post here.

Shocked by the inexplicable realization that Americans are stubbornly unwilling to bow down and blindly accept the political and economic views of the educated elites in this country, Harvard Professor Gregory Mankiw recently took to the New York Times to pen an oped where he concluded that the only possible reason for the lack of conformity to his point of view is the stupidity and racism of the electorate.  An article by Adam Button at forexlive, called our attention to the recent oped which he described as a “dazzling display of contempt for the public from a Harvard professor who can’t believe that voters aren’t listening to the gospel of the economic elites.

Questioning why American’s object to increasing globalization, Professor Mankiw pointed to three main conclusions:

“The first is isolationism more broadly. Trade skeptics tend to think, for example, that the United States should stay out of world affairs and avoid getting involved in foreign conflicts.  They are not eager for the United States to work with other nations to solve global problems like hunger and pollution.”

“The second is nationalism. Trade skeptics tend to think that the United States is culturally superior to other nations. They say the world would be better if people elsewhere were more like Americans.”

“The third is ethnocentrism. Trade skeptics tend to divide the world into racial and ethnic groups and think that the one they belong to is better than the others. They say their own group is harder working, less wasteful and more trustworthy.”

In summary, Professor Mankiw concludes that “…isolationist, nationalist, ethnocentric worldview is related to one’s level of education…the more years of schooling people have, the more likely they are to reject anti-globalization attitudes.”  So if we understand Professor Mankiw correctly, we disagree with him because we’re stupid, and because we’re stupid we’re also necessarily racist.  Got it.  

Lest you think that Mr. Mankiw only holds contempt for American dissenters, he points out that the British people are stupid and racist as well:

“…the recent Brexit vote was strongly correlated with education.  Districts with a high percentage of college graduates tended to vote to remain in the European Union, while those with a small percentage tended to vote


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The Trouble with Trade

 

The Trouble with Trade

By John Mauldin, Thoughts from the Frontline 

“When goods don’t cross borders, armies will.”
– Frequently attributed to Frédéric Bastiat

“Free trade agreements are trade agreements that don’t stick to trade.”
– Ralph Nader

“The future has arrived. It’s just not evenly distributed yet.”
– William Gibson, circa 1993 in an interview (original version of the quote)

The political speech-fests are finally over. Republicans and Democrats conducted largely violence-free quadrennial conventions – but not because everyone loves each other. The disdain was palpable, both within and between the two parties.

On one topic, however, both campaigns agree: global free trade has jumped the shark. We haven’t seen this kind of protectionist rhetoric in a long time, at least from major party candidates. Globalization is taking the blame for a wide variety of ills. The trouble with all this dissing of globalization and free trade is that, like some generals, both major political parties are fighting the last war, not the ones we face today and tomorrow. And the Libertarian Party seems to think that the correct philosophy by itself will cure the problems, which it may do in the long run; but philosophy doesn’t pay the bills or create jobs in the short run.

However, we should recognize that aimless, disorganized criticism isn’t necessarily wrong. Real economic problems led to Donald’s Trump’s GOP nomination. Ditto for the strong Bernie Sanders run against Hillary Clinton. People aren’t just imagining their pain.

I have used the quote from William Gibson several times this year at the opening of the letter: “The future is already here. It’s just not evenly distributed yet.” I decided to do a little research on the quote and found that the popular version actually comes from an interview in the documentary Cyberpunk. The quote evolved over the next few years to today’s form. Most versions that you read, including the one I’d been using, did not have the final word yet at the end of the sentence. And yet (he wrote with a smile), for the purposes of today’s letter, that is the key word. We are going to talk about the negative public sentiment that…
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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

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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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 ...

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.

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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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