Author Archive for Zero Hedge

WTI Slides Below $63 After Surprise Crude & Gasoline Builds

Courtesy of ZeroHedge. View original post here.

WTI traded lower today (finding support around $63) as anxiety over the ongoing US-China trade deal weighed on global growth (demand) sentiment (after yesterday’s gains on OPEC/Saudi supply comments).

“Given the fact that the macro environment isn’t looking spectacular, oil is doing relatively well,” said Bart Melek, head of commodity strategy at Toronto’s TD Securities. “It’s very much marching to its own drumbeat here, with the supply side being supportive in the face of less risk appetite.”

Product draws have been shrinking and crude builds increasing recently, dragging investors’ eyes back to the ‘gluttiness’ of energy markets…


  • Crude +2.4mm (-1.3mm exp)

  • Cushing +871k

  • Gasoline +350k (-662k exp)

  • Distillates -237k (-158k exp)

API reported a surprise inventory build in crude and gasoline…

WTI traded back down to Sunday night futures opening levels today, hovering around $63 ahead of the API print and kneejerking lower after the data hit…

North Korea Slams “Fool Of Low IQ” Biden, Says Frontrunner Status Is ‘Laughable’

Courtesy of ZeroHedge. View original post here.

At a time when the relationship between the Trump Administration and Beijing has probably never been more tense, we imagine it’s only a matter of time before Beijing unleashes the ‘coordinated’ Facebook campaign to sabotage the Trump administration, a campaign presumably organized at the behest of Trump’s one-time presidential rival, Hillary Clinton.

But if/when that happens, don’t expect Pyongyang to play along. To wit, North Korea’s state broadcaster has, seemingly apropros of nothing, lashed out at Joe Biden, accusing the former vice president of being “a snob bereft of elementary quality as a human being” in a scathing editorial.


In the editorial, KCNA Biden’s grades from college, and for an incident where he memorably fell asleep at a speech by President Obama.  Meanwhile…

“He is self-praising himself as being the most popular presidential candidate. This is enough to make a cat laugh,” they said.

Initially, we were puzzled by that last sentence – ‘enough to make a cat laugh’. But if we had to guess at what it means, it’d be that Bidens’ frontrunner ambitions are so obviously ridiculous that even a dumb animal would find humor in his posturing.

Finally, according to the Bloomberg story about the comments, the North Koreans accused Biden of being a “fool of low IQ.” He was also labeled a warmonger for “having the temerity to insult the supreme leadership.”

“Explicitly speaking, we will never pardon anyone who dare provoke the supreme leadership of the DPRK but will certainly make them pay for it,” they said.

Is the North Korean state media simply trying to butter up President Trump (perhaps in the hopes that Washington eases on its denuclearization demands)? Or did Pyongyang get ‘the tap’ from a Beijing trying to disguise its own growing hostility toward Trump.

Or maybe Trump and Kim were being sincere about their friendship.

Tesla Slides After Morgan Stanley Slashes “Bear Case” Price Target To Just $10

Courtesy of ZeroHedge. View original post here.

After Tesla shares plunged below $200 for the first time in years yesterday with Wedbush calling the company a "code red situation", another sell side analyst has taken the machete to his numbers this morning and is embracing the cold reality as long time bull Morgan Stanley slashed its bear case on the company to just $10 this morning from $97. This has caused shares to again slip under the Mendoza line in the pre-market session. The company printed a fresh 52 week low yesterday of $195.25. 

Morgan Stanley's Adam Jonas opened his note by reminding readers that the company's 5 year CDS is at 674 vs. Ford at 200, saying that Tesla "has among the widest ranges of outcomes and uncertainty of any major auto firm". With MS's bear case at $10 and other clinically insane optimistic analysts on the name predicting $4,000 per share, that's one assertion Jonas is clearly right about. 

Jonas slashed his price target for the company's bear case from $97 to just $10, "driven primarily by our concerns

around Chinese demand for Tesla products." But what about Tesla mobility?

First, Jonas asks if a collapse in the stock price could become a self-fulfilling prophecy among counterparties and employees. He also calls into question the year's "sharp deceleration in demand":

We have long held that Tesla’s share price performance is driven by: demand for its products, ability to generate cash flow, and access to capital markets. This year’s sharp deceleration in demand has led to a substantial curtailment of the company’s ability to self-fund through free cash flow generation, at the margin potentially impacting the firm’s access to capital. Tesla’s recent $2.7bn equity and convertible debt raise may provide an extra year of liquidity to run a business of this size and cash consumption. However, Tesla may now find itself in a cycle where a lower share price may itself contribute to a potential deterioration of employee morale as well as potentially increased counterparty risk with both customers and business partners (suppliers,governments)… potentially further impacting fundamentals.

He then reminds the Musk collective of the importance of demand, or lack thereof,…
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Global Markets A “Sea Of Green” After Trump Temporarily Eases Huawei Restrictions

Courtesy of ZeroHedge. View original post here.

It's not exactly clear what prompted today's dramatic U-turn reversal in overnight markets, but this morning stocks and futures around the globe are a sea of green with chipmakers and Asia-exposed stocks among the best performers, with some pointing the finger at Washington's decision to temporarily ease trade restrictions imposed last week on China’s Huawei even though the move was largely procedural, while the trade-war driven turbulence that has dominated markets showed no signs of abating.

S&P and Nasdaq futures all traded in the green after the U.S. granted limited relief for consumers and carriers using Huawei Technologies, a day after the White House’s moves against the Chinese telecom giant battered stocks. The result has been the biggest monthly drop in the Semiconductor Index – which confounded so many with its oblivious levitation in the first 4 months of 2019 – as traders finally realized that pain is coming.

The overnight respite came after news on Monday that Washington allowed Huawei to purchase American-made goods to maintain existing networks and provide software updates to existing Huawei handsets until Aug. 19. What happens next is unclear.

“The Huawei extension is in some sense providing a relief rally as it eases the worst fears of market participants that we are drifting towards a fully-fledged trade war,” said Aberdeen Standard’s head of global strategy, Andrew Milligan.

Extension aside, an angry China continues to dig in, and overnight Beijing warned about “unwavering resolve” to fight U.S. “bullying,” saying it could retaliate after U.S. President Donald Trump blacklisted Huawei.

In Europe, the STOXX 600 edged higher, with Germany’s DAX rising 0.6%, while France’s CAC 40 climbed 0.2% in early trading, while tech firm lead the advance. Chipmakers Infineon and STMicro were up 1.4 to 3.5%, and the tech sector rising more than 1% after losing almost 3% on Monday. The autos and suppliers sector was another top gainer, up as much as 1.1%. In London, heavyweights HSBC, Prudential and Standard Chartered boosted the blue-chip index as markets on hopes if an easing in the trade tensions. Daimler got a boost after German newspaper Handelsblatt reported the company was looking to cut administration costs by…
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Why The “World’s Most Important Gauge” Could Create Havoc

Courtesy of ZeroHedge. View original post here.

Authored by Bloomberg's Michael Msika

Another hit. It seems every day carries some news destined to make U.S.-China trade negotiations more difficult, with the ban against Huawei the latest example. The effects of the spat have started to show on currency markets and could deliver collateral damage, and European exporters could be big losers.

The escalation of tensions has pushed China’s yuan to year-lows against the dollar, near the 7.0 level seen as critical by several strategists at JPMorgan and Nordea. Further weakness could hurt Chinese asset prices and risk appetite globally, making it “the most important gauge worldwide currently,” Nordea says, and something that European equity investors can’t ignore.

The trade confrontation could drag on, according to Sebastien Galy, a senior macro strategist at Nordea Investment Funds. The next G20 meeting (June 28-29) could be decisive, and if no deal is in sight, the market will likely speculate on a devaluation of the renminbi and higher tariffs, providing a shock to the equity market, Galy writes.

Indeed, the U.S.-China dispute is the most significant hit to the early 2019 consensus of a cyclical global recovery, JPMorgan strategists write, adding that the Chinese Central Bank has been willing to act to prevent further weakness in the yuan.

“While it seems unlikely that China will let the yuan trend lower too durably beyond the 7 threshold, it appears equally unlikely to us that they will not be tempted to do so, just for a while, to test some nerves a bit,” Makor strategist Stephane Barbier De La Serre writes. The strategist has a 7.15 target for the currency, which would have a material impact on global equities, particularly on cyclicals and tech stocks.

The yuan has also lost ground against the euro, which is bad news for European firms selling goods overseas. JPMorgan strategists closed their overweight recommendation on European exporters this week, arguing the euro could be bottoming out.

Boeing Shares Spike On Report ‘Bird Strikes’ Involved In Ethiopian Airlines Crash

Courtesy of ZeroHedge. View original post here.

Boeing shares are spiking, lifting the Dow, after the Wall Street Journal reported that US aviation authorities now believe a 'bird strike' may have triggered the sequence of events that led to the crash of Ethiopian Airlines flight 302.

Four weeks after faulty sensor data led a 737 MAX jet to crash in Indonesia last year, a high-ranking Boeing Co. executive raised and dismissed the possibility of a bird collision triggering a similar sequence of events that could cause a second accident.

Fears about the potential for a 'bird strike' to damage sensors on the jet appear to have been validated, though Ethiopian authorities aren't convinced.

US aviation authorities regard a collision with one or more birds as the most likely reason for trouble with the sensor, according to industry and government officials familiar with the details of the crash investigation.

Ethiopian authorities disagree but haven’t provided any specifics to support their conclusion.

Boeing shares spiked 3% in premarket trading on the news, though WSJ's report doesn't exactly absolve Boeing. The company must now answer why, if senior executives feared 'bird strikes' could be a problem, it persisted in allowing MCAS, its anti-stall software that's believed to have contributed to two deadly crashes, to rely on only one sensor.


Boeing dragged the Dow higher.


Algos clearly interpreted the news as positive…after all, every American who has seen the movie 'Sully' probably remembers how much damage a flock of birds can do.

Blain: “It Feels Like A Shooting Match Is Imminent”

Courtesy of ZeroHedge. View original post here.

Blain’s Morning Porridge, submitted by Bill Blain of Shard Capital

“He knew everything about literature, except how to enjoy it…”

Waves of negative news headlines battering markets. Might have to wear a hat..

Huawei – Trade War Threat Level Rises

The Huawei embargo raises the trade war threat from undeclared to imminent shooting match. While it’s not quite “bullets fired at Archduke’s car”, it’s getting close. It feels like there is something of a tedious inevitability developing – a bellicose Trump realizes his political future depends on winning, and the Chinese refuse to lose face. Is it already too late to rein back? 

Huawei being effectively barred from Occidental markets has triggered all kinds of market fears: a “digital iron-curtain”, the threat of an economic cold tech war, broken global supply chains, and knock-on effects we can only begin to imagine. It’s the End of Globalisation – scream the media. The Chinese hint at reprisals. The “temporary exemptions” granted last night by the US are just that – temporary: they won’t undo the sudden need of millennials to dump their Huawei phones. The damage has been done.  Who will the Chinese punish in return?

Markets are now rife with speculation about “ripple” effects damaging tech dependent initiatives from autonomous cars, streaming, digitisation, and booking apps, triggering all kinds of real-world economic pain in sectors like tourism and luxury goods. While the market is fretting about how America will shod itself as tariffs are slammed on shoes made in China, it might be time to reassess market sectors where we expected long-term and ongoing China expansion, rising domestic consumption and demand to drive growth – I’m thinking areas from aviation, autos, machinery and plant, and energy. And, what are the implications for the UK – where the Chinese are building our nuclear power stations?

This doesn’t end well.

Powell wonders about Corporate Debt

In a fascinating Wall Street Journal article reporting Jerome Powell’s comments on the dangers of rising corporate debt to the US economy, he says he doesn’t rank the danger alongside what sub-prime mortgages did in 2007. Fair enough – but I think he may be underestimating the chain of consequences that…
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FT Editors Warn Washington’s “Coercive Steps” Against Huawei Are “Seriously Misguided”

Courtesy of ZeroHedge

The FT's editorial board rarely agrees with the Trump administration, and when it comes to Washington's decision to blacklist Huawei, the paper's editors believe Trump is making a massive miscalculation.

FT reporters warned yesterday that Google's decision to cut Huawei off from most Android-related offerings represented a "hammer blow" to the telecoms giant's rapidly expanding smartphone business.


Analysts quoted by the South China Morning Post on Tuesday warned that "as far as overseas markets go, this move just turned Huawei's upcoming phones into paperweights."

Beijing, for its part, has sworn to cultivate whole supply chains and app-based ecosystems out of nothing to insulate Huawei from Washington's blacklisting. In this, the FT editors apparently believe the Chinese might succeed. 

And the worst possible outcome of the Huawei crackdown – for the US, at least – would be for Huawei to survive by building a fully independent supply chain. That could help 'decouple' the American and Chinese tech industries, which are deeply intertwined due to the components trade.

They amount to an effort to decouple the US and Chinese tech sectors, leading to a bifurcation of the global industry. This reflects a view reaching beyond the Trump White House and deep into the US security establishment that President Xi Jinping’s China is a malign actor, and that its technology is on course to outstrip America’s. Indeed, the US steps appear part of an attempt to constrain China’s rise.

Echoes of the Soviet era abound, but Soviet industry was never entwined with America’s in the way China’s is. The latest US moves seem designed to cripple or crush one of the first Chinese tech companies to become globally competitive — and one that relies on American suppliers in both mobile phones and network equipment.

Other countries might also chafe at Washington once again imposing its will on global markets, which could galvanize support for an alternative to the US-dollar-based global financial system. And if China is forced to divorce its tech industry from the American tech industry, it could accelerate the 'splintering' of the Internet.

What's more, the European countries that have decided to tolerate the 'security risks' associated with allowing Huawei…
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Losing Access To Android Would “Turn Huawei Phones Into Paperweights”, Analyst Warns

Courtesy of ZeroHedge. View original post here.

Out of all the speculation about the fallout from Washington's Huawei blacklisting, this analyst comment offers perhaps the most spectacularly apt summation of what's in store for Huawei's smartphone business now that Google has suspended its Android developer license.

Here's the South China Morning Post:

"As far as overseas markets go, this move just turned Huawei’s upcoming phones into paperweights," said Bryan Ma, vice-president of client devices research at IDC Asia-Pacific. "The phones won’t be very useful any more without Google apps on them, and other apps will be unable to call on Google Play services."

Though Google has temporarily reversed this decision after the White House temporarily eased restrictions, that delay will only last 90 days. Though Huawei has already started building its own operating system, losing access to Android would make Huawei phones significantly less attractive to consumers.

This could be a huge boon for Samsung, the largest player in the global smartphone market, and even smaller Chinese firms like Xaomi stand to benefit, according to analysts. Huawei's shipments exploded 50% YoY during Q1, capping off a period of torrid growth for the company's smartphone business that saw it usurp the global No. 2 spot from Apple.


But it could soon surrender much of this advance. One student in Singapore said Google's decision to cut ties with Huawei made him think twice about buying a new Huawei phone.


He's decided to hold off on his purchase…for now, at least.

Some consumers are already shying away from Huawei because of future uncertainty. Germaine Wong, a postgraduate student in Singapore, recently considered purchasing a Huawei P30 smartphone to replace her current Samsung S7 Edge, but is now having second thoughts about using a Huawei device.

"I originally considered buying a Huawei P30 or P30+ for my next smartphone because the camera specifications are very good, and I’m already an Android user," Wong said. "But now I’m concerned about whether Huawei phones will be able to function optimally in the future, or if I will have the latest updates from Google."

For now, Wong has

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“Brutal Reminders” Loom: 7 Measures Suggest A Decade Of Low Returns For Stocks

Courtesy of ZeroHedge. View original post here.

Authored by Lance Roberts via,

“Price is what you pay, value is what you get.” – Warren Buffett

Just recently, I discussed the importance of valuations as it relates to investors who are close to retirement age. To wit:

“Unless you have contracted ‘vampirism,’ then you do NOT have 90, 100, or more, years to invest to gain ‘average historical returns.’ Given that most investors do not start seriously saving for retirement until the age of 35, or older, they have about 30-35 years to reach their goals. If that period happens to include a 12-15 year period in which returns are flat, as history tells us is probable, then the odds of achieving their goals are severely diminished.

What drives those 12-15 year periods of flat to little return? Valuations.”

Despite commentary to the contrary, the evidence is quite unarguable. As shown in the chart below, the cyclical nature of valuations and asset prices is clear.

In the short-term, a period of one year or less, political, fundamental, and economic data has very little impact on the market. This is especially the case in a late-stage bull market advance, such as we are currently experiencing, where the momentum chase has exceeded the grasp of the risk being undertaken by unwitting investors.

What investors most often overlook, due to this “short-termism” or the “fear of missing out,” is the risk being undertaken which will lead to less optimistic outcomes over the investment time frame of 10 to 20-years.

Just remember, a 20-year period of one-percent returns is indistinguishable from ZERO with respect to meeting savings goals. However, our focus today is looking at future returns over the next decade from current valuation levels which, again, are expected to be low to negative.

As I discussed previously in “You Carry An Umbrella In Case It Rains:”

“While daily, weekly, and monthly indications are useful, taking a look at ‘quarterly’ data can give us clues as to the ‘real risk’ investors are taking on at any given time. Is this the beginning

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Phil's Favorites

What China wants: 3 things motivating China's position in trade negotiations with the US


What China wants: 3 things motivating China's position in trade negotiations with the US

Courtesy of Penelope B. Prime, Georgia State University

Relations between the U.S. and China have deteriorated sharply in recent days after trade negotiations broke down, leading some to suggest we are on the cusp of a new “cold war.”

President Donald Trump blames the resumption of hostilities on China. Specifically, he and his negotiators say their Chinese counterparts backtracked on an agreement to change laws aimed at enforcing the ...

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Zero Hedge

White House Planned To Use Huawei As Trade 'Bargaining Chip'

Courtesy of ZeroHedge

If there was any lingering doubt that President Trump has treated Huawei like a 'bargaining chip' during trade talks with the Chinese, Bloomberg just put the issue to rest.

In a report sourced to administration insiders, BBG reported that the Trump administration waited to blacklist Huawei until talks with the Chinese had hit an impasse, because they were concerned that targeting Huawei would disrupt the talks.


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Kimble Charting Solutions

Commodities; Long-Term Bottom Being Created This Month?

Courtesy of Chris Kimble.

Is the Thomson Reuters Equal Weight Commodities creating a long-term bottom? What the index does at (3) over the next few weeks, will go a long way to answering this important question!

Commodities don’t have much to brag about over the past 8-years, as lower highs have taken place since the peak back in 2011. After the peak in 2011, they have created falling channel (1).

The index hit the top of this channel the prior two months at (2), creating back to back bearish reversal patterns.

Softness this month has the index testing 2017 lows and rising support at (3). While ...

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Insider Scoop

Off-Roaders Are In Buying Mood, BMO Says In Polaris Upgrade

Courtesy of Benzinga.

A long winter and the worst of the U.S.-China trade war may both be in the rearview mirror for off-road vehicle maker Polaris Industries Inc. (NYSE: PII), BMO Capital Markets said Tuesday.

The Analyst

Gerrick Johnson upgraded Polaris from Mark... more from Insider

Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

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

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

Then on Wednesday:

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


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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control


Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...

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DNA as you've never seen it before, thanks to a new nanotechnology imaging method

Reminder: We are available to chat with Members, comments are found below each post.


DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University


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More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism


The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...

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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 >>