Archive for the ‘High Mailing Priority’ Category

Cursed By Momentum

 

Cursed By Momentum

Courtesy of Tim Richards

Edgy Investors

Although most investors have no edge on the market there's a proportion of them that persist in trading actively, the main effect of which is to enrich their brokers. There are various explanations of why this occurs, but it seems to come down to some combination of inherent overconfidence and a perverse refusal to take account of negative information. 

This is particularly dangerous in calm periods such as those we’ve been experiencing in markets over the past few years.  In such times momentum strategies are particularly effective – and serve to supercharge the behavior of naturally overconfident individuals. The end results are usually not pretty…

Snow Business

We’ve covered the basic research into overconfidence here a number of times. Odean and Barber (see O is for Overconfidence) showed that the more investors trade, the more they tend to lose – high turnover investors spend more on fees and end up losing money relative to less active traders. In fact only the least active accountholders were able to generate a return in excess of an S&P500 index tracker.

In 2009 Mark Grinblatt and Matti Keloharju studied a bunch of Finnish traders in Sensation Seeking, Overconfidence and Trading Activity. In Finland all males have to take an Army psychometric test at age 20 – quite what the Finnish military is worried about isn’t clear, other than a tendency for adult male Finns to drink a lot, play chess and roll about naked in the snow, often all at the same time. The researchers then matched the results of these tests and driving violations to frequency of trading and – no surprise – found that overconfident, sensation seeking individuals were the most frequent traders.

Wrong But Right

As ever, the behavior of investors is conditioned by the times that they find themselves in. People tend to extrapolate the recent past into the indefinite future, which is fine when you’re dealing in the movements of tectonic plates, but less smart if you’re trading on the edge of an active volcano.  Given this it’s no surprise that momentum strategies – essentially


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The PhilStockWorld.com Weekly Webinar – 03-14-18

 

The PhilStockWorld.com Weekly Webinar – 03-14-18

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here

Major Topics:

00:01:56 Checking on the Markets
00:11:05 Active Trader
00:12:17 Indexes
00:20:27 Seeking Alpha Market News
00:25:59 S&P
00:32:09 Trade Ideas
00:41:36 CMG
00:45:43 Long-Term Portfolio
00:46:17 Short- Term Portfolio
00:49:01 Active Trader
00:55:42 KMI
01:07:01 RB
01:09:36 Petroleum Status Report
01:16:02 Active Trader
01:22:00 GDP Now
01:34:38 Trade ideas
01:37:27 WBA & CVS
01:55:42 Checking in the Markets

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!

 





Anthill 23: Bursting the Bitcoin bubble

 

Anthill 23: Bursting the Bitcoin bubble

File 20180313 30989 15jmdpj.jpg?ixlib=rb 1.1

via shutterstock.com

Courtesy of Annabel Bligh, The Conversation; Gemma Ware, The Conversation; Kelly Fiveash, The Conversation, and Will de Freitas, The Conversation

 


 

In this episode of The Anthill podcast from The Conversation, we’re delving into the world of Bitcoin. The cryptocurrency has come a long way since its launch by the mysterious person (or persons) Satoshi Nakamoto in 2008. The price of one Bitcoin hit a peak of more than US$19,000 in December 2017. It has since fallen below US$9,000.

Bitcoin has made a lot of headlines over the last year, but will it be the currency of the future? To find out, we spoke to professor of business history at Bangor University, Bernardo Batiz-Lazo, about what makes money money. He shared his doubts about Bitcoin – or any other cryptocurrency – going mainstream anytime soon.

And Larisa Yarovaya, lecturer in accounting and finance at Anglia Ruskin University, explains some of her recent research into the effect of US policy announcements on different cryptocurrencies. Her findings give some insights into whether or not they make good assets for investment. She also tells us how cryptocurrencies respond in different ways to the US dollar and gold.

For many, one of the big appeals of cryptocurrencies is the fact that they are not regulated by any governments. But different countries have responded in wildly different ways to the rise in popularity of Bitcoin. Initial coin offerings have been banned in South Korea, where regulators are considering shutting down local cryptocurrency exchanges. Meanwhile, the threat of regulation in China and elsewhere recently triggered a significant slide in Bitcoin’s value.

Russia, however, has been a hotbed of cryptocurrency innovation, where President Vladimir Putin wants to create infrastructure for the national adoption of virtual coins. And in Sweden there’s talk of releasing a national cryptocurrency.

The Conversation’s technology editor Kelly Fiveash spoke to lawyer Iwa Salami at the University of East London and Brian Lucey, finance expert at Trinity College Dublin, to take a closer look…
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The financial sector is professional gambling in action

 

The financial sector is professional gambling in action

File 20180313 30994 1d202l8.jpg?ixlib=rb 1.1

Shutterstock/f8studio

Courtesy of Chris Brady, University of Salford

The American journalist and poet Ambrose Bierce wrote in his 1906 satire The Devil’s Dictionary that “the gambling known as business looks with severe disfavour on the business known as gambling”.

That phrase has a particular ring of truth about it when one starts to think about the “casino banking” that caused the financial crisis almost ten years ago. But that term was – and still is – a slur on casinos. If the financial services industry was as well-regulated and as well understood as the gambling industry, the financial collapse may have been avoided.

At the root of all financial bubbles, scams and scandals is the self-proclaimed “professionalism” of the financial sector – what Nobel Prize-winning economist Freidrick von Hayek referred to as “the pretence of knowledge”.

Portrait of Friedrich von Hayek. Wikipedia

Professionalism and distraction

Von Hayek admitted to the futility of trying to make economics “scientific” in the accepted sense of the word. Like any profession, the financial sector seeks to clothe its “pretence of knowledge” in the language it uses to distract its customers from recognising that it is simply an arm of the gambling industry. Substitute betting jargon for finance-speak and the reality becomes clearer. The majority of actions in the finance sector are bets.

The finance sector has a vested interest in dissociating itself from the gambling industry itself. In his book, The Poker Face of Wall Street, finance expert Aaron Brown said:

Gambling lies at the heart of economic ideas and institutions, no matter how uncomfortable many people in the financial industry are with the idea.

Indeed, in the immediate aftermath of Tulipmania (the manic buying of tulips and the ridiculous prices they achieved in the mid 17th-century Netherlands) the courts refused to rule in favour of sellers trying to enforce contracts for sale on the grounds that it was a “gambling operation”.

Bluffing and confidence

Not…
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The Last Breakout…

Courtesy of Lance Roberts, Real Investment Advice

Well, I jinxed it.

In this past weekend’s missive I wrote:

“There are generally two events that happen every year – somebody forgets their coat, goggles or some other article of clothing needed for skiing, and someone visits the emergency clinic with a minor injury.”

The tradition continues as my wife fell and tore her ACL. The good news is she tore the right one three years ago, and after surgery is stronger than ever. Now she will get to do the left one.

But, while I was sitting in the emergency clinic waiting for the x-rays to be completed, I was sent a chart of the technology sector with a simple note: “Chart Of The Year.”

Chart Of The Year?

Yes, the technology sector has broken out to an all-time high. Yes, given the sector comprises roughly 25% of the S&P 500, it suggests that momentum is alive and well keeping the “bullish bias” intact. (We removed our hedges last week on the breakout of the market above the 50-dma on a weekly basis.)

This is why we are currently only slightly underweight technology within our portfolio allocation models as shown below.

But why “the chart of the year” now? As shown below the technology sector has broken out to all-time highs several times over the last 18-months. What makes this one so special?

The Last Breakout

As stated, breakouts are indeed bullish and suggest higher prices in the short-term. This time is likely no different. However, breakouts to new highs are not ALWAYS as bullish as they seem in the heat of the moment. A quick glance at history shows there is always a “last” break out of every advance.

1999-2000

2007-2008

As I discussed yesterday, the technology sector is once again the darling of “Wall Street” just as it was at the peak of the previous two bull-markets.

“When we compare the fund to Shiller’s CAPE ratio, not surprisingly, since Technology makes up a quarter of the S&P 500


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“Flippy” The Burger-Flipping Robot Taken Offline After First Day

Courtesy of Zero Hedge

The Robot uprising has had a minor setback as a Pasadena burger joint was forced to take its brand new burger-flipping robot, "Flippy," offline after the first day due to slow performance, reports USA Today.

Except, it wasn't Flippy's fault.

The restaurant, Cali Burger, says that while Flippy held up its end of the deal – there weren't enough to prepare the patties fast enough prior to cooking, nor finish the burgers with all the fixings, according to Chief Technology Officer for the Cali Group. 

The robotic arms of "Flippy's Kitchen" is still on static display at Caliburger. The stage where patrons would normally line up for a peek was dark when USA TODAY visited Thursday, and there was little sign that Flippy would be coming back, but just when was "TBA" — or to be announced. The restaurant was operating without the robot using its regular, human-run kitchen

Meanwhile, Flippy's "human helpers are also getting extra training to help the robot keep up with demand." In other words, the kids looking forward to that $15 / hour minimum wage in 2022 are learning how to dig their own graves more efficiently. 

Goodbye jobs

As automation and robotics steadily replace cashiers, cooks, assembly line workers, taxi drivers and all sorts of other vocations, low income workers are the first in line to feel the pain. 

Last November we reported on Walmart's new DARPA-funded autonomous cleaning robot, dubbed Emma; an A.I.-navigated system capable of operating floor care equipment on night shifts which can clean an entire store without human interaction.

"Emma" – test bedded in five Walmart locations, was developed by San Diego-based startup Brain Corp., which works with the Defense Advanced Research Projects Agency (DARPA) to develop novel machine learning algorithms that focus on taking jobs from middle class Americans. BrainOS is the company’s flagship product that enables robots to “perceive their environments, control motion, and navigate using visual cues and landmarks, while seeing and avoiding people and obstacles”.

The machine resembles a traditional scrubber but comes


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What really fueled the bull

 

What really fueled the bull

Courtesy of 

Both earnings and revenue growth have kept pace with the astonishing post-crisis bull market that is today celebrating nine years since the bottom. Buybacks helped, but they weren’t the whole story. Corporations got lean and mean, setting up big earnings growth from the economic nadir. Additionally, whole new industries like social media and the iPhone app economy took flight. US companies also penetrated into global markets and found entirely new avenues of growth opportunity.

But one other element has also been at play – negative emotions around stocks and utter disbelief that anything could go right again. There were lots of authoritative voices throughout the post-crisis recovery telling you not to believe your eyes and that capitalism as a mechanism for investment gains was going to be fundamentally ruined forever. This premise turned out to be very stupid.

But millions of investors – both amateur and professional – had succumbed to it. They were susceptible because two 50% crashes for the stock market occurring inside of a single eight year period had challenged our collective faith in the future and in the system. Some people came around sooner than others.

Here’s my pal Liz Ann Sonders of Charles Schwab with an important observation:

Suppressed sentiment was likely a function of the muscle memory of the financial crisis and the severity of the attendant bear market—especially given it occurred within a decade of the prior brutal bear market starting in 2000.

AAII’s bullish percentage has averaged less than 37 during the current bull market; which is in contrast to an average of more than 44 during the prior bull market which ended in 2007.

U.S. equity fund flows, even including the much more popular equity ETFs, on a net cumulative basis have remained in negative territory during the entire bull market (you have to go back to pre-financial crisis to find positive cumulative flows).

My personal opinion is that the pervasive negativity has probably lengthened the cycle. Even as we were making fresh record highs in 2013, five years ago, people still spent the


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The PhilStockWorld.com Weekly Webinar – 03-07-18

 

The PhilStockWorld.com Weekly Webinar – 03-07-18

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here

Major Topics:

00:01:50 Checking on the Markets
00:12:53 Seeking Alpha Market News
00:16:09 Options Opportunity Portfolio
00:20:02 Butterfly Portfolio
00:20:23 Money Talk Portfolio
00:20:53 Short Term Portfolio
00:21:41 Long Term Portfolio
00:25:45 S&P 500
00:29:20 Active Trader
00:36:17 CELG
00:49:56 HRB
00:44:57 OIH
00:51:05 COST
00:53:04 VRX
00:54:07 Trade Ideas
00:57:53 SWN
01:02:28 Active Trader
01:11:52 Beige Book
01:14:10 Active Trader
01:32:53 Indexes
01:37:01 More Charts
01:38:04 Portfolios
01:39:38 More Trade Ideas

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!

 





Fear and Greed are Undefeated

 

Fear and Greed are Undefeated

Courtesy of 

One of the funnier conceits of the modern investing era, in which a third of the stock market’s assets are held in passive or index funds, is that the market may become too efficient and, as such, would eliminate all opportunity for people doing fundamental research.

I can safely report that we’re in no danger of this, my friends.

Even though machines, software and rules-based investment vehicles currently dominate the marketplace, we must never forget that the end-owners of the money they’re running are people. Insane, emotional, irrational people who will find ways to make both good and bad decisions, inconsistently, regardless of where their capital is held.

Here’s one version of this incontrovertible truth, a dispatch from Trump Country, USA via Bloomberg:

Across middle America, in the towns big and small that voted overwhelmingly for Donald Trump, his most ardent, and financially comfortable, backers are opening stock-market accounts or beefing up existing ones, according to interviews with more than a dozen advisers and brokers. They were spurred on by a stream of presidential tweets crowing about, and taking credit for, the gains throughout 2017 and the strength of the economy, and they remain undaunted now as the rally sputters and the tweeting dissipates.

The brokers and advisors seem to be doing their best to interject some reason or common sense, but to no avail…

“It has really made a difference in attitudes,” said Jimmy Waggoner, an investment adviser with VisionPoint Advisory Group in Sioux Falls. So much so that in Covington, Rob Smith, an adviser at Edward Jones there, said he tries to tap down on the enthusiasm. “I dissuade people from thinking any specific politician or even event will have that much of a long-term positive or negative effect on markets.”

Hopefully, these people didn’t treat Obama’s election as a sell signal. Because, despite his “tone” about Big Business, stocks did better than under almost every other president who’s ever been in office.

“I hear it every day,” said Jimmy Freeman, a financial adviser at Edward Jones in


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Amazon Bank: Bezos To Offer Amazon-Branded Checking Accounts

Courtesy of Zero Hedge

Over the past year, the Wall Street Journal has published scoop after scoop about the innerworkings of Amazon.com – publishing revealing stories about everything from the company's plans to compete with UPS and Fedex to its decision to slash prices at Whole Foods.

Today the Murdoch-controlled paper (which competes with the Bezos-owned Washington Post) published its latest bombshell: Amazon is currently in talks with several of the country's largest banks to launch a checking-account-like product, in what appears to be Bezos' initial foray into yet another industry, perhaps the biggest of them all: banking.

Though plans are still in their early stages, the talks with financial firms are focused on creating a product that would appeal to younger customers and those without bank accounts. Whatever its final form, the initiative "wouldn’t involve Amazon becoming a bank" WSJ sources explained, which is somewhat odd since that is precisely what Amazon hopes to become by offering checking accounts, with loans to follow and iBanking services and prop trading on deck next.

Amazon

As a reminder, Amazon already offers an Amazon-branded Visa card that, among other benefits, allows customers to save money on purchases at Whole Foods, and on Amazon's store, with a 5% cash back on Prime purchases. A checking account would only further entrench the Seattle-based e-commerce giant in the lives of its customers.

If the product emerges, it would further inject Amazon into the lives of those who shop on its website and at its Whole Foods grocery stores, read on its Kindles, watch its streaming video and chat with Alexa, its digital assistant. Offering a product that is similar to an own-branded bank account could help reduce fees Amazon pays to financial firms and provide it with valuable data on customers’ income and spending habits.

The company’s latest push also answers a question that bank executives have been asking with increasing worry: When will Amazon show up on their turf?

With millions of customers, troves of data, access to cheap capital and seemingly unlimited leeway from its investors to enter new businesses, Amazon is a fearsome competitor. Its more-than $700 billion market value eclipses the combined value of JPMorgan and Bank of America Corp , the two biggest


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Zero Hedge

Saxo Bank: Reality-Check For The Euro Area Economy

Courtesy of ZeroHedge. View original post here.

Authored by Saxo Bank, Head of Macro Strategy, Christopher Dembik via TradingFloor.com,

The rosy "strong euro area growth" narrative is done. As a result of a lower than expected ZEW index (-8.2 points in April versus 5.1 points in March), Citi Economic Surprise Index for the Eurozone is sinking further into negative territory, reaching its lowest level since 2012. The index is currently the worst performer among G10, at minus 87.8. This collapse added downward pressure on European stocks during Q1 and ...



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Chart School

Short Opportunity II

Courtesy of Declan.

The first chance for a short play got burned but there is a second one on offer for the S&P.

The S&P tagged channel resistance and while today's reversal off resistance didn't amount to a big percentage loss it did register as a distribution day. There wasn't any significant technical change so if this short does evolve it will do so with risk measured on a move above 2,717.


The Nasdaq may match a 'bearish evening star' but if this is the case there has to be a significant move lower tomor...

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Phil's Favorites

What's unconscious bias training, and does it work?

 

What's unconscious bias training, and does it work?

Courtesy of Calvin K. Lai, Washington University in St Louis

A Starbucks manager in Philadelphia called the police on two black men on April 13, leading to their arrest. The two men, who had been waiting for a friend at the store, were released without being charged.

Starbucks has since apologized and announced it will close more than 8,000 of its stores in the United States to provide “racial bias” training for its 175,000 ...



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Insider Scoop

30 Stocks Moving In Thursday's Mid-Day Session

Courtesy of Benzinga.

Gainers
  • AGM Group Holdings Inc. (NASDAQ: AGMH) shares jumped 27 percent to $7.9992 after rising 26 percent on Wednesday.
  • OpGen, Inc. (NASDAQ: OPGN) shares climbed 23.4 percent to $2.58. OpGen completed rapid testing clinical trial in Colombia and expanded international operations.
  • PLx Pharma Inc. (NASDAQ: PLXP) gained 15.6 percent to $4.449.
  • Monaker Group, Inc. (NASDAQ: ...


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Digital Currencies

Only 0.04% Of Taxpayers Are Reporting Any Bitcoin Gains To The IRS

Courtesy of Zero Hedge

With the US tax deadline just one day away, crypto investors who traded actively during the market's run-up and inevitable meltdown should have a lot of activity to report to the IRS.

But according to a survey conducted by Credit Karma, only a handful of people who have filed their taxes using Credit Karma's tools have reported bitcoin holdings or holdings of some other cryptocurrency - fewer than 100 out of a total of 250,000 filers, or a whopping 0.04% in total.

In all likelihood, this means that (tens of) thousands of bitcoin traders are refusing to pay the IRS, either betting on the anonymity of the blockchain to conceal th...



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ValueWalk

Buffett At His Best

By csinvesting. Originally published at ValueWalk.

Bear with me as I share a bit of my history that helped me create SkyVu and the Battle Bears games. The University of Nebraska gave me my first job after college. I mostly pushed TV carts around, edited videos for professors or the occasional speaker event. One day, Warren Buffet came to campus to speak to the College of Business. I didn’t think much of this speech at the time but I saved it for some reason. 15 years later, as a founder of my own company, I watch and listen to this particular speech every year to remind myself of the fundamentals and values Mr. Buffett looks for. He’s addressing business students at his alma mater, so I think his style here is a bit more ‘close to home’ than in his other speeches. Hopefully many of you find great value in this video like I have. Sorry for the VHS...



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Kimble Charting Solutions

The Stock Bull Market Stops Here!

 

The Stock Bull Market Stops Here!

Courtesy of Kimble Charting

 

The definition of a bull market or bull trends widely vary. One of the more common criteria for bull markets is determined by the asset being above or below its 200 day moving average.

In my humble opinion, each index above remains in a bull trend, as triple support (200-day moving averages, 2-year rising support lines, and February lows) are still in play ...



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Members' Corner

Cambridge Analytica and the 2016 Election: What you need to know (updated)

 

"If you want to fundamentally reshape society, you first have to break it." ~ Christopher Wylie

[Interview: Cambridge Analytica whistleblower: 'We spent $1m harvesting millions of Facebook profiles' – video]

"You’ve probably heard by now that Cambridge Analytica, which is backed by the borderline-psychotic Mercer family and was formerly chaired by Steve Bannon, had a decisive role in manipulating voters on a one-by-one basis – using their own personal data to push them toward voting ...



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Biotech

How your brain is wired to just say 'yes' to opioids

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

How your brain is wired to just say ‘yes’ to opioids

A Philadelphia man, who struggles with opioid addiction, in 2017. AP Photo/Matt Rourke

Courtesy of Paul R. Sanberg, University of South Florida and Samantha Portis, University of South Florida

...

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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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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

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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All About Trends

Mid-Day Update

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

Click here for the full report.




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...

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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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