Archive for the ‘Appears on main page’ Category

Follow-Through Thursday – 5% Correction or Just the First Step?

Related imageDOOM!!!

That's what I said would happen on Tuesday morning so this is certainly not surprising.  Even from my vacation on Monday I could smell the BS of the move up, as Team Trump's Trade Triumph was not at all confimed by their Chinese trading partners and, as I said in the Morning Report:

When you think about it, of course, not only has NOTHING changed since last week but now we know for sure there will be no trade deal until March at best.  Trump showed real weakness backing down on more tariffs since that was the only leverage he had in this negotiations and China's tariffs have always been retaliatory – so Xi has given up nothing at all and Trump has stopped fighting – how is that worth $500Bn of stock advances?

All pretenses of improving US-China relations were dashed yesterday evening as news spread that the CFO of Huawei was arrested in Canada on Dec 1st, at the behest of US Authorities over "Iran Sanction Violations" – something the company claims to have had no notice of and no one was more shocked (or insulted) than China's President Xi, who was pretty much sitting down to dinner with Donald Trump at the time and was embarassingly clueless that this was happening.  Making a Chinese leader look clueless has historically been a big mistake….

The United States is “resorting to despicable hooliganism,” China's Global Times wrote in an editorial published Thursday. “Anybody can see that the United States is maliciously picking holes in Huawei, trying to give it a hard time using the American legal system,” said the paper, which often reflects the foreign policy views of the ruling Communist Party.

The “persecution” of Huawei is “clearly contrary to the spirit of the consensus” forged between Trump and Xi, it said.


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The Law of Large Numbers

 

The Law of Large Numbers

Courtesy of 

“Apple is so big, it’s running up against the law of large numbers.”

This was taken from a New York Times article in February 2012 when the market capitalization was…$487 billion.

Another NYT article from 2014 states that “What makes Apple’s challenge particularly daunting is the law of large numbers. Its sales are so big that even another new strong product — unless it’s a gigantic hit on the order of the iPhone — won’t lead to the kind of growth to which some investors have grown accustomed.”

The law of large numbers is often invoked when describing Apple and other large companies. This idea, which was made famous by Jacob Bernoulli in the 18th century, has nothing, nothing at all, to do with the size of a company.

Peter Bernstein described this theorem in Against The Gods

Suppose you toss a coin over and over. The Law of Large Numbers does not tell you that the average of your throws will approach 50% as you increase the number of throws; simple mathematics can tell you that…All the law tells us is that the average of a large number of throws will be more likely than the average of a small number of throws to differ from the true average by less than some stated amount.

What Apple and other large companies are battling is not the law of large numbers, but rather the idea that trees can’t grow to the sky. Think about profits as trees- eventually, and usually it’s sooner rather than later- competitive forces arrive to take a slice of the pie.

The idea that the market is a fiercely competitive arena is clearly presented in this table from Research Affiliates, which shows that “the top dog in each sector lags its own sector by 3.3% per year for the next decade!”

The clock is ticking on most companies from the minute they register their first sale. Geoffrey West wrote about the fate of most companies in Scale:


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Is The Yield Curve Coming to Kill You?

 

Is The Yield Curve Coming to Kill You?

Courtesy of 

Is the yield curve about to invert? If it does, are we guaranteed to have a recession in the US economy? What about a stock market crash?

How do we separate fact from fiction, noise from signal regarding this important topic?

Josh Brown and Michael Batnick break it down for you and share some reasons to be concerned and then some other reasons to be not so concerned.

You can read the articles we’re referencing here…

Arguing With The Yield Curve (A Wealth of Common Sense) 

The Flattening (Irrelevant Investor)





Testy Tuesday – Is China Enthusiasm Enough to Flip the Death Cross?

We're still in technical trouble.

The rally, while impressive, has not been enough to avoid the dreaded "death crosses" in the stock indexes, where the 50-day moving average falls below the 200-day moving average (indicating acceleration to the downside) and, keep in mind that's 50 business days so more like 2.5 actual months of downward movement is being tracked – that's not the kind of thing you reverse in a single session or even a very bullish week – is it?

You can see from the "W" pattern on the NYSE that has formed below the 200-day moving average since early October and now it's December and we are making our second attempt at a rally after the early November rally failed so spectacularly into the Holiday.  But now it's Santa Rally time and Team Trump is promising us a trade deal for Christmas and when have they ever lied to us, right?

Trump has named China hard-liner, Robert Lighthizer, to head up the negotiations and that's not a good sign as Lighthizer fought hard in 2001 to stop China from joining the World Trade Organization in the first place so it would be really, Really, REALLY ironic if he were to suddenly put together the largest trade deal in history, with China…

Treasury Secretary Mnuchin would have been a more China-friendly and negotiating-friendly choice or even pro-trade Economic Adviser, Larry Kudlow, who said China committed to rolling back tarriffs on autos and agriculture to which China has already replied "He said we said what???"

Pushing things back 90 days let's Team Trump make all sorts of BS claims that can't be verified for 3 months and, even then, they can push it back another 3 months.  The two sides even disagree whether there is a deadline for talks.  While the U.S. said it would “endeavor” to wrap up talks in 90 days. In Buenos Aires, Chinese officials made no mention of any deadline, and were angered when told about the U.S. claims.

After popping 450 points near the open yesterday, the Dow gave back 150 of those points and, this morning, the Futures are giving back 100 more but that still leaves us with…
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Will Santa Leave a Lump of Coal?

 

Will Santa Leave a Lump of Coal?

Courtesy of Wade Slome, Investing Caffeine

As we enter the last month of the year, the holiday season is kicking into full gear, decorations are popping up everywhere, and the burning question arises, “Will Santa Claus bring gifts for stock market investors, or will he leave a lump of coal in their stockings?”

It was a bumpy sleigh ride last month, but we ultimately entered December in a festive mood with joyful monthly gains of +1.7% in the Dow Jones Industrial Average, and +1.8% in the S&P 500. There have been some naughty and nice factors leading to some turbulent but modest gains in 2018. For the first 11 months of the year, the Dow has rejoiced with a +3.3% advance, and the S&P 500 has celebrated a rise of +3.2% – and these results exclude additional dividends of approximately 2%.

Despite the monthly gains, not everything has been sugar plums. President Trump has been repeatedly sparring with the Federal Reserve Chairman, Jerome Powell, treating him more like the Grinch due to his stingy interest rate increases than Santa. As stockholders have contemplated the future path of interest rates, the major stock indexes temporarily slipped into negative territory for the year, until Mr. Powell gave stock and bond investors an early Christmas present last week by signaling interest rates are “just below” the nebulous neutral target. The dovish comment implied we are closer to the end of the economy-slowing rate-hike cycle than we are to the beginning.

Trade has also contributed to the recent spike in stock market volatility, despite the fresh establishment of the trade agreement reached between the U.S., Mexico, and Canada (USMCA – U.S.-Mexico-Canada Agreement), a.k.a., NAFTA 2.0. Despite the positive progress with our Mexican and Canadian neighbors, uncertainty surrounding our country’s trade relations with China has been challenging due to multiple factors including, Chinese theft of American intellectual property, cyber-attacks, forced technology transfer, agricultural trade, and other crucial issues. Fortunately, optimism for a substantive agreement between the world’s two super-powers advanced this weekend at the summit of the Group of 20 nations in Argentina, when a truce was reached to delay an additional $200 billion in tariffs for 90 days, while the two countries…
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US-China trade war truce: 2 reasons why it’s unlikely to last

 

US-China trade war truce: 2 reasons why it's unlikely to last

File 20181203 194956 1eg1364.jpg?ixlib=rb 1.1

Presidents Xi and Trump don’t always see eye to eye. (AP Photo/Pablo Martinez Monsivais)

Courtesy of Jeffrey Kucik, University of Arizona

Presidents Donald Trump and Xi Jinping have agreed to a ceasefire in their increasingly painful trade war, yet their governments’ differing depictions of the deal show just how far apart they really are.

While the Trump administration emphasized trade issues such as a 90-day moratorium on raising tariffs and Xi’s concession to buy “very substantial” amounts of U.S. goods, China focused on diplomacy, regional issues and an agreement to try to quickly resolve their differences.

That’s because for China, Trump’s trade war has never been only – or even mainly – about trade.

As a political scientist following the escalating tensions, I believe that the statements coming out of the G-20 meeting reveal that a wide gap still separates Xi and Trump, both in terms of what matters most to them and their approach to getting it.

Territory trumps trade

One of China’s major concerns is U.S. interference in areas it considers “internal” matters.

A major flashpoint is Taiwan. Earlier this year, for example, Trump approved a US$330 million arms deal with Taiwan, following up on a previous deal of $1.3 billion.

These sales irk China because they directly conflict with Beijing’s long-standing policy that there is only one Chinese government, and Taiwan is merely a breakaway province that will inevitably be reunited with the mainland.

Another sticking point is the South China Sea, where the Chinese government has been increasingly aggressive in asserting territorial claims at odds with its neighbors. In the past, the U.S. has acted as a counterweight to China’s claims, Now inconsistency in Trump’s stance has added to tensions in the region.

Both of these issues have implications for the trade war. China is willing to absorb economic losses in exchange for standing firm on issues vital to the national interest.

That’s precisely why China’s statement highlighted Trump’s apparent commitment to continue respecting the so-called one China policy
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Monday Market Madness – China Goes on Hold, Markets Go Crazy!

All fixed! 

That's how the markets are acting now that Trump and Xi have agreed not to employ more tariffs while they negotiate trade.  I'm not quite sure how they plan to fix, in the next 90 days, what they haven't been able to in the past 360 but it is fun to be hopeful, isn't it?  As you can see from the Chart, the S&P is flying back to 2,800, where we were in early November but still way below 2,950, where we were in early Ocober but it's only early December and now Trump and Xi only have to keep quiet for 30 days and we can all pretend everything is high and go back to paying record-high prices on stocks – Merry Christmas!

Of course a Santa Clause Rally is a time-honored tradition as it's how all the Wall Street Banksters lock in their bonuses so it was never likely we were going to end the year on a sour note – that's why we put a lot of money into our bullish positions in the last round of portfolio adjustments.  Even GE is up 2.5% this morning as all the switches have been thrown on all the Buy Programs and every stock – good or bad – is on the move this morning.

Image result for trump xi negotiation cartoonWhen you think about it, of course, not only has NOTHING changed since last week but now we know for sure there will be no trade deal until March at best.  Trump showed real weakness backing down on more tariffs since that was the only leverage he had in this negotiations and China's tariffs have always been retaliatory – so Xi has given up nothing at all and Trump has stopped fighting – how is that worth $500Bn of stock advances?

Still, it is what it is and we'll just have to see how things shake out.  We're now soliday over our bounce lines but that doesn't matter unless we're still over them on Wednesday so today is very much a watch and wait kind of day, which is good – because I'm on vactation.

Be careful out there, 

- Phil

 





Pyramids of Crisis

Courtesy of John Mauldin, Mauldin Economics

In an increasingly divided world, we all share one great desire: self-preservation. Not just humans, either. The survival instinct exists in almost every living thing. Humans simply have greater ability to do something about it.

In fact, we have been doing something about it for many thousands of years. An inverted pyramid of geniuses and giants, modern medicine, nutrition, sanitation, and assorted other innovations has extended our lifespans and helped more of us live to ripe old ages. That’s wonderful… but it’s also a problem many of us still don’t fully understand.

I have mixed feelings myself. At 69, I truly believe I’ll live well past 100 and stay as healthy and independent as I am now. But sometimes I wonder. For instance, in the past few weeks I had a growing adverse reaction to a new (to me) medicine. It made me tired and slowly lowered my blood pressure to a dangerous level. I didn’t recognize it and just thought the years and miles were finally beginning to take their toll. Finally, in consultation with my doctor, we figured out what was going wrong, changed course and the major symptoms improved quickly. But for about a month, I felt much older, almost invalid at times. It was kind of like the Hemingway line, “How do you go bankrupt?” The answer: “Slowly, and then all at once.”

Of course, I’ve helped my elderly parents and others but this poignant experience gave me new awareness of my own age. It also increased my determination not to go gently into that good night. And, to today’s topic, it helped draw my attention to aging and demographics as they relate to my series on debt.

Aside from death, aging brings financial and cultural problems. We are simply not prepared for a world in which old people outnumber the young. But it may be coming, thanks to life extension at the upper end and falling fertility rates below. National pension systems—what we call Social Security in the US but similar elsewhere—are not designed for that combination. They presume a high ratio of working young to retired old citizens. That is no longer happening and is increasingly hard to ignore.

Today I want to review these…
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G20 will be about Donald Trump and his tariffs – but China will dominate the new world order

 

G20 will be about Donald Trump and his tariffs – but China will dominate the new world order

File 20181130 194935 ixamkt.jpg?ixlib=rb 1.1

Lightspring / Shutterstock

Courtesy of Michael Kitson, Cambridge Judge Business School

Tensions loom over Argentina, which plays host to the 2018 summit of the G20 starting on November 30. The G20 is an international forum of the EU and the heads of state of 19 major economies, which discusses global economic challenges. And the challenges are mounting.

Globalisation is in reverse, as the US threatens to escalate its trade war with China and other trading partners; and xenophobia is rife in many Western countries. These challenges are a threat to global prosperity, but what will shape much of the long-term evolution of the global economy is the rise of China and other emerging economies.

Much of the focus at the G20 will be on the US president, Donald Trump, and his series of sidebar meetings with other leaders, especially the Chinese president, Xi Jinping. Trump has said that it is “highly unlikely” that he would postpone the planned increase in tariff levels from 10% to 25% on US$200 billion of Chinese goods in January 2019.

Of course, this may be bluster and a frequent refrain from apologists for Trump is: “Take note of what the president does, not what he says.” But we may be on the cusp of a full-blown trade war, which will not be confined to the US and China and which will reverse and reconfigure globalisation. Entering foreign markets will be more costly and global supply chains will be disrupted.

Globalisation is not inevitable

The notion that globalisation is a natural phenomenon, akin to the change in the seasons or the weather or gravity, is a frequent refrain. During his tenure as prime minister of the United Kingdom, Tony Blair opined: “I hear people say we have to stop and debate globalisation. You might as well debate whether autumn should follow summer.” A pithy turn of phrase, but patently not true.

The configuration and extent of globalisation is shaped by public policy and technological change. When…
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Why we’ll miss George H.W. Bush, America’s last foreign policy president

 

Why we'll miss George H.W. Bush, America's last foreign policy president

File 20181201 194950 1rdpjv5.jpg?ixlib=rb 1.1

Unlike every president who followed him, George H.W. Bush had a background in foreign policy. In 1972, Bush was serving as U.S. ambassador to the U.N. AP Photo/Dave Pickoff

Courtesy of James Goldgeier, American University School of International Service

There are many reasons to miss George H.W. Bush, the 41st president of the United States. A World War II hero, he later served his country with great distinction in a number of important positions before becoming vice president and then president.

The outpouring of warm feelings first for his wife, Barbara Bush, who passed away earlier this year, and now for him, reflects not only the role President and Mrs. Bush played in American history but also the decency they represented in a political system that now has become full of indecency.

Strikingly, George H.W. Bush was also the last person elected president of the United States with any prior foreign policy experience.

George HW Bush as a senate candidate in 1964. AP Photo/Ed Kolenovsky

He entered office with one of the most impressive resumes of any president, having served as director of the Central Intelligence Agency, ambassador to the United Nations and Ronald Reagan’s vice president.

He left office with an impressive list of achievements, including the unification of Germany within NATO. As historian Jeffrey Engel has reminded us in his excellent recent book, “When the World Seemed New,” this was far from assured. British Prime Minister Margaret Thatcher and French President Francois Mitterand were deeply opposed to Germany’s unification, while Soviet leader Mikhail Gorbachev opposed not only unification but the incorporation of the former East Germany into NATO. Germany’s leadership in Europe as a force for democracy and human rights since those years has clearly vindicated President Bush’s instincts to support West German Chancellor Helmut Kohl in his efforts in 1990.

A major high point of the George H.W. Bush presidency, however, was also the harbinger of disappointments to come: the swift military victory that reversed Saddam Hussein’s invasion of…
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Zero Hedge

Trump Slams "Foolish" Fed, Ready To Intervene In Huawei Case

Courtesy of ZeroHedge. View original post here.

Update: President Trump went on tell Reuters that he needs flexibility amid the trade battle with China:

“You have to understand, we’re fighting some trade battles and we’re winning. But I need accommodation too,” he said.

And stated that it would be a mistake if the Fed boosts rates next week: "I think that would be foolish, but what can I say?"...



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Phil's Favorites

Blue Wave with Cheri Jacobus (Q&A II, Updated)

By Ilene at Phil's Stock World

Cheri Jacobus is a widely known political consultant, pundit, writer and outspoken former Republican and frequent guest on CNN, MSNBC, FOX News, CBS.com, CNBC and C-Span. Cheri shared her thoughts on the political landscape with us in our August interview, and now, post-2018 election, we’re following up.

Updated 12-10-18

Ilene: What do you think about Michael Cohen's claim that the Trump Organization's discussions with high-level Russian officials about a deal for Trump Tower Moscow ...



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Members' Corner

Blue Wave with Cheri Jacobus (Q&A II, Updated)

By Ilene at Phil's Stock World

Cheri Jacobus is a widely known political consultant, pundit, writer and outspoken former Republican and frequent guest on CNN, MSNBC, FOX News, CBS.com, CNBC and C-Span. Cheri shared her thoughts on the political landscape with us in our August interview, and now, post-2018 election, we’re following up.

Updated 12-10-18

Ilene: What do you think about Michael Cohen's claim that the Trump Organization's discussions with high-level Russian officials about a deal for Trump Tower Moscow ...



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Kimble Charting Solutions

Bear Market Omen? The 'Average Stock' Is Breaking Down

Courtesy of Chris Kimble.

The stock market has been in a corrective sideways move for the better part of 2018. Is it ready to decline even lower?

Well if the “average stock” is any indication, then investors should be concerned.

The “monthly” chart below is of the Value Line Geometric Index (INDEXNYSEGIS: VALUG), which plots the price of an average stock in today’s market. We can see that a bearish wedge pattern has developed in a similar fashion to 2007 and 1999.

It’s notable that in each of the past two breakdowns (1) and (2), the price broke below wedge support and its 10-month moving average.

It appears to be doing the same thing today. Careful here!

Value Line Geometric Chart – Bearish Wedges

...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Surge Ahead Of Producer Price Index

Courtesy of Benzinga.

Related SPY A Peek Into The Markets: US Stock Futures Signal Lower Start On Wall Street Assessing This Week's Technical Damage To...

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Digital Currencies

How low will Bitcoin now go? The history of price bubbles provides some clues

 

How low will Bitcoin now go? The history of price bubbles provides some clues

The Bitcoin bubble is perhaps the most extreme speculative bubble since the late 19th century. Shutterstock

Courtesy of Lee Smales, University of Western Australia

Nearly 170 years before the invention of Bitcoin, the journalist Charles Mackay noted the way whole communities could “fix their minds upon one object and go mad in its pursuit”. Millions of people, he wrote, “become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first”.

His book ...



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Chart School

Weekly Market Recap Dec 09, 2018

Courtesy of Blain.

Bears are certainly showing the type of strength we haven’t seen in a long time.   A week ago at this time futures were surging on news of a “truce” for 90 days between China and the U.S. in their trade spat.  But the charts were still not saying lovely things despite a major rally the week prior.   And by Tuesday, darkness had descended back on the indexes, with another gut punch Friday.    A lot of emphasis was put on a long term Treasury yield dropping below a shorter term Treasury.

On Monday, the yield on five year government debt slid below the yield on three year debt, a phenomenon which has p...



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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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Biotech

World's first gene-edited babies? Premature, dangerous and irresponsible

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

 

World's first gene-edited babies? Premature, dangerous and irresponsible

Vchal/Shutterstock

By Joyce Harper, UCL

A scientist in China claims to have produced the world’s first genome-edited babies by altering their DNA to increase their resistance to HIV. Aside from the lack of verifiable evidence for this non peer-revie...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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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.

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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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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