Archive for the ‘Morning Report’ Category

Freaky Friday

Which way will we go???

I was just laying out my DIA puts and calls and my QQQQ calls in member chat and I realize that those positions clearly indicate that l have absolutely no idea what's going on.

As I expected last night. the GDP data gave us a nice Goldilocks set of numbers but the PCE including food and energy, which the Government likes to ignore, was up 4.3% for the quarter, up from 3.5% in Q1.  The "core" PCE is up just 1.4% for all you non-eating, non-energy using citizens so let's all party like we are Amish people on a hunger strike!

I can kid about the Amish because they'll never read an electronic document but, for the rest of us, I still urge caution, caution and more caution as the DIA calls and QQQQ calls we took were UPSIDE PROTECTION, meaning they are there to protect our terrific gains on the put side.  We could make money on both ends of this trade today as we wait for some Federally funded BS to hit the markets from Paulson, Bush (oh no but, yes, he's speaking!), Bernanke et al who'd better say something positive before we start making Asian-style declines.

The Hang Seng missed my down 1,000 target by 222 points and recovered 127 into the close so kudos to them for making it back over 22,500.  The Nikkei dropped 418 points, also with a 100 point gain at the last minute so I'm taking all of Asia with a grain of salt this morningNTT's profits dropped 25% as they experienced the kind of cost inflation that our government doesn't believe in.

Europe is off about a point ahead of our open and has been gathering strength in their afternoon, so we will watch that finish with great interest but it will take a lot for us to jump back in and BUYBUYBUY.  We certainly have the cash on the side ready to do it but we're going to need clear tech leadership, not energy leadership, to even consider jumping back into this very chilly pool:


We actually played OIH to the plus side yesterday.  Happy Trading says they still have room to run and we do not argue with Wang's World, as he's
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Thursday Morning – In progress

“All human wisdom is summed up in two words – wait and hope”

- Alexandre Dumas Père




It is hard to wait for the right moment to deploy our capital.


We investors are, by nature, a hopeful group and we tend to get jumpy when the market looks hot, always worried we are going to miss something.  This is kind of funny because the people who are anxious to buy today are the same people who couldn’t wait to sell on Tuesday.


What changed?  We had this conversation just this weekend when I warned not to get too excited about a "dead cat bounce" yet now we have a weaker bounce and my mailbox is filled with questions from people who want to BUYBUYBUY.  I love buying stocks as much as the next guy but I prefer to buy stocks that ARE going up, rather than stocks that LOOK like they are going up (it’s a fine distinction).


I was excited to buy last week because we oversold because, as I said at the time: "QQQQ made a nice doji yesterday as volume tapered off to half of last week’s peak.  Look for the very rare "abandoned baby" pattern to form in the candle chart of the Qs (it will gap up at the open and finish the day at or above yesterday’s high) to signal a real reversal which could have all those shorts covering for the rest of the week."  I say this now to remind you know I can be bullish when I have a good reason to be!  More importantly, I can also be patient – and that is what is called for here.


The MSM (main stream media) does not want you to be patient – they need you to BUYBUYBUY because US investors control over $4 Trillion dollars in market wealth and if they lose
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Which Way Wednesday?

The BOJ raised rates (doubled them in fact)!

Wow, I love it when the world makes sense…  I was starting to think I was crazy as not one person in CNBC agreed with my call for a rate hike and it was causing me to rethink my World view but, as the BOJ said in their statement: "??????????????????????????????? ??????????????????"

This is exactly what I've been talking about!  More telling was their very positive statement regarding our economy: "Uncertainties over the future course of overseas economies, including that of the United States, are abating, and this is likely to reinforce the prospects of continued increase in corporate profits and business fixed investment."  That first statement, "a virtuous circle of production, income, and spending" speaks volumes for the bank's confidence in their own economy as well.

So, on the bright side, the world economy is chugging along and, although this hike, by necessity, puts the Fed back on the table, it's doing so for all the right reasons.  As I said yesterday (and for months) the only industries hurt by this are the bubble commodity industries, which simply aren't worth what they are being paid and will come down hard when money is no longer free.

Asian stocks were mixed overall as Japanese stocks took their rate hike pretty well in stride.  Tokyo Steel announced price hikes and jumped 8%.  Nissan just said no to Chrysler in what I predict to be the first of many rejections for DCX, who paid $36Bn for the company in 1998.  DCX plans on cutting 13,000 North American jobs this year and it remains to be seen where they book those costs but I'm thinking this 15% rally in a company that will be lucky to get $10Bn back on their investment (after losing Billions operating it) is just a bit overdoneApril $70 puts are $2.35 and we can set a stop at $1.90 as any upward movement here means I'm wrong so we can get out quick.

Speaking of overbought auto companies – how did we forget to short GM at $36.50?  I don't like the June pricing so I'll take my chances with the March $35 puts for .80 and will roll to April, May, June and July if I have to wait that long for…
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Fickle Friday Morning

We have to give the markets a pass today.

It’s option expiration day and any movement you see today needs to be taken with a rather large grain of salt. 


The Fed came out with a bold statement – that low unemployment may not necessarily lead to higher inflation.  This is part of the new global paradigm we’ve been discussing for the past 2 years (see all previous columns!).  As I’ve often said about outsourcing, we don’t just outsource the low-paying jobs, we outsource the pollution, the inadequate housing, the health, welfare, education and retirement burdens that come with employing 50M minimum wage workers who couldn’t be found in this country even if you wanted them.

Speaking of the globe – is it just me or is money getting cheaper? Here’s a 30 year chart of the 30 year note, you tell me why HB’s making a comeback.

Maybe the global markets have gotten so efficient that money can be profitably marketed for just 4% interest.  If we think of money as a product and think of Central Banks, the IMF and, of course computers as devices we use to increase manufacturing and distribution efficiency, it’s not so hard to see that maybe the cost of money has simply declined over the years.  Citibank certainly seems to be able to squeeze out a living in this environment…

China raised the deposit rates for lenders for the 5th time in 8 months, still trying to keep a 10% cap on their growth rate.  Starting 2/25, commercial banks must keep 10% of their deposits on reserve with the People’s Bank of China, compared with 9.5% previously.  "There is relatively large pressure to expand lending, and a further increase in the reserve requirement ratio was needed in response to changes in the liquidity situation," the central bank said in explaining the move.

Japan’s GDP grew at 4.8% in Q4 and they are complaining that their consumers are asleep at the wheel!  What will happen when they wake up and start shopping?  What if American consumers start saving like the Japanese do?  LOL – well of course that’s not going…
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Thinking About It Thursday

Apple is still trading down pre-market (6am)!


They beat earnings by .36 (48%) but that somehow isn't enough to get people excited.  Cramer made a bearish call on tech in general yesterday, especially cell phones, handheld products, storage stocks, semiconductors and software (I guess that leaves just cappuccino machines and treadmills).

He did give his blessing to our holdings of AAPL, HPQ, GOOG and MSFT as well as CSCO, which we just dumped and LVLT, which I disagree with until they pull back to the $5s.

I think it may be just a little premature to write off tech just yet, although I warned yesterday morning that the ides of March are nigh, I still think we are too near escape velocity to cancel our moon shot after just one orbital pass.

Not to pick on Cramer but seriously, the man just spent Tuesday morning telling people this is the year of the Nasdaq and then a day later, he reads my headline and changes his opinion 180 degrees – Jim, don't take me so literally!  I'm cautious but I haven't thrown in the towel just yet…

Both the PPI and the Fed Beige book indicated the economy is still moving along nicely and I strongly believe the entire tech cycle is being dragged down by the delayed Vista launch.  While a late winter will dampen enthusiasm, I think an early spring will get CEOs to whip out their checkbooks and pump up IT spending sooner than expected as you tend to want to get your year into focus before you start thinking about summer vacations.

As with yesterday, the Asian markets shrugged off our lackluster performance and turned in some very nice numbers with the Nikkei climbing another 109 points back near the ATH at 17,370 while the Hang Seng added another 212 points to finish at 20,277.

I jumped the gun yesterday as I should have said, there will be no way the BOJ raises rates tomorrow when I said "The BOJ backed off raising their rates for this session."  Sometimes I'm so sure something is going to happen I think it's already news!  As I said to someone yesterday, the problem with being a fundamentalist is sometimes it takes the markets some time to catch up with you…

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Which Way Wednesday?

Et tu, Intel!  Then fall, Nasdaq.


It's looking pretty dire for the Nasdaq as first SYMC, then RACK, the SOX and now even INTC all take a stab at it.  Will the Nasdaq die a death of 1,000 cuts?  It's really just the top 100 we care about but there's a lot of pressure mounting on Apple, IBM and MOT to give us a brighter vision of the future of tech than we've gotten so far this week.

As I said last week, we need Nasdaq leadership to guide that commodity money off the sidelines and into something new – I'm not sure that the industrials will be up to the job.  Like the Roman senate, the analysts are all too willing to take down the Nasdaq just as it's breaking out but they have no clear plan for a successor!  Without a hot sector – the markets, like Rome, will crumble.

Asian markets weathered Intels storm fairly well yesterday, also working hard to shake off falling commodity sectors.  The BOJ backed off raising their rates for this session, a bit of a surprise that rallied the real-estate sector over there (you'd be amazed at what kind of house you can get with a 1.5% mortgage!).  We had a Bugs Bunny rush back into steel, real-estate and construction with banks giving up some ground as there is not much margin to be made on 0% interest.

Europe is trading flat ahead of our open and their timing couldn't have been worse for Intel as the EU is recommending formal charges against INTC for not playing nice with AMD.  As we know from Microsoft's monopoly case, the EU's bark is worse than it's bite but never underestimate investors' fear of a barking dog.

Back home we got some good news from JPM, who are still cranking out profits at a record pace with a 50% increase in investment banking revenues.  That perked up the DOW pre-marked, which includes JPM as a component.  Still, I'm going to be watching the downside today as anything up is obviously good:

  • Dow 12,550 needs to hold, with luck we can make progress towards 12,600 but just staying halfway there would be great!

    • Transports need

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Thursday Morning

Last Thursday was not good.

Yesterday was not good either. It wasn't bad – it just wasn't good. Something has to perk up tech, especially the semis or it may be time to lighten up again into the holidays. Today may be the critical day as the VIX crashes and we set a direction ahead of the inevitable rebound after options expiration.

That's the other big factor, options expire tomorrow and you can see a lot of stocks flat-lining into expiration and we can't trust any movement we see this week so be very careful out there!

[Timothy Johnson]

As of 7am, oil was up a full dollar in European trading. Sen. Tim Johnson (D – SD) is in critical conditionand should he be forced to step down the Republican Governor, Mike Rounds, gets to appoint his successor and swing the Senate back to the Republicans!

OPEC did nothing but pledged to cut another 500Kbd in February, so let's keep an eye on the March and April contracts to see how real the traders think this is. I will likely take this one last opportunity to double down Jan oil puts – if it ever stops going up!

Our prayers go out to Senator Johnson, who is just 59 but seems to have had a stroke – he is listed in critical condition after emergency surgery.

Asian markets were up across the board with India recovering 305 more points and saving my market of the year prediction (at least this week). The Hang Seng erased yesterday's drop entirely as Chinese leaders seemed intent on making a public showingof telling Paulson and Bernanke who was really the boss while privately releasing "work plans for various government agencies to tackle tensions between the two countries."

"We have had the genuine feeling that some American friends are not only having limited knowledge of, but harbouring much misunderstanding about the reality in China," VP Wu told Paulson and other senior Washington policy-makers at the start of their two-day meeting in Beijing. "This is not conducive to the sound development of our bilateral relations."

Europe was flat this morning, BP has been advised there will be
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Monday Morning

Well the dollar is starting to matter.

We talked about this back in Augustand it has always cast a shadow on our trading as I’ve never been able to get all gung-ho while ignoring this pressing issue.

While we were all out having turkey, the rest of the world took a long, hard look at our balance sheets and downgraded us. 

As our debt is looking riskier to foreigners, the rumors that the Fed will LOWER rates to boost a slowing economy make no sense at all to buyers of international paper (or to anyone who actually understands economics).

So let’s be very, very careful out there as things may LOOK good over here but to other countries we look a lot more like this:


And that is not good in any language! 

I don’t want to make things sound dire but, since Wednesday, the dollar is down 2.3%.  That means that a European or Asian investor who has a virtual portfolio of US stocks lost 2.3% of his value across the board in just 3 days.  That’s the equivelant of a 250-point Dow drop!

We are going to be needing some pretty exceptional retail numbers to convince foreign investors that our economy still has legs…

Let’s not forget that we asked for this when we told China to strengthen the Yuan.  Currencies don’t strengthen in a vacuum and for the Yuan to rise, something had to fall and it’s no surprise to my readers that the dollar would end up suffering.

All of this is right in line with my Inflation Nation policy but it’s a fine line between a steady devaluation and a total meltdown so let’s watch our gauges!  Asian markets were up, except for the Hang Seng as investors there become concerned that the government will have to take action to curb the dollar’s fall.  Japan has already made noises about keeping a rate raise off the table to keep speculators out of the Yen and to maintain the ”carry trade” where investors borrow Yen to buy Dollars, taking advantage of the interest spreads.

Europe is having a 1% sell-off and companies that get paid in dollars are being hit hard, a strong indicator that European investors don’t see any great fixes ahead for our currency.

You would think Europe would be in a good mood as crude prices have slipped 2.5% in the past 3 days, something we are blissfully unaware of as the contracts are priced in dollars that are falling just
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Friday Morning

Well, we’re up 200 points for the week so far.

Keep that in perspective if we drop 50 points and Don’t Panic – it will take a drop of more than 100 points to erase the week’s very bullish tone.

Oil is printing (at 5:30) $55.79 in European trading but Brent crude is still higher ($58.23) and I imagine there’s a difference in the contract.  The Brent contract fell $3.07 yesterday as it was much higher than ours ($61.30). 

It was 60 degrees in NJ last night and the 15 day forecast says no freezing temperatures until December 1st but the warm weather IS breaking and we know how shocked energy traders are when it gets cold in the winter!

Of course today is options expiration day and only a fool tries to guess the markets today so here goes:

There’s only 2 levels to watch today, amazing (almost any gain) and uh-oh, the point at which some panic will occur:

  • Dow 12,300 plus is great but below 12,200 will create doubt that we can’t afford as we try to achieve escape velocity.
  • S&P cannot be expected to break 1,400 on no news and doing so would be a major bull signal but we’d really hate to lose 1,390 and even 1,395 will be a concern.
  • NYSE is losing its leadership and will be weighed down on commodity weakness as well.  If 8,850 holds it will be a very good sign.
  • Nasdaq needs to take the lead and break 2,450 and 2,425 will be a problem already.
  • Russell must hold 790, and that’s a lot to ask as it just got there and needs a rest but the floor is too weak to test.

The SOX are free to retest 480 without looking weak while the transports have earned themselves a free pass all the way to 2,675 (down 45) after gaining 150 points in 5 sessions. 

I hate to repeat myself but I will just reprint what I wrote on Wednesday which was a reprint of what I wrote the week before as it was exactly correct:

“You have to ignore the dollar amount on this chart as it’s based on a continuous contract price but the moving average is fulfilling my prediction of last week:   ”Oil could go either way today but showed real weakness at the $60 level of late as the rapidly falling 50 dma races
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Thursday Morning

The CPI is out today.

I expect it to be not as tame as the PPI because consumers don’t have departments whose sole job is to make sure they don’t overpay for things, but we should get some trickle down improvement, at least as a slowing of inflation.  Anything else will be a big disappointment although I don’t see how anyone can complain about sub 3% inflation.

Asia was fairly flat, taking a well-deserved rest today and the BOJ held rates steady at .25% which should boost the buck a bit.  It’s very tricky for Japan, who have to double the rates in order to raise them a quarter point…

Europe has no idea what to do ahead of our CPI report so we will ignore them but we do want to see if the FTSE can break 6,250.

I should really wait 90 minutes as it will all change but let’s see if I get this right:

The Dow needs to break 12,300 TODAY in order to really bring in some new money.  Falling all the way to 12,100 would still be fine if we hold it but will sideline new money for quite a while.

The S&P tested 1,400 yesterday and it will be amazing if they break it and 1.390 is a very soft floor.  The NYSE is at 8,901 and holding that level will be huge – let’s look for them for early inidcations of trouble.  The Nasdaq touched 2,450 yesterday and now it has to buy it or get out.

The SOX broke 480, which was a huge barrier last fall and led to the mega semi rally in January.  We are still 75 points (15%) below those highs.  Transports are looking to take out 2,700, on their way to a retest of 2,800 – which may mark a top for now.

[Crude Oil]

Oil is going to try to hold $59 again as traders are stunned by the possibility of cold weather may hit the US in the winter.  There’s a gas inventory report today that is sure to make XOM move up whether it’s a build or a draw or a steep decline.

Ticker Sense has a nice gas chartand postulates that, even if we have the biggest drawdown in gas ever this winter, we will still hit the spring with above average inventories.

I wish I could tell you that makes for…
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Zero Hedge

Yuan Extends Losses After China Macro Data Disappoints

Courtesy of ZeroHedge View original post here.

China's yuan extended its early losses, testing down to the fix after headline economic data disappointed across the board.

  • Industrial Production rose just 5.6% YTD YoY (below the +5.7% exp and down from +5.8% prior)

  • Retail Sales rose just 7.5% YoY (below the +7.9% exp and down from +7.6% prior)

  • Fixed Asset Investments rose just 5.5% YTD YoY (below the +5.7% exp and down from +5.7% prior)

  • Property Investment rose just 10.5% YTD YoY (down from +1...

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Phil's Favorites

Black Hole Investing


Black Hole Investing

Courtesy of John Mauldin, Thoughts from the Frontline 

Scientists say the rules change in a cosmic “black hole” at what astrophysicists call the event horizon. How do they know that? Not by observation, since what happens in there is, by definition, un-seeable. They infer it from the surroundings, which say that the mathematics of the universe as we understand them change at the event horizon.

Or maybe not. One theory says we are all inside a black hole right now. That could possibly explain a few things about central bank policy. ...

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The Technical Traders

Crude Oil Setting Up For A Downside Price Rotation

Courtesy of Technical Traders

Crude Oil has been trading in a fairly narrow range since mid-August – between $52 and $57 ppb.  Our Adaptive Dynamic Learning (ADL) predictive modeling system suggested the downside price move in late July/early August was expected and the current support aligns very well with our ADL predictions of higher price rotation throughout most of September/October.  Please take a minute to review the original research post below :

July 10, 2019: ...

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Insider Scoop

The Street Reacts To Kroger's Q2 With Mixed Takeaways

Courtesy of Benzinga

Kroger Co (NYSE: KR) reported second-quarter results that came in better than expected. The earnings beat may have been overshadowed by management's decision to remove its prior guidance of $400 million in incremental EBIT by fiscal 2021.

Q2 A Mix Of Positives And Negativ... more from Insider

Chart School

Dow to 38,000 by 2022

Courtesy of Read the Ticker

President Trump said the Dow would be 10,000 points higher if it was not for the FED. In truth if the Dow breaks to new all time highs the next stop is 38,000 and he may be proven correct. Is there an election on? 

Of course who knows? But lets continue. 

The fundamentals behind this may be:

  • A good deal with China.
  • The FED turning on easy money with further rate cuts (very strange with a market near all time highs). FOMC Sept 17th well tell us more.
  • The above turbo charging stock buy backs.
  • Off shore money running out of foreign equity markets in to US markets (see note1).

Note1: Of course this has happened before, one particular time was just before O...

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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...

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Lee's Free Thinking

Nonfarm Payrolls Not Seasonally Adjusted Tell the Real Story - Unspinning Wall Street™

Courtesy of Lee Adler

Not seasonally adjusted nonfarm payrolls, that is, the actual numbers, give us a truer picture of the jobs market than the seasonally adjusted garbage that Wall Street spews.

Friday’s seasonally adjusted nonfarm payrolls jobs headline numbers disappointed investors with slower than expected growth. But was it really that bad?

Here’s How The Street Spun It – Wall Street Journal Modest August Job Growth Shows Economy Expanding, but Slowly

Employers added 130,000 nonfarm jobs, jobless rate held steady at 3.7%

U.S. employment grew only modestly in August, suggesting that a global economic slowdown isn’t driving the U.S. into recession but has dente...

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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...

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The Big Pharma Takeover of Medical Cannabis

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


The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:


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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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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.

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