Archive for the ‘Phil’s Favorites’ Category

Only took 12 years, but Wall Street has finally gotten bullish enough

 

Only took 12 years, but Wall Street has finally gotten bullish enough

Courtesy of 

One of the most interesting things that happens after a big, nasty, protracted bear market is that no one wants to be accused of being bullish or upbeat about anything. In the aftermath of a crash, the bulls always look and sound dopey or complacent.

Wall Street strategists are only human. And as markets trade higher, they gradually get more and more comfortable sounding positive on stocks. The trauma of having been bullish and wrong ahead of the last crisis fades away and the recency bias takes over. Individual investors’ risk tolerances work this way too, but that’s another discussion.

Anyway, my friend Savita Subramanian has been showing us the Sell Side Indicator that she keeps for BofA and, over all this time, The Street hadn’t really gotten up to a place where the rally might be threatened by excess bullishness – until now:

Wall Street is just 1ppt shy of ‘Sell” signal

Wall Street strategists continued to increase their recommended equity allocations in February. The Sell Side Indicator (SSI), which is the average recommended equity allocation by sell-side strategists, rose by nearly 1ppt to 59.2% from 58.4%. It’s the second month in a row of an almost 1ppt jump, bringing recommended equity allocation to almost a 10 year high and just 1.1ppt shy of a “Sell” signal. The last time the indicator was this close to “Sell” was June 2007 after which we generally saw 12-month returns of -13%. We’ve found Wall Street bullishness to be a reliable contrarian indicator.

Savita notes that we’re still in Neutral territory based on the model’s inputs, and we’ve been in the Neutral zone since December of 2016. And with the indicator still at Neutral (as opposed to Bullish), we’re still looking at positive forward returns based on the historical relationship holding (which, who knows if it will).

It only took about 20,000 Dow points, a quadruple in the S&P 500 and a 500% Nasdaq rally to get The Street’s experts up to the upper end of Neutral sentiment. That’s pretty funny, in and of itself, regardless of what happens from here.

Source:

Approaching “Sell” signal
Bank of America Securities – March 1st, 2021





Will Higher Interest Rates Kill Growth Stocks?

 

Will Higher Interest Rates Kill Growth Stocks?

Courtesy of Michael Batnick

Interest rates are important. They’re the lifeblood of the economy. To say they’re one of several inputs instead of the only input is not to minimize their importance, but to state reality.

Ben did a post over the weekend in which he makes the argument that low interest rates do not turn investors into gamblers. For example, the average yield on the 10-year treasury was over 6% during the dot-com bubble. People piled into risky IPOs when they could have just clipped 6% and moved on with their life. Why? Because their friends and family members were getting rich quick. In that type of environment, the 10-year could have been 30% and people still would have gambled. Getting rich slow has little appeal to the average investor in a get-rich-quick market.

This brings us to today. There was an enormous move in interest rates last week.

It’s true that rates are still incredibly low on an absolute basis, but to dismiss what happened last week as trivial would be foolish, as we know that everything is relative, especially in markets.

Tracy Alloway notes that, “The 2/5/10-year butterfly — a popular trade involving two-, five- and 10-year U.S. bonds — moved by an astonishing 24 basis points (one of those events which, when measured by standard deviations, is only supposed to happen once in a billion years, etc.).”

It’s not only bond investors that are paying attention to interest rates but equity investors as well. The popular narrative these days is that growth stocks have benefited from low interest rates. If stocks are valued off of future discounted cash flows, and the discount rate is zero, then it doesn’t matter if investors see that money one month from now or 10 years from now.

This makes intuitive sense, but I’m in the camp that interest rates are still just one, albeit an important part of a complicated equation. An equation that uses more than just hypothetical future cash flows and today’s discount rate. And if this were all there was to it, that higher interest rates equal lower prices for growth stocks, then…
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Momentum Monday – The Banks and Energy? and Joe Fahmy Is Our Special Guest

 

Momentum Monday – The Banks and Energy? and Joe Fahmy Is Our Special Guest

Courtesy of Howard Lindzon

Happy Monday.

I promised you SPAC week, but Momentum Monday never sleeps.

I start my week off each Saturday working through The Stocktwits 25 lists. This week it the lists were filled with names I don’t care to follow or the most part. The growth names I have been following are mostly in pullback mode and the banks and energy are leading.

As always, Ivanhoff and I toured the markets to size up the field position for my favorite growth ideas and what is working. This week we had a special guest – our good friend Joe Fahmy. Joes is a great student of momentum and markets and it was fun hearing how he sees the tape right now.

Here is the episode to watch/listen and I hope you enjoy.

Here is Ivanhof’s take:

Last week started with rotation into the so-called back-to-normal (from Covid) stocks like leisure, airlines, hotels, oil & gas, and financials. While those recovery industries were rising, interest rates were quickly accelerating putting downward pressure on tech stocks. Something broke on Thursday and the entire market started to pull back. QQQ closed below its 50-day moving average. SPY closed below its 20-day moving average. Momentum stocks as measured by the ETFs – MTUM and ARKK, had their worst performance since September-October of last year. The market is currently in a correction mode.

There are two types of market correction:

Sector rotation – the indexes remain relatively unscathed in move in a wide sideways range while money constantly rotates from one group of sectors to another. This is the most common type of consolidation. Basically, a stock picker’s market.
High-correlation pullback which brings down most stocks – the price action last Thursday was a good example of this. Most breakouts are faded or find very little follow through during this market environment. Short ideas work better but they often require going through a lot more volatility, using wider stops or selling


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More than a Year Later, Americans Have No Idea Where $9 Trillion of Fed Money Went

Courtesy of Pam Martens

Federal Reserve Chairman Jerome Powell

Federal Reserve Chairman Jerome Powell

By Pam Martens and Russ Martens

Beginning on September 17, 2019 – months before there was any report of a COVID-19 case anywhere in the world – the Federal Reserve turned on its money spigot to the trading houses on Wall Street. By October 23, 2019 the Fed announced that it was upping these loans to $690 billion a week – again, months before any report of COVID-19 anywhere in the world. Earlier in October 2019, the Fed had also announced that it would be buying back $60 billion a month in Treasury bills.

Within a span of six months, the Fed had pumped out a cumulative $9 trillion in loans to Wall Street’s trading houses, according to its own spread sheets, with no peep as to which Wall Street firms were getting the bulk of that money. It’s more than a year later and the American people still have no idea what triggered that so-called “repo loan crisis” or which Wall Street firms were in trouble or remain in trouble.

The Federal Reserve, as is typical, outsourced this money spigot to the New York Fed, which is literally owned by some of the largest banks on Wall Street. We wrote at the time the New York Fed was making these massive repo loans that this action was unprecedented in Federal Reserve history for the following reasons:

No Wall Street crisis has been announced to the public to explain these massive loans and Treasury buybacks;

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ARK Omitting Some Daily Trade Updates, Burry Says Shorts Will Be “Ruthless” To Wood

Courtesy of ZeroHedge

One of the big things that has helped ARK's public image during its wild run to over $50 billion under management has been its stated commitment to transparency. Every day, at the end of the day, ARK has been emailing out its trades so that followers of the firm and investors can see which stocks "visionary" stock picker Cathie Wood and her team are moving in and out of.

Except now, after a week mired by several days of massive outflows, it appears that ARK Invest isn't exactly disclosing all of its sales anymore. In fact, it's adding numerous disclosures and disclaimers to its daily e-mail lists. 

What used to be a simple spreadsheet showing buys and sells now comes with a warning that the list of trades going out "exclude initial/secondary public offering transactions and ETF Creation/Redemption Unit activity."

In fact, the entire disclaimer can be found on ARK's site, here, admitting that trade files do not include certain trades. 

Trade notifications are for informational purposes only. ARK offers fully transparent ETFs and provides trade information for all actively managed ETFs. ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. ARK may not trade every day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades. Files of trades are not comprehensive lists of a day’s trades for the ARK ETFs and exclude initial/secondary public offering transactions and ETF Creation/Redemption Unit activity. Additional files may be posted at a later time. Most ARK ETF portfolio trades settle on a T+2 basis. These files represent an UNOFFICIAL, UNRECONCILED account, as all official accounting and custody processes for the ARK ETFs are performed by BNY Mellon resulting in a daily Net Asset Value


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Two by Two

 

Two by Two

Courtesy of Scott Galloway, No Mercy/No Malice@profgalloway

“The task is…not so much to see what no one has yet seen; but to think what nobody has yet thought, about that which everybody sees.” 

~ Erwin Schrödinger

Just as life is not about what happens to you, but about how you respond to what happens to you, insight is not a function of data, but of how you perceive the data. Plotting data in different ways is illuminating, even fun, and it can lead one to discover stories. And while “stories” often connotes fiction, stories can also be true, and can even create truth. 

The best way to predict the future is to make it. And, just as history is the stories we (i.e., the victors) tell ourselves, stories can shape the future by giving people a path, an inspiration, or a goal. One inspiration for those stories is data … and different ways of looking at the data.

Just read the last paragraph and it’s clear I’m insecure re my intellect, or have an edible hangover. The answer is yes.

Anyway, I love 2×2 matrices, and how their quadrants inspire stories. Identifying two factors that define four groups can provide insight into industry dynamics and illuminate pressures and opportunities. Often, the points on a matrix are a function of quantitative analysis; however, the real value is in the sorting, not the calibration. 


In that spirit, I’ve been thinking a lot about how tech is battling for our attention. Screens have infested our lives and we’ve become re-attached to an Orwellian umbilical cord. From fitness to


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Which Governments Ordered Johnson & Johnson’s Vaccine?

 

Which Governments Ordered Johnson & Johnson's Vaccine?

Courtesy of Niall McCarthy, Statista

On Wednesday, U.S. regulators announced that Johnson & Johnson's Covid-19 vaccine being developed by its subsidiary Janssen Pharmaceuticals in Belgium is effective at preventing moderate to severe cases of the disease. The jab has been deemed safe with 66 percent efficacy and the FDA is likely to approve it for use in the U.S. within days.

The Ad26.COV2.S vaccine can be stored for up to three months in a refrigerator and requires a single shot, unlike some of the other Covid-19 vaccines currently in use that need special freezing units and two doses. It will also require less medical personnel and should speed up the pace of he vaccination campaign considerably.

The United States has ordered 100 million doses of Johnson & Johnson's vaccine according to tracking conducted by Duke University but its rollout is set to be hindered by production shortfalls. The company committed to delivering 10 million doses by the end of February but it recently states that only 4 million are going to be ready to ship. By the end of March, the company hopes to distribute 20 million doses.

Infographic: Which Governments Ordered Johnson & Johnson's Vaccine? | Statista You will find more infographics at Statista





Can vaccinated people still spread the coronavirus?

 

Can vaccinated people still spread the coronavirus?

Vaccinated people are wondering whether they can ease social distancing and mask-wearing. AP Photo/Darko Bandic

Courtesy of Deborah Fuller, University of Washington

Editor’s note: So you’ve gotten your coronavirus vaccine, waited the two weeks for your immune system to respond to the shot and are now fully vaccinated. Does this mean you can make your way through the world like the old days without fear of spreading the virus? Deborah Fuller is a microbiologist at the University of Washington working on coronavirus vaccines. She explains what the science shows about transmission post-vaccination – and whether new variants could change this equation.

1. Does vaccination completely prevent infection?

The short answer is no. You can still get infected after you’ve been vaccinated. But your chances of getting seriously ill are almost zero.

Many people think vaccines work like a shield, blocking a virus from infecting cells altogether. But in most cases, a person who gets vaccinated is protected from disease, not necessarily infection.

Every person’s immune system is a little different, so when a vaccine is 95% effective, that just means 95% of people who receive the vaccine won’t get sick. These people could be completely protected from infection, or they could be getting infected but remain asymptomatic because their immune system eliminates the virus very quickly. The remaining 5% of vaccinated people can become infected and get sick, but are extremely unlikely to be hospitalized.

Vaccination doesn’t 100% prevent you from getting infected, but in all cases it gives your immune system a huge leg up on the coronavirus. Whatever your outcome – whether complete protection from infection or some level of disease – you will be better off after encountering the virus than if you hadn’t been vaccinated.

An electron microscope scan of the coronavirus

Vaccines prevent disease, not infection. National Institute of Allergy and Infectious Diseases, CC BY

2. Does infection always mean transmission?

Transmission happens when enough viral particles from an infected person get into the body of an uninfected…
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Why it takes 2 shots to make mRNA vaccines do their antibody-creating best – and what the data shows on delaying the booster dose

 

Why it takes 2 shots to make mRNA vaccines do their antibody-creating best – and what the data shows on delaying the booster dose

After a second dose of the COVID-19 mRNA vaccine, a swarm of antibodies attacks the virus. Kateryna Kon/Science Photo Library via Getty Images

Courtesy of William Petri, University of Virginia

With the U.S. facing vaccination delays because of worker shortages and distribution problems, federal health officials now say it’s OK to push back the second dose of the two-part vaccine by as much as six weeks.

As an infectious disease doctor, I’ve been fielding a lot of questions from my patients as well as my friends and family about whether the COVID-19 vaccine will still work if people are late receiving their second dose.

Why you need two doses 3-4 weeks apart

Two doses, separated by three to four weeks, is the tried-and-true approach to generate an effective immune response through vaccination, not just for COVID but for hepatitis A and B and other diseases as well.

The first dose primes the immune system and introduces the body to the germ of interest. This allows the immune system to prepare its defense. The second dose, or booster, provides the opportunity for the immune system to ramp up the quality and quantity of the antibodies used to fight the virus.

In the case of the Pfizer and Moderna COVID-19 vaccines, the second dose increases the protection afforded by the vaccine from 60% to approximately 95%.

Why the CDC decided receiving the second dose within 42 days is OK

In the clinical trial, the second dose of the Pfizer vaccine was administered as early as day 19 and as late as day 42 to 93% of the subjects. Since protection was approximately 95% for everyone who was vaccinated within this time “window,” there is little reason not to allow some flexibility in the timing of the second dose 2.

As more vaccine becomes available, the timing of the second dose should be close to four weeks for the Pfizer and Moderna vaccines. But the good news is that…
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Ensuring the minimum wage keeps up with economic growth would be the best way to help workers and preserve FDR’s legacy

 

What is raising the federal minimum wage likely to accomplish and not likely to accomplish?

Ensuring the minimum wage keeps up with economic growth would be the best way to help workers and preserve FDR's legacy

It may seem like a lot, but it’s not the most important change in the bill. AP Photo/J. Scott Applewhite

Courtesy of Felix Koenig, Carnegie Mellon University

The US$1.9 trillion pandemic relief bill that the House is expected to soon pass includes a gradual increase in the federal minimum wage to $15 per hour by 2025. While its chances in the Senate appear slim, the proposal has brought national attention to the minimum wage, which has been stuck at $7.25 since 2009.

Supporters argue a higher minimum wage would translate into higher incomes for millions of low-wage employees, such as restaurant waiters, retail salespeople and child care workers, and thereby lift a lot of people out of poverty. Opponents claim it would hurt businesses and lead to a lot of job losses.

As an economist who studies labor markets and income inequality, I believe both claims exaggerate the impact and miss a key point of what the minimum wage is meant to achieve. The current debate offers a perfect opportunity to restore the wage floor’s original purpose, as laid out by FDR over 70 years ago.

Preventing employer abuses

The federal minimum wage was first implemented under the Fair Labor Standards Act in 1938 at a very modest 25 cents an hour – about $4.61 today – and applied only to “employees engaged in interstate commerce or in the production of goods for interstate commerce.” Think manufacturing workers, miners and truck drivers.

It took 18 years before Congress raised it to a buck, and the wage was soon expanded to include lots of other workers, such as retail employees, gas station attendants and nursing home aides. The latest increase, in 2009, set the wage at $7.25. It now applies to almost all workers except the self-empoyed, small-farm laborers, teenagers and those who receive tips, as well as a handful of other exempted groups.


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Phil's Favorites

Only took 12 years, but Wall Street has finally gotten bullish enough

 

Only took 12 years, but Wall Street has finally gotten bullish enough

Courtesy of 

One of the most interesting things that happens after a big, nasty, protracted bear market is that no one wants to be accused of being bullish or upbeat about anything. In the aftermath of a crash, the bulls always look and sound dopey or complacent.

Wall Street strategists are only human. And as markets trade higher, they gradually get more and more comfortable sounding positive on stocks. The trauma of having been bullish and wrong ahead of the last crisis fades away and the recenc...



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Zero Hedge

Controversial Bonus Change At Bank Of America Pulls Forward $400 Million In Costs

Courtesy of ZeroHedge View original post here.

A controversial change in how bonuses were to be issued for 2020 has wound up pulling forward $400 million in expenses, which will be booked in Q1. The costs otherwise would have been spread out over the next four years, according to Bloomberg...



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ValueWalk

Ormat: Dirty Dealings in 'Clean' Energy

By Hindenburg Research. Originally published at ValueWalk.

Hindenburg Research‘s short report on Ormat Technologies, Inc. (NYSE:ORA).

Q4 2020 hedge fund letters, conferences and more

Ormat Technologies, Inc. (ORA)
  • Today we reveal how ESG-darling Ormat, a developer and operator of geothermal power plants, has engaged in what we believe to be widespread and systematic acts of international corruption.
  • We expect the blowback to these revelations to be severe, threatening Ormat’s ...


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Kimble Charting Solutions

Gold Miners Decline Nearly 30%, Currently Testing 15-Year Support Level!

Courtesy of Chris Kimble

The past 8-months have been great for the broad markets, the same cannot be said for Gold Miners. Gold Miners ETF (GDX) has lost nearly a third of its value since peaking last August.

This decline has taken place inside a bullish rising channel, that started at the lows in 2015.

The 27% decline in the past 30-weeks has GDX testing a support/resistance line at the $30 level, that has been in play for the past 15-years.

It is critical for GDX to hold this support at (1).

If this support level does not hold, odds increase that GDX could end up testi...



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Mapping The Market

Which Governments Ordered Johnson & Johnson's Vaccine?

 

Which Governments Ordered Johnson & Johnson's Vaccine?

Courtesy of Niall McCarthy, Statista

On Wednesday, U.S. regulators announced that Johnson & Johnson's Covid-19 vaccine being developed by its subsidiary Janssen Pharmaceuticals in Belgium is effective at preventing moderate to severe cases of the disease. The jab has been deemed safe with 66 percent efficacy and the FDA is likely to approve it for use in the U.S. within days.

The Ad26.COV2.S vaccine can be stored for up to three months in a refrigerator and requires a single shot, ...



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Biotech/COVID-19

Which Governments Ordered Johnson & Johnson's Vaccine?

 

Which Governments Ordered Johnson & Johnson's Vaccine?

Courtesy of Niall McCarthy, Statista

On Wednesday, U.S. regulators announced that Johnson & Johnson's Covid-19 vaccine being developed by its subsidiary Janssen Pharmaceuticals in Belgium is effective at preventing moderate to severe cases of the disease. The jab has been deemed safe with 66 percent efficacy and the FDA is likely to approve it for use in the U.S. within days.

The Ad26.COV2.S vaccine can be stored for up to three months in a refrigerator and requires a single shot, ...



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Digital Currencies

Crypto - It Is Different This Time

 

Crypto – It Is Different This Time

Courtesy of Howard Lindzon

?I have been astonished as you know by the growth of crypto.

I remember back in 2017 when I noticed that Stocktwits message volume on Bitcoin ($BTC.X) surpassed that of $SPY. I knew Bitcoin was here to stay and Bitcoin went on to $19,000 before heading into its bear market.

Today Bitcoin is near $50,000.

Back in November of 2020, something new started to happen on Stocktwits with respect to crypto.

After the close on Friday until the open of the futures on Sunday, all Stocktwits trending tickers turned crypto. The weekend messages on Stocktwits have increased 400 percent.

That has continued each weekend...



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Politics

What is fascism?

 

What is fascism?

A Donald Trump supporter wears a gas mask and holds a bust of him after he and hundreds of others stormed the Capitol building on Jan. 6, 2021. Roberto Schmidt/AFP via Getty Images

Courtesy of John Broich, Case Western Reserve University

Since before Donald Trump took office, historians have debated whether he is a fascist.

As a teacher of World War II history...



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Chart School

The Fastest Money

Courtesy of Read the Ticker

The fast money happens near the end of the long trend.

Securities which attract a popular following by both the public and professionals investors tend to repeat the same sentiment over their bull phase. The chart below is the map of said sentiment.
 


 

Video on the subject.


 

Charts in the video



 



 



Changes in the world is the source of all market moves, to ...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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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. Contact Ilene to learn about our affiliate and content sharing programs.