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Silver – Pausing Before Another Leg Higher

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Silver – Pausing Before Another Leg Higher

By: MIG Bank | Tue, Feb 28, 2017

Silver has finally exited an area where bearish pressures seem important. The precious metal is way into a bullish momentum. Hourly support can be located at 17.75 (14/02/2017 low) then 16.63 (27/01/2017 low). Expected to reach 19.00 in the medium-term.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Daily Technical Report

 

 

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MIG BANK, formerly known as MIG INVESTMENTS, was established in Neuchatel,

Switzerland as an online Forex broker and

in 2009 became the world’s 1st Forex broker to obtain a Swiss banking license.
Since its foundation in 2003, MIG BANK specializes in online Forex
trading
and remains a leading Forex broker for clients in more than 120
countries.

No information published constitutes an offer or recommendation, to buy or
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Published at Tue, 28 Feb 2017 06:43:42 +0000

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Group Coaching: A Powerful Trading Resource

 

Group Coaching: A Powerful Trading Resource

One of the things I’m most looking forward to in this coming Sunday’s four-hour seminar at the New York Trader’s Expo is the opportunity to conduct true group coaching with attendees.  It’s surprising how little coaching of traders occurs in group mode, especially given the common overlap of concerns among traders.  I’m looking forward to the experience because of several powerful advantages of working in groups:

1)  In groups, there are opportunities to gain insights from other members as well as from the group organizer.  Take AA as an example:  much of the impact derives from the interactions of members to support, challenge, and enlighten one another.

2)  Groups, run properly, can be fun.  They lend themselves to interactive exercises and lively dialogue.  We tend to be most focused on what is most engaging.  Groups can actively engage us.

3)  The loyalty built within groups brings the best out in people.  I saw this when I ran group therapy sessions on the inpatient psychiatry unit of a hospital.  Members reached out in ways for others that they couldn’t always do for themselves.

Perhaps best of all, groups can become phenomenal creativity resources.  Imagine a group of dedicated traders, each bringing their best trade of the week–and their best psychological practice–to the group meetings.  Everyone can play off everyone else, modifying the ideas, applying them to their own situations, and generating new best practices for the entire group.  When group members are passionate about what they do, that passion becomes self sustaining, fueling the development of new ideas and methods.  It’s an important reason some traders choose to join trading firms rather than trade on their own.  It’s an important reason solo traders maintain active networks with like-minded peers.

Think of basketball and football teams.  Think of AA.  Think of Special Forces units.  So often, groups push us in ways that we would never push ourselves.  Groups support us in ways we cannot support ourselves.  Groups give us feedback we’d never think of on our own.

(While writing this, I’m listening/watching MMJ doing their early Conan session.  From 2:45 on in the video, you can see how groups, passionate about what they do, make beautiful music.)

Look forward to some great music making this weekend!

Further Reading:  Joining a Hedge Fund or Prop Trading Group

Published at Mon, 20 Feb 2017 11:44:00 +0000

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Reading in Parallel: Becoming Better at Generating Ideas

 

Reading in Parallel: Becoming Better at Generating Ideas

Reading for information is a bit different than reading for fresh thinking.  Often, when we read a book, we simply absorb the ideas of the author.  When we read for fresh thinking, we actively play with those ideas and create new ones.

An exercise I’ve mentioned in the past–and that I’ve used in writing my books–is reading in parallel.  Select a topic of interest and then purchase at least four highly rated, well-reviewed books related to that topic.  Skim each book in advance and mark off the sections most relevant to your selected topic.  Then take turns reading from those sections of each of the books, freely moving from an idea in one of the books to related ideas from the other books.  So, for example, I might read four books on creativity, but will read the sections on “problem finding” (how to arrive at worthwhile questions to ask) from each of the books.  Then I might read the sections on brainstorming from each of the books.

Rarely will I get through every section of every book.  The idea is to create a kind of dialogue among the authors, identifying points of overlap and difference.  Very often, the ideas from one book will trigger ideas that have you scouring the other books for elaboration.  The mixture of ideas from several books will lead to a thought that is not contained in any of the books.  When you read in parallel, it’s like being in the room while the authors are conversing.  The intersecting of ideas almost always stimulates fresh ways of thinking about (and applying) the topic at hand.

The key to reading in parallel is starting with worthwhile books.  Curated lists are often a great place to start.  Here’s a curated list of good books from James Clear.  The excellent site Abnormal Returns offers an excellent curated list of articles and podcasts organized by categories.  Quantocracy offers a great list of articles relevant to quantitative finance.  Barry Ritholtz regularly puts out thought provoking articles of relevance to macro investing.

There’s a world of great material out there…how you access it can help unearth its greatest value.

Further Reading:  Emotional Creativity

 

Published at Thu, 15 Dec 2016 10:15:00 +0000

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Surging dollar skittles euro, yen and EM currencies

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Men walk past an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, November 18, 2016. REUTERS/Toru Hanai

Men walk past an electronic board showing Japan’s Nikkei average outside a brokerage in Tokyo, Japan, November 18, 2016.REUTERS/Toru Hanai

Surging dollar skittles euro, yen and EM currencies

By Marc Jones | LONDON

The dollar surged to a near 14-year high before pulling back on Thursday, clocking up records against a range of other top world currencies and skittling emerging markets.

Stronger data from the world’s biggest economy had underpinned the greenback’s gains, which were further amplified by thinner volumes as U.S. traders stayed away for the Thanksgiving holiday.

It was off its highs as Europe wound down but had earlier pushed its way past more of last year’s peaks against the euro to reach $1.0515, with only the March 2015 high of $1.0457 standing in the way of a drive toward parity. [FRX/]

The yen JPY= had skidded to an eight-month low and China’s yuan CNH=D3 to an 8-1/2 year low, while the highly sensitive Turkish lira TRY= and Indian rupee IDR= hit new troughs as warning lights flashed in emerging markets. [EMRG/FRX]

“There doesn’t seem to be anything stopping U.S. yields going higher in the near-term so I think people are going to stay on the dollar trend,” State Street Global Markets’ head of global macro strategy, Michael Metcalfe, said.

“The only risk to this are that the dislocations in markets outside of the U.S., particularly in emerging markets, get to a point where they start to feed back into concerns (for the Federal Reserve as it looks to raise interest rates),” he said.

In contrast to all the FX noise, European shares .FTEU3 saw a broadly quiet day, with most of the main bourses <0#.INDEXE> inching up on gains from chemical and insurance sector stocks but capped by weaker banks. .SX7E[.EU]

German business confidence data showed firms remained unfazed, for now at least, by the U.S. election win for Donald Trump and the political uncertainty bubbling in the euro zone.

However, the European Central Bank delivered an unusually downbeat message, warning that global political shifts could compound existing vulnerabilities to rising interest rates and revive worries about the euro zone’s weaker economies.

ECB Vice President Vitor Constancio said the bank would be watching Italy particularly closely as it braces for a referendum on sweeping changes to its constitution next month.

“It’s the sort of political uncertainty that will trigger or not an economic shock in financial markets,” Constancio told reporters after presenting the ECB’s twice yearly report on financial stability, refering to if Italy’s government losses the vote.

“And depending on the degree of that shock, then we have to see if we have anything to do or not.”

DOLLAR BULLS IN THE CHINA SHOP

It was enough to keep bond markets playing the transatlantic divide that has been widening again on bets that, while the United States may be about to raise interest rates, Europe is unlikely to follow suit for a couple of years.

The yield on Germany’s 10-year government bond, the benchmark for the region, fell 2 basis points (bps) to 0.26 percent, while Italy, which has been plagued by its political concerns, outperformed with yields down 5 bps to 2.08 percent.

In the United States on Wednesday by contrast, the two-year Treasury yield US2YT=RR hit its highest since April 2010.

The firm dollar hit most emerging market currencies, with China’s yuan nearing the 7 per dollar level for the first time since May 2008. [CNY/]

State banks or foreign exchange authorities in China, India, Indonesia and the Philippines were all suspected of intervening to slow the slide in their currencies, traders said.

Turkey’s lira TRY= and India’s rupee both sank to record lows. The lira was also buffeted by calls from European lawmakers to halt Turkey’s EU membership talks, though it clawed back some ground after the Turkish central bank raised one of its key interest rates for the first time since 2014.

“Exchange rate movements due to recently heightened global uncertainty and volatility pose upside risks on the inflation outlook,” the central bank’s monetary policy committee said in its statement.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.4 percent, though the drop in the yen lifted the export-orientated Nikkei in Tokyo .N225 to a near 11-month high. [.T]

Hong Kong’s Hang Seng .HSI shed 0.2 percent while higher metals prices lifted China’s blue-chip CSI300 index .CSI300 0.4 percent.

Oil prices were little changed amid all the dollar commotion and ahead of a planned OPEC-led cut in crude production at a meeting on Nov. 30. [O/R]

U.S. crude was up 10 cents at $48.08 a barrel CLc1 and Brent LCOc1 was up a similar amount at $49.09.

Industrial metals remained red-hot meanwhile on hopes of a revival in U.S. manufacturing and infrastructure spending under Trump. London zinc CMZN3 hit an 8-year high and copper CMCU3 jumped for a fourth day in a row to put $6,000 a ton within reach. [MET/L]

“Strong durable goods orders in the U.S. helped buoy investors who have viewed Trump’s upcoming presidency as a positive for industrial metals demand,” ANZ said in a report.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

(Additional reporting by Melanie Burton in Melbourne and Balazs Koranyi and Francesco Canepa in Frankfurt; Editing by Louise Ireland and Toby Chopra)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 24 Nov 2016 10:31:38 +0000

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Asia stocks under pressure as dollar hovers near 14-year high

A man stands next to an electronic board showing stock prices in Tokyo, Japan, August 18, 2016. REUTERS/Kim Kyung-Hoon

A man stands next to an electronic board showing stock prices in Tokyo, Japan, August 18, 2016. REUTERS/Kim Kyung-Hoon

Asia stocks under pressure as dollar hovers near 14-year high

By Saikat Chatterjee | HONG KONG
The U.S. dollar held near a 14-year high on Tuesday and Treasury yields extended their rise as investors braced for stronger inflation in the United States amid expectations of expansionary fiscal polices under Donald Trump’s presidency.

The combination of the two have derailed Asian currencies and equities, particularly in South Korea, Taiwan and Indonesia, which have seen big inflows this year, especially after the shock referendum vote by Britain to exit the European Union in June.

MSCI’s broadest index of Asia-Pacific shares outside Japan was broadly flat after falling nearly 5 percent since Trump’s shock victory at the U.S. presidential elections last week. European markets were expected to open steady.

Indian stocks and Australian shares led regional losers with declines of 1.4 and 0.4 percent respectively. Hong Kong stocks rose 0.5 percent, boosted by expectations of strong earnings from index heavyweight Tencent.

“People are already pricing in the Trump presidency and the repercussions on their own economies,” said Joseph Roxas, an analyst at Manila-based Eagle Equities.

“The (regional) currencies are recovering, so the markets are recovering as well after quite a long down period. We should expect a little rally after such a big drop.”

On a trade-weighted basis, the dollar index on Monday vaulted above its January peak to hit 100.22, its highest since early December 2015.

On Tuesday, it was steady at 99.922.

Dollar strength and rising U.S. yields have fueled capital outflows from emerging markets. Foreign investors pulled out 950 billion won ($812.52 million) from Korean stocks and pumped in 397.4 billion won ($339.89 million) into bonds between Nov. 9-14.

Analysts expect more gains for the greenback in the short term, resulting in further headwinds for Asia.

Though emerging market equities have staged a comeback in the third quarter, their performance has sharply diverged since last week, putting developed equities comfortably ahead.

“The immediate driving force is the anticipated policy mix in the U.S.,” Brown Brothers Harriman analysts said in a note to clients.

They said most economists are “focusing on either the higher U.S. interest rates and a likelihood of a somewhat more aggressive Fed tightening cycle, or the possibility of a dramatically more stimulative fiscal stance. We see the combination (the policy mix) as an exceptionally potent force that will continue to propel the dollar higher.”

Despite the general air of caution over Asian markets, investors are eyeing some opportunities such as banking stocks in Hong Kong which would benefit from any Trump-led deregulation in the financial sector.

Some investors were also considering the Indian rupee, which is relatively less exposed to any flare-up in global trade protectionism than others.

In currency markets, the dollar was trading at 107.88 yen after hitting its highest level in more than five months overnight. The less volatile Chinese yuan plunged to its lowest levels in nearly eight years to 6.8641 after a weak fixing.

The dollar has been on a tear since Trump’s shock victory triggered a massive sell-off in Treasuries.

The large moves in markets has been stoked by expectation that Trump’s promised infrastructure spending and tax cuts will spur higher U.S. growth, pushing up inflation as well as borrowing costs.

Yields on the U.S. 10-year Treasury notes climbed to their highest since January to 2.23 percent on Monday, while 30-year paper reached 3 percent.

Just two days of selling last week wiped out more than $1 trillion across global bond markets, the worst rout in nearly 1-1/2 years, according to Bank of America Merrill Lynch.

In the oil market, Brent crude rose 1.6 percent to $45.14 a barrel, while U.S. crude climbed 1.87 percent to $44.13 on expectations of falling shale output.

(Additional reporting by Jongwoo Cheon in SINGAPORE and Hideyuki Sano in TOKYO; Editing by Kim Coghill and Richard Borsuk)

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My Trading Journal: 30 Day Trading Journal

Published at Tue, 15 Nov 2016 03:56:46 +0000

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Dollar jumps against yen, euro as FBI clears Clinton

 

Light is cast on a U.S. one-hundred dollar bill next to a Japanese 10,000 yen note in this picture illustration shot February 28, 2013.REUTERS/Shohei Miyano/Illustration/File Photo

Dollar jumps against yen, euro as FBI clears Clinton

By Dion Rabouin | NEW YORK

The dollar rose on Monday after the FBI decided that U.S. Democratic presidential nominee Hillary Clinton will not face criminal charges, which was seen as a boost to her chances of winning Tuesday’s contest with Republican rival Donald Trump.

The greenback gained 0.75 percent against a basket of currencies .DXY after getting hammered last week when FBI Director James Comey said the agency was looking at another large batch of Clinton emails, strengthening chances of a Trump victory, an outcome that was seen as likely to send shock waves through financial markets.

The Federal Bureau of Investigation said late Sunday it stood by its earlier finding that no criminal charges were warranted against Clinton for her email practices. The announcement sent the dollar surging against the yen JPY=, euro EUR= and pound, and gave a jolt to the Mexican peso MXN=.

“It’s all the election. It’s all the Comey letter,” said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey, referring to the currency moves.

“Markets want continuity and essentially they want what they have priced in and both point towards Clinton. That’s why markets are reacting to anything that boosts Clinton’s chances by taking back some of the selloff from the past week or so.”

Despite wide-ranging political worries from a Trump victory to the possibility of a Democratic sweep of the U.S. presidency, Senate and House of Representatives, markets now look confident the U.S. will continue with the status quo, analysts said.

“It’s going to be a tight race, but the market appears to be pricing in a Clinton victory,” with the Republicans likely to control the House and the Democrats likely in control of the Senate, said Peter Ng, senior FX trader at Silicon Valley Bank in Santa Clara, California.

Trump’s stance on immigration, foreign policy and trade have made the Mexican peso a proxy for his election chances.

Boosted by the FBI’s decision, the peso rose as much as 2.5 percent on Monday, on pace for its largest one-day percentage gain since Sept. 27, to hit a 12-day high of 18.55 per dollar.

The dollar rose 1.4 percent to 104.58 yen JPY=. It declined to 102.550 against the safe-haven Japanese currency last week as polls showed the U.S. presidential race tightening.

The euro EUR= fell 0.9 percent against the dollar to $1.1035. Sterling GBP=also slipped against the dollar, falling 1 percent to $1.2390.

(Additional reporting by Patrick Graham and Yumna Mohamed in London; Editing by Jeffrey Benkoe and Diane Craft)

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal

Published at Sun, 06 Nov 2016 21:56:02 +0000

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Assessing Positioning in the Market: A Measure of Pure Sentiment

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By stux from PixabayAssessing Positioning in the Market: A Measure of Pure Sentiment

Traders are often concerned that their ideas might fail simply because they have become “too consensus”.  That is, if many other participants are positioned in the same idea, the risk/reward may become negatively skewed.  There aren’t many traders left to move the position further in the desired direction and, should prices start to move the other way, there can be a stampede for the exits quickly putting positions under water.

Sentiment in the stock market is one way of gauging market psychology and whether there may be a bullish or bearish consensus.  Unfortunately, the standard measure for assessing sentiment, the put/call ratio, has several weaknesses.  First, it often mixes together put and call trading for stock index options and for the options on individual equities.  My work shows those are different distributions, with different impacts on markets.  The equity-only put/call measure, where options across all exchanges and all listed issues are included, has been the best measure for sentiment.  A second problem with the standard put/call ratio is that it is itself impacted by past price movement and volatility.  When markets rise, the ratio tends to decline and vice versa.

The pure sentiment measure I created is akin to the pure volatility measure, which adjusts implied volatility for the amount of realized volatility and past price movement.  Pure volatility thus tells us how much movement is being priced into options for a given amount of recent movement and realized volatility.  In other words, it shows us how VIX may be under-reacting or overreacting to recent price behavior.  Similarly, pure sentiment adjusts the put/call ratio for recent price movement and volatility.  The pure sentiment measure (shown above) tells us when we are “too” bullish or “too” bearish, given recent price behavior.

Interestingly, going back to 2014, pure sentiment has been a decent near term predictor of stock index prices–so much so that I added it to the ensemble model recently described.  By a simple median split, when pure sentiment has been high (too bearish for the amount of market movement we’ve seen), the next ten days in SPX have averaged a gain of +.71%.  When pure sentiment has been too low (too bullish for the amount of recent market movement), the next ten days in SPX have averaged a loss of  -.17%.  The numbers stand out even more at the extremes.

Notice how, in the recent market, we’ve had quite a few high readings in pure sentiment.  (Friday closed bullish on the pure sentiment measure; the overall ensemble model closed at a flat 0).  We’ve seen weakening breadth in stocks and many participants have been anticipating a market top, but prices have tended to bounce higher after we’ve seen selling.  The bearish sentiment/positioning may have something to do with that.  It’s a facet of the market I’ll be tracking closely in coming days.

Many, many market indicators can be improved by looking at whether and how they anticipate forward price movement once correlated market factors are removed.  It doesn’t help to look at 12 different market indicators if they all are significantly correlated.  When we remove the correlations, we come closer to measuring the true factors that move stock prices.

Further Reading:  Pure Volatility
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Published at Sat, 08 Oct 2016 12:32:00 +0000

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Tracking Speculative Sentiment in the Market

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By stevepb from PixabayTracking Speculative Sentiment in the Market

I recently posted on the importance of identifying who is in the market as a way of gauging how the market is likely to move, tracking the behavior of large institutional participants.  A different way of assessing market participation is by looking at speculative sentiment in the market.  This can be accomplished by looking at total options volume, not just the ratio of put volume to call volume.  

When total equity options volume (volume of options trading for stocks listed across all options exchanges) is in its lowest quartile going back to 2014, the next 10 days in SPY have averaged a loss of -.51%.  When total options volume has been in its highest quartile, the next 10 days have averaged a gain of +.91%.  If we strip out the role of total trading volume from total options volume in a regression model, we find that when pure options volume is in its lowest quartile (as was the case after Monday’s close), the next 10 days in SPY have averaged a loss of -.41% versus an average gain of +.49% for the remainder of the sample.  

In other words, when speculative sentiment has died out, the market has been most vulnerable to correction.  Bear moves tend to end in a frenzy of activity, as value and momentum participants become involved at multiple time frames.  Bull moves tend to end in complacency and lack of interest, as the market becomes too dull for momentum participants and too rich for value players.  It is the interplay of high and low participation, tracking the activity of different participants, that creates the dynamics of market cycles.

Further Reading:  Volatility and the Dynamics of Market Cycles
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Published at Tue, 04 Oct 2016 10:55:00 +0000

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Looking for Your Trading Edge

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By stevepb from PixabayLooking for Your Trading Edge

Just thought I’d update this post on what it means for stocks when we see a high degree of institutional participation in the US equity market.  Yesterday’s reading was in the highest quartile, which has been associated with significantly above average returns over a next 10-day period.  Interestingly, we also saw an elevated equity put/call ratio, also associated with favorable next 10-day returns in SPY.

Meanwhile, several of my cycle measures have been pretty toppy.  

There are times when things line up and there are times when they don’t line up.  A useful psychological exercise is to assume that, at some point, everything will line up.  What would you need to see for such a line-up to occur?  Anticipating potential price paths is a first step in preparing to trade them.  Being aware of when things aren’t lining up is a great way to avoid overtrading.

Further Reading:  When to Exit Winning Trades
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Published at Fri, 30 Sep 2016 11:14:00 +0000

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An Update of the Trading Model

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By stux from PixabayAn Update of the Trading Model

TraderFeed will be taking a sabbatical during the month of October, with occasional postings on the market and on trading psychology.  During the sabbatical, I’ll be finishing a co-edited book on brief therapy and completing a personal project.  That personal project will be a major subject during November’s posts.

Over the October sabbatical, I’ll also provide occasional updates of scores from my multivariate model, which I’ve revised to include a new measure of sentiment.  That new measure views put volume and call volume as independent variables, rather than simply taking the ratio of the two.  So we look for occasions when put volume is unusually high or low and the same for call volume.

Model scores range from +6 (very bullish) to zero (neutral) to -6 (very bearish).  The chart above shows average 10-day returns as a function of model score from 2014 to the present.  Hit rates on trades taken mechanically have been as one would expect from the above chart, with 64% of trades finishing up when scores have been 1 or 2; and 63% of trades finishing down when scores have been between -2 and -3 and very high hit rates at the bullish and bearish extremes.

We closed Friday with a score of +2, moderately bullish. 

Further Reading:  What We Can Learn From Quant Models
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Published at Sat, 01 Oct 2016 16:32:00 +0000

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