The Prepared Mind: January 25, 2016

"Chance favors the prepared mind." -- Louis Pasteur

“Chance favors the prepared mind.” — Louis Pasteur

By Frank Fahey

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections

than has been lost in corrections themselves.”   Peter Lynch

The only value of stock forecasters is to make fortune-tellers look good.” – Warren Buffet

The markets were very jittery last week.   The average dialing trading range for the S&P 500 – difference between high and low mark – this past week was 45 points. Assuming an weekly average price of 1850, the high to low trading range was nearly 2.%%. This range does not tell the whole story. Every day this week had multiple moves of up and down over 1%. I have reduced the number of my trading positions and the size of the remaining positions. Current interday and intraday volatility requires me to turn up my focus on risk and my ability to modify existing positions in a timely manner. As famed architect Mies van der Rohe cautioned, “Less is more.”

Stocks are still under pressure despite Friday’s rally. This rally was described by many analysts as an “oversold rally.” The SPX bounced of the 1820 level. This support level is the lows of both April 2014 and October 2014. Equity only put/call ratios gave new buy signals on Thursday and Friday. Market breadth is deeply mired on sell signals and profoundly oversold. The general consensus among technical analysts is shorter bullish and intermediate term bearish. The struggle between the short term and the intermediate term trends will provide further volatility of the indices.

Here is an overview of the market behavior last week:

Index 22-Jan Weekly Change % Weekly 2015 YTD Volatility of Index
Dow Jones Industrials (DJIA) 16093.51 105.43 0.66% -7.64% 21.93% (VXD)
S&P 500 (SPX) 1906.90 26.61 1.42% -6.70% 22.34% (VIX)
NASDAQ 100 (NDX) 4246.96 107.01 2.58% -7.62% 25.74% (VXN)
Russell 2000 (RUT) 1016.50 9.67 0.96% -10.35% 25.24% (RVX)
S&P 100 (OEX) 851.34 (4.24) -0.50% -6.59% 23.18% (VXO)
CBOE Volatility Index (VIX) 22.34 (4.68) -17.32% NA  

Data Source: OptionVue7

 

The VIX front month future is at a premium to the VIX spot for the first time since January 4. The backwardization of front month future versus spot ended at 11 days, the third longest backwardization streak in VIX history. Backwardization continues in the February VIX future versus the March VIX future. Russell Rhoads, Options Institute Director of Program Development, points out the front month futures versus second month futures is the backwardization which VIX traders care the most about.

 

Here is an overview of last week for the VIX and related products:

Indexes Ticker 22-Jan 15-Jan Change % Change
CBOE Volatility Index VIX 22.34 27.02 (4.38 ) -17.32%
VIX February Future (2/17/2016) VXG6 22.725 24.350 (1.625) -6.67%
VIX March Future (3/16/2016) VXH6 22.175 23.650 (1.475) -6.24%
VIX April Future (4/20/2016) VXJ6 23.650 23.300 0.350 1.50%
CBOE Short-term Volatility Index VXST 22.59 29.60 (7.01) -23.68%
CBOE 3 Month Volatility Index VXV 24.28 26.88 (2.60) -9.67%
CBOE Mid-term Volatility Index (6 month) VXMT 24.58 26.19 (1.61) -6.15%
VIX of VIX VVIX 98.92 116.41 (17.49) -15.02%
Long VIX ETP’s      
iPath S&P 500 VIX Short Term Futures ETN VXX 26.00 26.70 (0.70) -2.62%
ProShares VIX Short Term Futures ETF VIXY 16.60 17.74 (1.14) -6.43%
iPath S&P 500 VIX Mid-Tem Futures ETN VXZ 12.54 12.97 (0.43) -3.32%
Inverse VIX ETP’s      
Daily Inverse VIX Short Term ETN XIV 19.54 18.44 1.10 5.97%
ProShares Short VIX Short Term Future ETF SVXY 38.19 36.03 2.16 6.00%

Data Source: OptionVue7

The highlight of the coming week is the first Fed meeting of 2016. The Fed has telegraphed their intention to not change monetary policy at this meeting. Wednesday’s FOMC announcement will be dissected for clues about the timing and size of changes for the rest of the year. The week of January 25 brings reports on the S&P/Case-Shiller Home Price Index, durable goods, new home sales, and the first estimate of U.S. fourth-quarter GDP. The week starts off with the Dallas Fed manufacturing survey. The survey will provide a picture of the impact of lower oil prices and contractions in the energy sector are most severe.

The earnings season is in full swing. The earnings highlights for widely held and actively traded stocks are: Halliburton, Kimberly Clark, McDonalds, DuPont, Procter & Gamble, Apple, US Steel, Norfolk Southern Boeing, Johnson & Johnson, Celgene, Ball Corp, Caterpillar, Amazon, Visa, Ford, American Airlines, Abbvie, Honeywell, Chevron, MasterCard, and Colgate Palmolive. I did not open any new positions based on earnings strategies this past week. Having no position is a viable strategy. I decided to avoid simultaneously opening position which would be effected by two volatility events – a major market sell-off and earnings announcements.

OptionVue7 has the ability to identify stocks 30 days out with a new enhanced Earnings Search feature. I have done a quick search 14to 28 days forward for candidates for double calendars. Here are the results of my initial scan for double calendar candidates. You should further filter any of the stocks with your own risk/reward criteria.

Symbol Company Name Jan 22 Close IV30 B/A DATE
CTSH Cognizant Technology Solutions Corp $59.06 35.78 BMO 8-Feb
GOLD Randgold Resources Ltd. (ADR) $65.12 37.99 BMO 8-Feb
CNC Centene Corp $59.75 41.48 BMO 9-Feb
REGN Regeneron Pharmaceuticals Inc $461.57 40.44 BMO 9-Feb
RAI Reynolds American, Inc. $45.70 28.24 BMO 9-Feb
ALR Alere Inc $37.56 42.71 BMO 9-Feb
HCP HCP, Inc. $35.63 27.64 BMO 9-Feb
SNY Sanofi SA (ADR) $40.34 26.15 BMO 9-Feb
MLM Martin Marietta Materials, Inc. $118.37 41.77 BMO 9-Feb
IR Ingersoll-Rand PLC $48.83 31.68 BMO 9-Feb
AGU Agrium Inc. (USA) $86.47 32.00 BMO 9-Feb
SAVE Spirit Airlines Incorporated $44.46 58.50 BMO 9-Feb
NBIX Neurocrine Biosciences, Inc. $49.30 75.53 AMC 9-Feb
DIS Walt Disney Co $94.02 28.62 AMC 9-Feb
VIAB Viacom, Inc. $41.58 49.28 AMC 9-Feb
SGEN Seattle Genetics, Inc. $36.08 52.38 AMC 9-Feb
PNRA Panera Bread Co $179.07 35.57 AMC 9-Feb
AKAM Akamai Technologies, Inc. $46.21 52.40 AMC 9-Feb
WOOF VCA Inc $48.51 42.48 DMT 10-Feb
HUM Humana Inc $166.11 31.15 BMO 10-Feb
OC Owens Corning $43.82 33.82 BMO 10-Feb
ARMH ARM Holdings plc (ADR) $41.13 39.23 BMO 10-Feb
MYL Mylan NV $51.44 37.98 BMO 10-Feb
SEE Sealed Air Corp $39.82 35.84 BMO 10-Feb
AFSI AmTrust Financial Services Inc $53.23 37.85 BMO 10-Feb
NSP Insperity Inc $44.51 30.77 BMO 10-Feb
TWX Time Warner Inc $69.48 38.44 BMO 10-Feb
NTES NetEase Inc (ADR) $159.16 47.32 AMC 10-Feb
ORLY O’Reilly Automotive Inc $236.71 32.98 AMC 10-Feb
FMC FMC Corp $35.11 44.43 AMC 10-Feb
PRU Prudential Financial Inc $68.13 34.44 AMC 10-Feb
PXD Pioneer Natural Resources $111.80 54.86 AMC 10-Feb
EXPE Expedia Inc $106.40 49.21 AMC 10-Feb
TSLA Tesla Motors Inc $199.97 55.05 AMC 10-Feb
NLSN Nielsen Holdings PLC $43.89 30.71 BMO 11-Feb
WWAV WhiteWave Foods Co $35.16 41.02 BMO 11-Feb
SHPG Shire PLC (ADR) $174.94 37.30 BMO 11-Feb
TOT Total SA (ADR) $41.01 33.96 BMO 11-Feb
TEVA Teva Pharmaceutical Industries Ltd $61.99 26.95 BMO 11-Feb
TAP Molson Coors Brewing Company $86.57 29.49 BMO 11-Feb
SON Sonoco Products Co $37.13 25.57 BMO 11-Feb
APA Apache Corporation $37.24 60.30 BMO 11-Feb
INCY Incyte Corporation $73.78 68.43 BMO 11-Feb
AIG American International Group Inc $55.31 33.22 BMO 11-Feb
BG Bunge Ltd $59.42 37.00 BMO 11-Feb
JAH Jarden Corp $50.24 35.87 AMC 11-Feb
CYBR Cyberark Software Ltd $48.65 72.43 AMC 11-Feb
ELLI Ellie Mae Inc $61.65 57.17 AMC 11-Feb
STMP Stamps.com Inc. $91.46 74.75 AMC 11-Feb
BIDU Baidu Inc (ADR) $169.56 46.37 AMC 11-Feb
THS TreeHouse Foods Inc. $74.35 46.27 AMC 11-Feb
TRIP Tripadvisor Inc $69.51 53.94 AMC 11-Feb
ALNY Alnylam Pharmaceuticals, Inc. $71.14 65.64 AMC 11-Feb
CBS CBS Corporation $45.77 35.85 AMC 11-Feb
GPC Genuine Parts Company $79.22 25.91 BMO 16-Feb
XEC Cimarex Energy Co $80.47 60.46 BMO 16-Feb
ZTS Zoetis Inc $43.08 32.61 BMO 16-Feb
CERN Cerner Corporation $55.83 35.05 AMC 16-Feb
A Agilent Technologies Inc $37.23 31.64 BMO 17-Feb
MAR Marriott International Inc $61.65 35.59 BMO 17-Feb
MDCO The Medicines Company $35.56 63.66 BMO 17-Feb
BJRI BJ’s Restaurants, Inc. $41.38 49.24 AMC 17-Feb
ADI Analog Devices, Inc. $50.53 37.11 AMC 17-Feb
FANG Diamondback Energy Inc $64.10 60.06 AMC 17-Feb
MIC Macquarie Infrastructure Corp $62.92 34.18 AMC 17-Feb
JACK Jack in the Box Inc. $74.30 35.71 AMC 17-Feb
HOT Starwood Hotels & Resorts Worldwide Inc $61.81 30.61 BMO 18-Feb
TMUS T-Mobile Us Inc $37.10 38.88 BMO 18-Feb
AGN Allergan plc $295.79 25.48 BMO 18-Feb
PRGO Perrigo Company PLC $146.79 34.90 BMO 18-Feb
CAB Cabelas Inc $39.79 56.05 BMO 18-Feb
HRL Hormel Foods Corp $74.48 30.04 BMO 18-Feb
XRAY DENTSPLY International Inc. $56.35 27.22 AMC 18-Feb
INTU Intuit Inc. $91.95 33.24 AMC 18-Feb
IDCC InterDigital, Inc. $41.56 37.53 AMC 18-Feb
ANET Arista Networks Inc $62.54 61.42 AMC 18-Feb
JWN Nordstrom, Inc. $47.74 40.32 AMC 18-Feb
HCN Welltower Inc $65.48 26.03 AMC 18-Feb
PCLN Priceline Group Inc $1,089.14 38.59 AMC 18-Feb
FLR Fluor Corporation (NEW) $41.32 37.81 AMC 18-Feb
VFC VF Corp $57.00 32.28 BMO 19-Feb
DE Deere & Company $73.03 32.66 BMO 19-Feb

 

Once again, it is your responsibility to confirm these earnings dates. The date and time of earnings announcements can and do change.

Advice to stimulate your imagination:

 

“Chance favors the Prepared Mind.” – Louis Pasteur

“It is not certain that everything is uncertain.” – Blaise Pascal

 

Do you know what investing for the long run but listening to market news everyday is like?

It’s like a man walking up a big hill with a yo-yo and keeping his eyes fixed on the yo-yo instead of the hill.”

– Alan Abelson

 

Monday January 25:

 

Economic: Dallas Fed Manufacturing Survey – 10:30.

 

International Economic: ECB President Mario Draghi speaks in German..

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
ASH Ashland Inc $96.97 30.80 BMO
DHI D.R. Horton, Inc. $26.65 41.86 BMO
HAL Halliburton Company $29.29 45.40 BMO
KMB Kimberly Clark Corp $124.95 22.80 BMO
MCD McDonald’s Corporation $117.84 25.32 BMO
OA Orbital ATK Inc $84.15 34.44 BMO
PKG Packaging Corp Of America $55.95 37.41 AMC
ZION Zions Bancorporation $21.09 38.91 AMC

 

 

 

Tuesday January 26:

 

Economic: Redbook – 8:55, FHFA House Index – 9:00, S&P Case-Shiller HPI – 9:00, Consumer Confidence – 10:00, Richmond Fed Manufacturing Index – 10:00, State Street Investor Confidence Index – 10:00.

 

International Economic: No major announcements.

 

Other: FOMC Meeting Begins.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
COH Coach Inc $32.47 43.45 BMO
DD E I Du Pont De Nemours And Co $53.56 35.29 BMO
DHR Danaher Corporation $84.43 24.32 BMO
DOV Dover Corp $52.85 34.78 BMO
GWW W W Grainger Inc $185.53 30.54 BMO
LMT Lockheed Martin Corporation $210.79 23.42 BMO
LXK Lexmark International Inc $26.76 51.92 BMO
MMM 3M Co $137.76 24.13 BMO
PH Parker-Hannifin Corp $87.95 36.20 BMO
PII Polaris Industries Inc. $80.87 48.00 BMO
PLD Prologis Inc $37.73 27.16 BMO
AAPL Apple Inc. $96.30 36.33 AMC
CA CA, Inc. $26.17 30.05 AMC
CB Chubb Ltd $109.43 26.01 AMC
CNI Canadian National Railway (USA) $48.44 32.25 AMC
COF Capital One Financial Corp. $61.18 36.67 AMC
HA Hawaiian Holdings, Inc. $30.89 55.79 AMC
MTSI M/A-COM Technology Solutions Hldgs $39.28 51.20 AMC
SYK Stryker Corporation $91.89 22.82 AMC
TSS Total System Services, Inc. $45.19 35.23 AMC
VMW VMware, Inc. $49.58 51.01 AMC

 

 

Wednesday January 27:

 

Economic: MBA Mortgage Applications – 7:00, New Home Sales – 10:00, EIA Petroleum Status Report – 10:30AM.

 

International Economic: No major announcements.

 

Other: FOMC Meeting Announcement.

 

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
ANTM Anthem Inc $138.78 30.98 BMO
BA Boeing Co $123.40 31.19 BMO
BIIB Biogen Inc $262.08 40.01 BMO
BOKF BOK Financial Corporation $45.62 41.62 BMO
CFR Cullen/Frost Bankers, Inc. $43.37 45.06 BMO
CRUS Cirrus Logic, Inc. $26.95 59.93 BMO
CVLT CommVault Systems, Inc. $30.95 49.13 BMO
DFS Discover Financial Services $48.42 29.28 BMO
EMC EMC Corporation $23.98 22.08 BMO
GD General Dynamics Corporation $124.32 24.29 BMO
HES Hess Corp. $37.62 59.21 BMO
ITW Illinois Tool Works Inc. $81.65 26.40 BMO
NVS Novartis AG (ADR) $79.86 22.87 BMO
OSIS OSI Systems, Inc. $79.63 36.04 BMO
PGR Progressive Corp $29.55 24.86 BMO
ROK Rockwell Automation $90.06 38.73 BMO
STJ St. Jude Medical, Inc. $53.72 32.51 BMO
STT State Street Corp $54.43 32.83 BMO
TXT Textron Inc. $36.51 33.45 BMO
UTX United Technologies Corporation $85.57 24.82 BMO
AMP Ameriprise Financial, Inc. $90.57 32.39 AMC
CAVM Cavium Inc $56.03 48.94 AMC
CCI Crown Castle International Corp $79.13 24.48 AMC
CLB Core Laboratories N.V. $92.95 57.15 AMC
CTXS Citrix Systems, Inc. $65.42 47.89 AMC
EBAY eBay Inc $26.09 38.26 AMC
FB Facebook Inc $94.16 39.95 AMC
HOLX Hologic, Inc. $33.91 37.38 AMC
IBKC IBERIABANK Corp $44.46 35.48 AMC
JNPR Juniper Networks, Inc. $25.64 39.44 AMC
LRCX Lam Research Corporation $68.12 39.30 AMC
LVS Las Vegas Sands Corp. $37.64 45.66 AMC
MCK McKesson Corporation $170.45 26.67 AMC
MLNX Mellanox Technologies, Ltd. $38.60 49.30 AMC
NOW ServiceNow Inc $74.41 56.08 AMC
NSC Norfolk Southern Corp. $70.07 39.62 AMC
QCOM QUALCOMM, Inc. $47.05 39.21 AMC
SLG SL Green Realty Corp $96.75 25.24 AMC
SNDK SanDisk Corporation $66.23 49.92 AMC
TSCO Tractor Supply Company $83.30 35.73 AMC
TXN Texas Instruments Incorporated $49.83 33.72 AMC
URI United Rentals, Inc. $55.31 52.53 AMC
VAR Varian Medical Systems, Inc. $74.81 29.48 AMC
VRTX Vertex Pharmaceuticals Incorporated $95.07 55.69 AMC

 

 

Thursday January 28:

 

Economic: Durable Goods Orders= 8:30, Weekly Jobless Claims – 8:30, Bloomberg Consumer Comfort Index – 9:45, Pending Home Sales Index – 10:00, EIA Natural Gas Report – 10:30, Kansas City Fed Manufacturing Index – 11:00.

 

International Economic:

 

Other: Bank of Japan Announcement-, Great Britain GDP – 4:30 AM, Germany CPI – 8:00AM, Japan CPI – 6:30PM, Japan Industrial Production -6:50PM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
ABT Abbott Laboratories $39.48 25.36 BMO
AZPN Aspen Technology, Inc. $33.86 52.88 BMO
BABA Alibaba Group Holding Ltd $70.72 48.69 BMO
BHI Baker Hughes Incorporated $40.73 63.09 BMO
BLL Ball Corporation $67.06 34.97 BMO
BMY Bristol-Myers Squibb Co $63.13 27.17 BMO
BX Blackstone Group LP $24.16 46.34 BMO
CAT Caterpillar Inc. $59.69 36.41 BMO
CELG Celgene Corporation $105.46 36.25 BMO
CHKP Check Point Software Technologies $72.76 33.72 BMO
DEO Diageo plc (ADR) $103.52 23.10 BMO
DGX Quest Diagnostics Inc $64.75 27.55 BMO
EPD Enterprise Products Partners L.P. $20.68 62.25 BMO
HOG Harley-Davidson Inc $40.67 44.97 BMO
HP Helmerich & Payne, Inc. $45.28 59.84 BMO
HSY Hershey Co $84.66 28.81 BMO
IVZ Invesco Ltd. $28.43 34.48 BMO
JBLU JetBlue Airways Corporation $20.82 42.03 BMO
JCI Johnson Controls Inc $35.24 34.56 BMO
LEA Lear Corporation $101.41 33.11 BMO
LLL L-3 Communications Holdings, Inc. $108.85 30.13 BMO
LLY Eli Lilly and Co $81.40 26.72 BMO
MJN Mead Johnson Nutrition CO $67.64 29.90 BMO
NDAQ Nasdaq Inc $55.78 29.03 BMO
NOC Northrop Grumman Corporation $181.22 25.26 BMO
NUE Nucor Corporation $35.01 34.05 BMO
RCL Royal Caribbean Cruises Ltd $85.48 44.91 BMO
RTN Raytheon Company $117.62 26.08 BMO
SHW Sherwin-Williams Co $245.97 32.31 BMO
SWK Stanley Black & Decker, Inc. $92.85 31.27 BMO
TMO Thermo Fisher Scientific Inc. $131.68 25.90 BMO
TROW T. Rowe Price Group Inc $65.56 27.90 BMO
TWC Time Warner Cable Inc $179.29 26.10 BMO
UA Under Armour Inc $69.06 45.99 BMO
ADS Alliance Data Systems Corporation $248.81 35.54 AMC
AMGN Amgen, Inc. $152.78 30.00 AMC
AMZN Amazon.com, Inc. $575.02 47.45 AMC
EA Electronic Arts Inc. $67.03 41.79 AMC
EMN Eastman Chemical Company $61.25 33.95 AMC
FTNT Fortinet Inc $26.73 62.85 AMC
HAR Harman International Industries Inc. $76.32 52.46 AMC
HBI Hanesbrands Inc. $28.88 49.48 AMC
MSFT Microsoft Corporation $50.48 34.14 AMC
NTCT NetScout Systems, Inc. $26.90 44.23 AMC
PFPT Proofpoint Inc $57.32 56.61 AMC
SIMO Silicon Motion Technology Corp. $29.84 54.64 AMC
SMCI Super Micro Computer, Inc. $24.96 64.88 AMC
SWI SolarWinds Inc $58.40 22.41 AMC
SWKS Skyworks Solutions Inc $63.29 52.19 AMC
SYNA Synaptics, Incorporated $71.95 73.54 AMC
V Visa Inc $71.56 27.62 AMC
WDC Western Digital Corp $43.94 55.10 AMC

 

 

Friday January 29:

 

Economic: GDP – 8:30, International Trade in Goods – 8:30, Employment Cost Index – 8:30, Chicago PMI – 9:45, Consumer Sentiment – 10:00, Baker-Hughes Rig Count – 1:00, Farm Prices – 3:00.

 

International Economic: France PPI – 2:45AM, EMU HICP FLASH – 5:00AM.

 

Other: San Francisco Federal Reserve Bank President John Williams panel presentation on economic outlook, in San Francisco – 2:45PM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
AAL American Airlines Group Inc $39.79 38.72 BMO
ABBV AbbVie Inc $58.36 37.21 BMO
APD Air Products & Chemicals, Inc. $117.17 32.57 BMO
CVX Chevron Corporation $81.05 37.19 BMO
HON Honeywell International Inc. $96.58 24.02 BMO
MA Mastercard Inc $86.12 28.08 BMO
NS NuStar Energy L.P. $28.26 63.53 BMO
NWL Newell Rubbermaid Inc. $36.85 46.12 BMO
PCAR PACCAR Inc $45.81 35.66 BMO
PSX Phillips 66 $76.04 35.76 BMO
PSXP Phillips 66 Partners LP $55.17 58.54 BMO
PX Praxair, Inc. $97.96 26.35 BMO
SNE Sony Corp (ADR) $21.16 39.82 BMO
SPG Simon Property Group Inc $182.70 24.02 BMO
TYC Tyco International PLC $29.99 30.81 BMO
WHR Whirlpool Corporation $133.37 42.72 BMO
STX Seagate Technology PLC $27.56 61.45 AMC

 

 

 

Monday February 1:

 

Economic: Personal Income and Outlays – 8:30, Gallup US Consumer Spending Measure – 8:30, PMI Manufacturing Index – 9:45, ISM Manufacturing Index – 10:00, Construction Spending 10:00.

 

International Economic: China PMI Manufacturing Index – 9:00PM Sunday, Germany PMI Manufacturing Index – 4:00AM, Global Manufacturing PMI – 11:00AM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
AET Aetna Inc $105.26 31.41 BMO
CAH Cardinal Health Inc $80.08 27.92 BMO
MAT Mattel, Inc. $25.82 42.67 BMO
AFL AFLAC Incorporated $55.82 25.26 AMC
APC Anadarko Petroleum Corporation $33.55 66.74 AMC
GGP General Growth Properties Inc $26.34 45.23 AMC
GOOG Google Inc. $706.59 37.45 AMC
GOOGL Alphabet Inc $726.67 37.43 AMC
HAIN Hain Celestial Group Inc $36.10 52.50 AMC
IDTI Integrated Device Technology Inc $24.20 49.44 AMC
KRC Kilroy Realty Corp $54.70 27.96 AMC
TSO Tesoro Corporation $85.24 47.78 AMC

 

 

 

 

 

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