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Charting a decisive 2021 breakout: U.S. benchmarks clear 20-day volatility bands

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Technically speaking, the major U.S. benchmarks have asserted a near-term holding pattern, pulling in modestly from all-time highs.

Still, the slight downturn punctuates previously aggressive January breakouts amid a still comfortably bullish bigger-picture backdrop.

Before detailing the U.S. markets’ wider view, the S&P 500’s
SPX,
-0.11%

 hourly chart highlights the past two weeks.

As illustrated, the S&P is digesting its latest break to all-time highs. The flattish initial pullback signals still muted selling pressure near record territory.

Tactically, initial support (3,783) is followed by an inflection point, circa 3,764.

Meanwhile, the Dow Jones Industrial Average
DJIA,
+0.03%

 has also sustained its January breakout, notching three straight closes atop the 31,000 mark.

The prevailing bull flag — the tight four-session range, near record highs — is a bullish continuation pattern.

Slightly more broadly, the breakout punctuates a successful test of major support (29,964) on the year’s first session.

Against this backdrop, the Nasdaq Composite
COMP,
+0.08%

has registered three straight closes atop the 13,000 mark.

To reiterate, the breakout point (12,973) marks a notable floor, and is followed by the Nasdaq’s former projected target (12,920).

Delving deeper, the prevailing upturn punctuates a successful first-day-of-the year test of major support (12,607).

Widening the view to six months adds perspective.

On this wider view, the Nasdaq is digesting its January break to record territory. Recall that the initial spike marked a 1.8% breakout, confirming the Nasdaq’s primary uptrend.

Tactically, the breakout point (12,973) pivots to support.

Delving deeper, the prevailing upturn originates from the 20-day moving average — a widely-tracked near-term trending indicator — and the former breakout point (12,607).

Looking elsewhere, the Dow Jones Industrial Average has sustained a more decisive break to record highs.

Consider that Monday’s modest downturn snapped a stretch of three straight closes atop the 20-day Bollinger bands to conclude a statistically unusual two standard deviation breakout.

As always, consecutive closes atop the Bollinger bands signal a tension between time horizons.

For the near-term, the index is extended — and due to consolidate — following a break outside the range encompassing two standard deviations of its trailing 20-day price volatility.

But more importantly, the decisive upside spike signals extreme bullish momentum, a backdrop likely to precede longer-term upside follow-through.

Meanwhile, the S&P 500 has also taken flight.

Its January breakout has encompassed two straight closes atop the 20-day volatility bands amid an unusually strong January breakout.

The bigger picture

Collectively, the major U.S. benchmarks are off to a bullish 2021 start.

On a headline basis, each big three U.S. benchmark has knifed to all-time highs — previously uncharted territory — rising from a successful early-January test of the 20-day moving average.

As always, the 20-day moving average is a widely-tracked near-term trending indicator.

Moreover, the subsequent rally from the 20-day moving average has been fueled by statistically unusual bullish momentum. Each big three benchmark has staged a two standard deviation breakout.

(On a granular note, the Dow Jones Industrial Average notched three straight closes atop the 20-day volatility bands, the S&P 500 registered two straight closes atop the 20-day bands, and the Nasdaq Composite managed a less reliable, but still bullish, lone close atop the bands.)

Moving to the small-caps, the iShares Russell 2000 ETF
IWM,
+1.36%

 is digesting an unusually strong January spike.

Recall that its nearly 3.5% breakout confirms the primary uptrend.

More immediately, the prevailing pullback has been flat, fueled by decreased volume, likely laying the groundwork for longer-term follow-through.

Similarly, the SPDR S&P MidCap 400 ETF
MDY,
+0.94%

 has taken flight, knifing to record highs.

Combined, the decisive small- and mid-cap breakouts are consistent with a bullish rotational market backdrop.

Looking elsewhere, the SPDR Trust S&P 500
SPY,
-0.10%

 has broken out less decisively, rising about 1.2% atop the 2020 peak.

Still, the breakout is nominally respectable, and sufficient to confirm the primary uptrend.

Placing a finer point on the S&P 500, the index has sustained its latest break to all-time highs.

To reiterate, initial support (3,783) is followed by an inflection point, circa 3,764.

Delving deeper, the 3,723-to-3,726 area marks the S&P’s first significant floor.

Widening to the six-month view, the S&P 500 has knifed to what will likely mark a higher plateau, atop the December peak. The prevailing upturn originates from the 20-day moving average.

Against this backdrop, the prevailing breakout has encompassed consecutive closes atop the 20-day Bollinger bands, signaling statistically unusual bullish momentum.

Though still near-term extended — and a consolidation phase remains underway — the S&P 500’s intermediate-term outlook remains comfortably bullish.

Also see: Charting a bull-trend whipsaw, S&P 500 absorbs pullback from record highs.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Drilling down further, the 10-year Treasury note yield
TNX,
+3.53%

 has taken flight to start 2021, staging a likely consequential technical breakout.

In the process, the yield has extended its spike atop the marquee 1.00% mark

Tactically, the breakout confirms the yield’s late-2020 uptrend, detailed previously. The upturn punctuates an orderly December range, as well as a bullish triangle hinged to the late-November low.

More broadly, the upturn punctuates a massive double bottom, defined by the April and August lows. (See the one-year chart.) The rally above the former range top (0.97) has indeed produced swift upside follow-through.

On further strength, the March peak (1.27) remains a potential upside target, and is closely followed by the 2016 low (1.34). (Also see the Nov. 9 review and Dec. 3 review.)

Looking elsewhere, the United States Oil Fund
USO,
+1.79%

 has also staged a January breakout. The fund tracks daily changes in the spot price of light, sweet crude oil.

The shares initially spiked about two months ago, gapping atop trendline resistance amid optimism that vaccine progress will promote global economic growth. The subsequent grinding-higher follow-through places the shares at eight-month highs.

Tactically, near-term support (33.50) is followed by the former breakout point (31.00) an area toward which the 50-day moving average is rising. The 50-day has marked a bull-bear inflection point, and a sustained posture higher signals a bullish bias.

More broadly, rising oil prices and interest rates (yields) would conventionally present a broad-market headwind. But against the prevailing backdrop, the resurgence more likely signals a reflation trade, an expected return toward pre-virus economic conditions.

Initially profiled July 23, Advanced Micro Devices, Inc.
AMD,
-1.51%

 has returned 57.4% and remains well positioned.

As illustrated, the shares have rallied to the range top, rising to challenge all-time highs. (Monday’s close (97.25) marked a record close, by a narrow 13-cent margin.)

The upturn punctuates a relatively tight six-week range, laying the groundwork for a potentially decisive breakout. A near-term target projects to the 104 area on follow-through.

More broadly, recall that the late-2020 range is hinged to massive July breakout. (See the one-year chart.) The prevailing rally attempt is intact barring a violation of the range bottom (88.70).

Cisco Systems, Inc.
CSCO,
-0.07%

 is a large-cap name setting up well for the near-term. (Yield = 3.3%.)

Technically, the shares have rallied to challenge four-month highs amid a January upturn. A near-term target projects to the 47 area on follow-through.

Conversely, notable support, circa 43.70, closely matches the August gap. A sustained posture higher signals a bullish bias.

Also notice the pending golden cross — or bullish 50-day/200-day moving average crossover — signaling that the intermediate-term uptrend has overtaken the longer-term trend.

Finally, SolarEdge Technologies, Inc.
SEDG,
-0.46%

 is a well positioned Israel-based large-cap name.

Earlier this month, the shares knifed to record highs, rising amid a volume spike after the Georgia runoff Senate elections.

The ensuing pullback has been orderly, fueled by decreased volume, placing the shares near the breakout point (335.50) and 7.1% under the January peak.

Still well positioned

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

Company

Symbol* (Click symbol for chart.)

Date Profiled

Chegg, Inc.

CHGG

Jan. 11

Ambarella, Inc.

AMBA

Jan. 11

Macy’s, Inc.

M

Jan. 11

Nexstar Media Group, Inc.

NXST

Jan. 11

iShares Transportation Average ETF

IYT

Jan. 11

Energy Select Sector SPDR

XLE

Jan. 8

Teledoc Health, Inc.

TDOC

Jan. 8

Dollar Tree, Inc.

DLTR

Jan. 8

Skyworks Solutions, Inc.

SWKS

Jan. 7

DexCom, Inc.

DXCM

Jan. 7

Financial Select Sector SPDR

XLF

Jan. 7

Devon Energy Corp.

DVN

Jan. 6

Alcoa Corp.

AA

Jan. 6

FireEye, Inc.

FEYE

Jan. 5

Check Point Software Technologies

CHKP

Jan. 4

Synaptics, Inc.

SYNA

Jan. 4

Ceridian HCM Holding, Inc.

CDAY

Jan. 4

Lumentum Holdings, Inc.

LITE

Dec. 23

Sunrun, Inc.

RUN

Dec. 23

ShockWave Medical, Inc.

SWAV

Dec. 23

JPMorgan Chase & Co.

JPM

Dec. 22

Coupa Software, Inc.

COUP

Dec. 22

PagSeguro Digital Ltd.

PAGS

Dec. 22

Ballard Power Systems, Inc.

BLDP

Dec. 21

LivePerson, Inc.

LPSN

Dec. 21

United Therapeutics Corp.

UTHR

Dec. 21

Shopify, Inc.

SHOP

Dec. 18

CyberArk Software Ltd.

CYBR

Dec. 18

Apellis Pharmaceuticals, Inc.

APLS

Dec. 18

iShares Silver Trust

SLV

Dec. 17

Calix, Inc.

CALX

Dec. 17

Elastic N.V.

ESTC

Dec. 17

Cerner Corp.

CERN

Dec. 17

Universal Health Services, Inc.

UHS

Dec. 16

Tenet Healthcare Corp.

THC

Dec. 16

Sunnova Energy International, Inc.

NOVA

Dec. 16

Xilinx, Inc.

XLNX

Dec. 15

Netflix, Inc.

NFLX

Dec. 15

Toyota Motor Co.

TM

Dec. 15

Williams-Sonoma, Inc.

WSM

Dec. 15

iShares Nasdaq Biotechnology ETF

IBB

Dec. 15

SDPR S&P Regional Banking ETF

KRE

Dec. 14

Atlassian Corp.

TEAM

Dec. 14

Etsy, Inc.

ETSY

Dec. 14

Surface Oncology, Inc.

SURF

Dec. 14

Autodesk, Inc.

ADSK

Dec. 9

Monster Beverage Corp.

MNST

Dec. 9

Cimarex Energy Co.

XEC

Dec. 9

Plug Power, Inc.

PLUG

Dec. 9

F5 Networks, Inc.

FFIV

Dec. 8

Emerson Electric Co.

EMR

Dec. 8

Zscaler, Inc.

ZS

Dec. 7

Fortinet, Inc.

FTNT

Dec. 7

Kulicke and Soffa Industries, Inc.

KLIC

Dec. 7

Honeywell International, Inc.

HON

Dec. 7

Dillard’s, Inc.

DDS

Dec. 4

Caleres, Inc.

CAL

Dec. 4

Spotify Technology S.A.

SPOT

Dec. 3

Align Technology, Inc.

ALGN

Dec. 3

Valero Energy Corp.

VLO

Dec. 3

Analog Devices, Inc.

ADI

Dec. 2

Cirrus Logic, Inc.

CRUS

Dec. 1

Sonos, Inc.

SONO

Dec. 1

Dollar Tree, Inc.

DLTR

Dec. 1

Nuance Communications, Inc.

NUAN

Nov. 30

Northern Trust Corp.

NTRS

Nov. 30

American Airlines Group, Inc.

AAL

Nov. 30

Microchip Technology, Inc.

MCHP

Nov. 24

Zillow Group, Inc.

ZG

Nov. 23

Yeti Holdings, Inc.

YETI

Nov. 23

Palo Alto Networks, Inc.

PANW

Nov. 20

Bank of America Corp.

BAC

Nov. 20

Eaton Corp.

ETN

Nov. 20

SPDR S&P Oil & Gas Exploration and Production ETF

XOP

Nov. 20

MetLife, Inc.

MET

Nov. 19

Hilton Worldwide Holdings, Inc.

HLT

Nov. 19

American Express Co.

AXP

Nov. 18

Kohl’s Corp.

KSS

Nov. 18

FleetCor Technologies

FLT

Nov. 18

Applied Materials, Inc.

AMAT

Nov. 17

Delta Air Lines, Inc.

DAL

Nov. 17

Consumer Staples Select Sector SPDR

XLP

Nov. 17

Ross Stores, Inc.

ROST

Nov. 16

RingCentral, Inc.

RNG

Nov. 13

Regions Financial Corp.

RF

Nov. 13

iShares Europe ETF

IEV

Nov. 13

Flex, Inc.

FLEX

Nov. 9

Snap, Inc.

SNAP

Nov. 9

Norfolk Southern Corp.

NSC

Nov. 9

Communications Services Select Sector SPDR

XLC

Nov. 5

Health Care Select Sector SPDR

XLV

Nov. 5

Alphabet, Inc.

GOOGL

Nov. 5

Uber Technologies, Inc.

UBER

Nov. 5

Keysight Technologies, Inc.

KEYS

Nov. 4

Harley-Davidson, Inc.

HOG

Nov. 4

Garmin, Ltd.

GRMN

Nov. 4

Pinterest, Inc.

PINS

Nov. 3

Sony Corp.

SNE

Nov. 3

8×8, Inc.

EGHT

Nov. 3

Exact Sciences Corp.

EXAS

Nov. 2

Universal Display Corp.

OLED

Nov. 2

Dentsply Sirona, Inc.

XRAY

Oct. 27

Maxim Integrated Products, Inc.

MXIM

Oct. 21

The Travelers Companies, Inc.

TRV

Oct. 21

Micron Technology, Inc.

MU

Oct. 20

Vulcan Materials Co.

VMC

Oct. 19

ON Semiconductor Corp.

ON

Oct. 16

Ford Motor Co.

F

Oct. 15

Texas Instruments, Inc.

TXN

Oct. 15

First Solar, Inc.

FSLR

Oct. 13

Nevro Corp.

NVRO

Oct. 12

Teradyne, Inc.

TER

Oct. 12

SPDR S&P Homebuilders ETF

XHB

Oct. 9

Shake Shack, Inc.

SHAK

Oct. 9

SPDR S&P Biotech ETF

XBI

Oct. 8

Twilio, Inc.

TWLO

Oct. 8

Cloudflare, Inc.

NET

Oct. 7

Ceridian HCM Holding, Inc.

CDAY

Oct. 7

RSailPoint Technology Holdings, Inc.

SAIL

Oct. 1

Martin Marietta Materials, Inc.

MLM

Sept. 30

Abercrombie & Fitch Co.

ANF

Sept. 29

Zendesk, Inc.

ZEN

Sept. 23

Scientific Games Corp.

SGMS

Sept. 23

Crocs, Inc.

CROX

Sept. 14

Five Below, Inc.

FIVE

Sept. 10

Eastman Chemical Co.

EMN

Sept. 10

International Paper Co.

IP

Sept. 3

Anaplan, Inc.

PLAN

Sept. 2

Celanese Corp.

CE

Aug. 26

Westlake Chemical Corp.

WLK

Aug. 25

Deere & Co.

DE

Aug. 24

Expedia Group, Inc.

EXPE

Aug. 24

Johnson Controls International

JCI

Aug. 21

Canadian Solar, Inc.

CSIQ

Aug. 20

General Motors Co.

GM

Aug. 20

Starbucks Corp.

SBUX

Aug. 18

Builders FirstSource, Inc.

BLDR

Aug. 18

Steel Dynamics, Inc.

STLD

Aug. 17

Brinker International, Inc.

EAT

Aug. 13

Enphase Energy, Inc.

ENPH

Aug. 13

Nucor Corp.

NUE

Aug. 11

Freeport McMoRan, Inc.

FCX

Aug. 10

Natera, Inc.

NTRA

Aug. 10

Industrial Select Sector SPDR

XLI

Aug. 6

Penn National Gaming, Inc.

PENN

July 30

Procter & Gamble Co.

PG

July 29

SPDR S&P Metals & Mining ETF

XME

July 28

iShares MSCI South Korea ETF

EWY

July 28

Advanced Micro Devices, Inc.

AMD

July 23

Materials Select Sector SPDR

XLB

July 20

Caterpillar, Inc.

CAT

July 20

Roku, Inc.

ROKU

July 16

Cognizant Technology Solutions, Inc.

CTSH

July 16

Consumer Discretionary Select Sector SPDR

XLY

July 13

SunPower Corp.

SPWR

July 13

Walmart, Inc.

WMT

July 8

Danaher Corp.

DHR

June 24

Fiverr International, Ltd.

FVRR

June 19

HubSpot, Inc.

HUBS

June 8

Square, Inc.

SQ

June 8

SPDR S&P Retail ETF

XRT

June 3

iShares MSCI Japan ETF

EWJ

May 29

Synopsis, Inc.

SNPS

May 27

Agilent Technologies, Inc.

A

May 15

Qualcomm, Inc.

QCOM

May 12

ServiceNow, Inc.

NOW

Apr. 27

Five9, Inc.

FIVN

Apr. 24

Chewy, Inc.

CHWY

Apr. 24

Tesla, Inc.

TSLA

Apr. 23

VanEck Vectors Semiconductor ETF

SMH

Apr. 17

Okta, Inc.

OKTA

Apr. 16

Target Corp.

TGT

Apr. 16

Invesco QQQ Trust

QQQ

Apr. 14

Apple, Inc.

AAPL

Mar. 27

Nvidia Corp.

NVDA

Mar. 27

iShares MSCI Emerging Markets ETF

EEM

Mar. 19

Microsoft Corp.

MSFT

Feb. 22

* Click each symbol for current chart.



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My parents made my sister executor of their $4 million estate, and joint owner of their bank accounts. Should I be worried?

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Dear Quentin,

I just found out that my parents (who are in their mid 80s) have named my sister as their successor trustee, and executor of their estate and wills. They have also put her name on all their financial accounts “in case something happens to us.”

I have no reason to suspect my sister of any nefarious motives, but having her name as joint owner on their accounts seems potentially problematic to me in case of their passing. What are the pros and cons of this arrangement?

Their estate is probably worth about $4 million. We have five other siblings who are currently unaware of this arrangement. Can you provide any resources or articles I could show my parents regarding better ways to accomplish their goal of having someone in charge of their finances?

Concerned Son

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Dear Son,

People often don’t do anything nefarious, until they have the opportunity to do so and/or run into financial difficulty of their own. That may not be the case with your sister, of course, but your parents should absolutely know the meaning of making one of their children a co-owner on their bank accounts, if their intention is to merely have your sister assist with bills.

Is she a co-owner of this account, or is she a co-signer? If it’s the former, your sister is a joint owner and can spend the money as she wishes. She would likely be liable for debts on that account after your parents’ death. If it’s the latter, your sister has the right to sign checks on your parents’ behalf. To complicate matters, not all banks have the same definitions for “co-owner” and “co-signer.”

Many people don’t understand the difference between being a co-signer and a co-owner. There are many cases of children listed as co-owners (rather than authorized signers) on those accounts who have emptied their parents’ bank account before and after they died. Sometimes, they did not keep enough (or any) receipts, and have been wrongly accused of emptying a parent’s account.


Many people don’t understand the difference between being a co-signer and a co-owner.

In the letters I have received on this issue,the damage was often already done, typically caused by a combination of the three “Gs” — grief, gripes and greed — when long-simmering sibling rivalries boil over. People do things that they may not otherwise do if their parents were there to witness it. You are correct to ensure your parents’ action is in accordance with their wishes.

There are other ”what ifs”: What if your sister dies first? The account would likely become part of her estate too, with a share to be distributed to her children, which could then involve paying a state inheritance tax. Your parents’ accounts could also be “paid on death” or “transferred on death,” avoiding the public and often time-consuming probate process. Read more here.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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Video: SEC's Hester Peirce on why the U.S. is behind the curve on crypto

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S.E.C. Commissioner Hester Peirce on the outlook for crypto regulation, and whether this will finally be the year we see a Bitcoin ETF.





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My husband doesn’t get along with my son. I brought most of the wealth into our marriage. How do I split my estate?

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Dear Quentin,

How do couples typically handle their estates in a second marriage? My husband and I have been married for seven years, and it is the second marriage for both of us. I have one adult child from my previous marriage; he has no children.

I brought the majority of our wealth to our marriage, including almost $1 million in my 401(k) and a nice home that is almost paid off; otherwise, we have no debt. My husband and I bought a second home together. We work hard to fund our new 401(k)s, and own a successful business together.

I am turning 65 this year, so estate planning is long overdue. My husband is five years younger than me, and we are both in very good health. We have two issues facing us: I see our retirement as living very comfortably on the monthly income generated by our 401(k)s, pension, Social Security, etc., and leaving whatever may be left to my son.


‘The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him.’

I am not interested in scrimping, but I want to be able to have enough money to last us until age 90 (or beyond) by not touching the principal. My husband is more interested in dipping deep into our savings, and living it up in retirement while we are young enough to enjoy it.

The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him, to the point that neither one wants anything to do with the other. As far as he is concerned, my son doesn’t meet his expectations, and so deserves nothing from me and certainly nothing from him.

I want my estate planning to be fair to both my new husband and my son. How do people typically handle this type of quandary? I think that I need to create some type of trust to pass on my share of our estate to my son. My pre-marriage assets involved my son as I pursued my graduate degree through night school and worked long hours throughout his childhood.

Second Wife

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Dear Second Wife,

Don’t allow your husband’s feelings toward your son to influence your estate planning.

Your relationships with your husband and your son and your own plans for retirement are all fair game when making decisions about your estate, but your husband and son’s fractured relationship is their business, not yours. You worked hard for this money, and your son is your legal heir. Any effort by your husband to spend all of your savings and fritter away any inheritance that you intended to leave to your son should be resisted at all costs.

You have worked too hard your entire life to compromise your plans for a comfortable retirement where you have money set aside for long-term medical care insurance, unforeseen emergencies and/or your son. If you jointly own your home, you can leave your half to your son in your will, and specify it can only be sold after your husband passes away.

If you own the home, you can give your husband a life estate. Your son would pay capital-gains tax on the value of your home when he sells it, and not when you bought it. You could also make your son the beneficiary on your life-insurance policy, and/or gift him a certain amount of money per year to see how he manages and spends that money.

Figure out what is fair to yourself first before moving on to what is fair to your husband and your son. It’s OK to put your needs first. I caution against your dipping into savings at a rate that is beyond your own risk tolerance.

Ultimately, you are entitled to leave all other separate property to your son when you die — and, along with a financial adviser, set up a trust with that in mind for you, your husband and your son. Not necessarily in that order.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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