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Author: Mike Celeste Editor: Tony Ponzo December Circulation:

Stat Sheet Week Ending December 18th 2010

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+82.0+0.7%+1,064.0+10.2%
S&P+5.0+0.4%+130.0+11.7%
NAS+5.0+0.2%+374.0+16.5%

Highlight of this past week: The Momentum Strategy is turning out its best month of the year in December with the conservative plays showing over an 84% profit and the Aggressive plays coming in with a 292% profit for this month alone. Check out the action Results


Holiday Greetings: This will be the last newsletter of 2010. The newsletter will resume on January 08, 2011. For those who celebrate Christmas, we wish you and your family a very Merry Christmas. For those who celebrate another tradition we wish you and your family a Merry Celebration too and to all, we wish a Happy New year!

In this Issue---
SplitMaster Basic System---
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As expected, the splitter that closed out this week, RAI, was a winner. Fortunately, we have some more in the pipeline that will be a buy in the near future.

If you are interested in stocks that split, send us an email and we'll tell you about stock splits for 2011. To send an email and questions click on this link. Contact Us

Options---
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This week was a pretty typical option expiration week. To me it is nerve wracking, yet at the same time, exciting. If you like action, option expiration week gives you plenty. And, as each day approaches Friday, the price movement on the options gets more volatile until there is no more time value on the bid side, and the option moves penny for penny with the Spy or stock options at the money, The underlying stock might be 100 times more expensive than the option. That is real leverage, big time. The trick is to be nimble and maybe allow a bit more room for a stop or for a profit exit point.

Now that December options have expired, the closest expiration month is January - of course. They will not expire until the third Friday in Janurary which is the 21st. Actually options expire on Saturday but since we can't trade on Saturday, we refer to Friday as expiration day. Starting this Monday then, January options will have the most amount of time premium in them. That means in order to get an option with a high delta, it is necessary to go deeper into the money and that means a more expensive option. So either a trader deals with a slower moving option for an out of the money less expensive option , or a more expensive in the money option. Both have there advantages and disadvantage. Which one a trader plays depends on the individual's preferences and emotional make up. If you are not sure which is the best for you, paper trade for a while so you can get a feel for what you prefer before you risk actual dollars.

Momentum Plays---
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December has stacked up to be our best month so far this year. It is not the month with the most amount of plays but many of the plays we have had are big profit winners, especially on the aggressive plays. The conservative plays have won over 72% or the time and are sitting on an 84.02% profit for this month alone. And take a look at the numbers for the aggressive trades. They have won 90% of the time this month and have posted a 292.15% profit!. On ten contracts per trade, the aggressive plays are at a $3,790 profit. That's on an average investment of $1,090 per trade. Remember, the dollars invested do not accumulate because we are in and out of a trade in less than a day and sometimes as little as a few minutes. Check out the action Results

We just started the aggressive portion of the Momentum strategy in June of this year and we are really pleased with its results. The aggressive plays have really turned out to be a great source of extra income for many members. If you would like to know more about this strategy send us an email and we'll be happy to answer your questions. Click on this link -
Contact Us

Indicator Play---
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This option expiration week saw an Indicator play each and every day of the week. We were not able to get into all of them, due to the very rapid price movements, but we did get enough to make it worthwhile. A very important point to us is that the Indicator signals were all correct, whether we had time enough to get in or not. We don't want to see the signals take on new directions which would change our qualifying criteria. We can always do better, and we are continually working to improve. The only challenge comes when it is hard getting our order in on time to get it executed, especially during option expiration week. We may have come up with an aid for that, and will talk more about it in January. We would also like to point out the vast difference between our two approaches to the Indicator play. We have the Basic or Conservative play, which shoots for a quick in and out and a decent profit goal. Then we have the Aggressive play which goes for more profit and allows for a greater stop loss, too. At this point the Aggressive players have had pretty incredible results. Take a look at our Past Results page and see what we mean. Indicator Results

The Economy, The Markets & Commentary---
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Our reps did what was expected on the tax cut issue. By that I mean that they waited until the very last moment before passing a bill to handle the expiration of the previous tax cuts, due to expire Jan. 1, 2011. With Congress closing down for the rest of the year, they had to do something this week. And what they did was play "Kick the Can". Let's face it, people, it is a very tough decision. If you let the tax cuts expire, the higher resulting taxes could cripple any recovery we have been having in the economy. By the way, you do realize that the experts said the recession has now been over for 1 1 2/ years--since June 2009? Ask yourself the question--Are you better off now than you were in June 2009? Back to the tax cut situation. If you let the tax cuts continue, and also extend the unemployment benefits, you are increasing the national debt by a substantial amount As most people do in their own lives, you handle the immediate problem, and that is jobs and economic recovery. Worry about the debt later--kick that can down the road and don't worry about it until you catch up with it sometime in the future. Of course the hope is, that keeping the tax cuts going will keep more money in our pockets allowing us to spend more and get more businesses to hirer and substatnially lower the unemployment rate. If that happened then it could compensate for lost revenue due to the continued cuts because more people are working which would bring more revenue to the government. Yes, it is a very difficult decision, but it was all brought about by political decisions made and influenced greatly by Wall St.--we must not forget that. Talking about Wall St., and also remembering how they had to be bailed out, it was reported that the famous bonuses might set a record this year, or come in a close 2nd. We bailed them out so that they can now borrow money at practically no cost and then buy treasury bonds that are paying a lot more interest than what it costs them to borrow. It's a no lose action on their part. Oh, if only all of us could start or be part of a financial institution and get in on this boon doggle. You know, if you can't beat them, join them. Bah, humbug, tho, we are not allowed to join those hollowed ranks and partake of the billions to be made.

There is also rumbling about doing away or repealing the national health bill, once the make up of Congress changes in Jan. There has now been a court decision in one of the states that says the law is unconstitutional because you are making people get the insurance whether they want it or not. That is on a federal level. On the state level, there seems to be nothing wrong with the absolute requirement that auto insurance must be in force for everyone that owns a vehicle. Someone mentioned that you don't have to have a car, and then you don't have to have insurance, but we all know that is impossible practically, as the greatest percentage of people need a car in this society, except those who depend solely on public transportation. You could apply the same thought to health--if they don't want to pay for health insurance, they choose to receive no health care at all. That is not practical, either. State vs. Federal---we see an area where State's rights are more powerful than Federal influence--on some levels, at least.

It is going to be interesting to see what the new Congress does. The people voted for change--again. This time they want to cut down on deficit spending and at the same time create jobs. So far, everything seems to be leading in the direction of continued deficit spending. We see more commissions created, no cuts in the easiest sector there is to cut--defense--and so many other areas. Corruption in the government, or what should be considered corruption or at least obscenity, continues at major levels. We have a local city where 40% of the city employees are making over $100,000 per year (El Monte, CA). Then, there is Vernon, CA, with around 100 residents, and the city attorney lives about 500 miles away, comes into town 2 days a week, bills for about 60 hrs. per week, and draws compensation of well over $1,000,000 per year for the last 5 years (I think that is when he started). Also, relatives, friends and associates are given work or city contracts without competition, and making huge amounts. All this affects the economy, which in turn affects our investments. How can this be allowed to continue? It is allowed and is continuing. At least the newspaper is bringing it out in the open--if not for them, this would probably never be known. We've kicked the can on a number of issues, but someday, somewhere down the road, there will be an accounting. Let's hope that the recovery continues, but not only continues, it spreads to the common folks who do all the backbone work in this country. When you go to a WalMart or Target, do you know the CEO? No, you know and interact with the workers in the stores, that's who you get to know. They are Target to you, not the CEO. If there are good workers and they make you feel good about coming back to that store, do they get big bonuses? Sorry, Charlie, not good enough.

It seems to me that particularly at this time of year, we should give thoughts to our fellow workers and how much they mean to us - The Working Class heroes as John Lennon put it. The vast majority of workers in this country work hard and given a decent chance, they perform wonderfully. Do they get recognition--not enough, let me tell you. In my own experience, I have taken the time to call WalMart headquarters and give them a few names of employees that I thought were outstanding in their service to me. The same has been done to people that wait on us in chain restaurants, etc., and provided exceptionally well to us, making our visit very pleasant. I wanted the company to know about these people and how much they are appreciated. Guess what happened next, after I called home office? Absolutely nothing, when it came to informing those people that someone cared enough to contact the company in appreciation--I know because I follow up and ask the people if they were told about the compliment. I don't know about you, but that doesn't sit right with me. These outrageous bonuses that are paid to people I never run into in my everyday life and who don't seem to me to have a handle on what the real world is doing. The worst is when the bonuses come without any increase in earnings, etc. Then there is the severance packages--even when they are fired for doing such a bad job that their performance can no longer be tolerated. Again, outrageous. Feelings for our common man (most of us), that is what should be zeroed in on. In countries full of corruption and bribery, where no one has any faith in their leaders, that's where it ends up that the common people, the everyday workers, ignore the law and it is every person for themselves. If we think of others, then that means someone is thinking of us, too, and we can all progress and prosper--as we have done in the past. We are a caring people and it would be a shame to see that change--but you can't help but be resentful of those that abuse our system for only their personal gain. I hope we can overcome this and get that pendulum to swing the other way--and you will see a rebirth. I truly believe that.

Everyone, please enjoy your family and friends at this time of year, and we will talk again--keep us on the road to recovery and may those record corporate profits trickle down to give some benefits for all of us.

Finally, don't forget the January effect that we talk about each year. December is the best month for stocks and it is doing wonderfully this year, too--we are full of optimism for the future. January is reality time, when those bills start coming in, and we have long pointed out that ol' Dad's theory of selling by the 10th day of January is a good move, whereby you expect to buy back later at cheaper prices.

Today's Christmas Thought---
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The best of all gifts around any Christmas tree: the presence of a happy family all wrapped up in each other......Burton Hillis, Better Homes and Gardens

Mike

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