** SplitMaster Big Dipper System--2 New plays
** Options--Big 116% winner this week
** S+P 500 --Getting close
** The Quest--Goal:Turning $1,000 into $1,000,000 in 10 years.
** Chart Indicator--Negative
** Split comments--2 New announcements meet criteria
** Team Member Comments--Bernie strikes again
** New Option Testing--Looking very good
** Tip of the Week--PE vs. Growth (PEG) (Value investing)
** Economy Reports and Commentary--New Hurricane (Rita)
** Today's Thought
SplitMaster Basic System---
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NBL (click on link) closed out this week and was a great winner for SplitMaster. The gain was 8 points or almost 10% profit. We still have 5 more currently active in the Basic System.
Big Dipper System---
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There were 2 new plays that hit their Big Dipper buy prices this past week. One is ahead and one is a bit below the buy price. There are 4 others that are potential plays. Next week we will have additional stocks put on the list for potential plays. In the meantime, keep your eye on VAL and check out our BD Past Results.
Options---
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The week saw us close out one set of options--NBL calls and puts, with excellent results. The call made a profit of 116%, while the put had a nice gain of 82% (out of a max. of 100%--with no $ invested for the puts, just assets) Click on Past Results (above) and check out the figures we have so far this year. We still think options are going to continue to make triple digit profits--and are shooting for a goal of quadruple digit gains for year 2006. Yes, we want over 1,000 percent profit over the course of a year. Think about joining our team---but you must understand options and be approved by a broker.
The Quest
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We haven't mentioned The Quest lately as it has been inactive for a while. The reason we haven't been active is that we more than reached our first year goal of doubling our starting $1,000 to reach $2,000. The best months of the market are coming up (in our opinion). Our current working capital is now $2,684 ($684 over goal). Our goal for 2006 is to get to $4,000. Stick around and see if we make it.
S+P 500 Options---
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We almost pulled the plug to take a position in the S+P puts, but we just want a little more confirmation. This is the system we have NEVER had a loss, and we don't want to blow it now.
Chart Indicator---
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The Indicator finally confirmed being negative this past week and remained there to the close of the week.
Stock Split Comments---
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We had 2 new announcements on splitters that meet our criteria. One is that famous coffee pit-stop, SBUX, Starbucks. The other is BOOM. We will be having them put into play later on. We now have 2 more splitters that will reach buy date in Sept. and another new one for October.
Team Member Comments--
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This one is going to make you jealous---at least it made me jealous. It comes from our long-time team member that often outdoes us (not all the time, but often enough). Here is what he had to say this week.
"I bought URBN 9/2 for $53.30 and then sold it at $57.27 on 9/9 (yes I cheated again).
I bought it back 9/21 for $50.25 and just sold it a minute ago for $55.25. Is everyone having this much fun???"
Those are the kinds of comments that makes us feel we are doing something right for investors, even if they do "cheat" a bit on the system. Keep it up, Bernie, you've got the touch.
New Option Testing--
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To update you on the latest developments in this new system we are beta testing, we can say that our excitement has not dimmed. There is still criteria setting being done, but we are getting closer.
This past week we tested 5 contracts in calls and puts for each stock that qualified. There was a gain for just the one week of $835 on those 5 option calls and puts---or a 32% profit returned on our investment. At this point, the system is mostly a one-day play. It's a one-day play with times when we keep some options that are basically free.
Tip of the Week---
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For you value investors out there, we like to look at the comparison between a stock's current PE and the stock's growth. This comparison is called the PEG. It is determined by dividing the stocks growth rate into the P/E. If that equals less than 1 you have a positive PEG and that is a good sign. It means that even at the current P/E, the price of the stock will increase because there will be higher profits. The most important part of this is to get a PEG that is not a 5 year PEG, but one that is no more than 1 year expected growth, in percent. I flat out don't believe there is anyone capable of consistently predicting 5 years down the road. OK--1 year or less. For us, altho it is not a criteria, we feel better when the current quarter or next quarter growth is higher than the PE ratio. That is the key---the percent of growth should be higher than the PE ratio. Example--VLO had a PE ratio of 13 and a growth of 129% for the current quarter and 40% for the next quarter. So that is a combined average of 84.5%. Now divide 84.5 into 13 and you have a PEG of .15 (13/84.5=.15) which is a very good sign. Since our system is based on a play lasting no longer than 30 days, we are most interested in the current quarter. Longer term investments can use up to that 1 year PEG--at the longest.
Economy---
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Both the Dow and Nas are well below their 2004 year-end figures--much like last year, which was pulled to the positive in the last 3 months---with 2003 showing good gains then, too.
As this is being written, we don't know how bad the new hurricane, Rita, is going to be. It has been a category 5 and the last I heard it was reduced down to a category 3--but it can build up again. So, we just don't know what damage it is going to cause. The evacuation that's been shown on TV is a problem in itself. The heat and humidity is so great that when cars take 14 hours to go 70 miles, there is a huge potential of emergency health problems. How they would get to them, I don't know, except by helicopter. The road as solid cars---while at the points I saw it, the direction coming into the city was practically empty. I don't understand why they didn't open both sides to one way traffic-Maybe leaving one lane to remain in going in the opposite direction. The economy is going to take a hit, but at the same time, there are going to be some huge winners out there. Fleetwood, for example, got their biggest contract ever, producing manufactured homes for Katrina's area. Cleanup companies have lots and lots of work--so much so that they are having problems with where they can dump the debris. Gasoline is scarce again in the new area--so many cars on the road at the same time. Gasoline inventory was reported up from the previous week--a good indicator. Crude oil inventory continued to be up a goodly amount from last year. Gasoline production was up from last year and last week, also. Lastly, gasoline demand is down for the past week, compared to the same week last year. Sooner or later prices will .............................
Today's Trivia Thought--
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Q--If you were to spell out numbers starting with the word "one" "two", etc., how far would you have to go until you find the letter "A" ?
A--One thousand......... (How about that?)
Mike
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