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Author: Mike Celeste Editor: Tony Ponzo June Circulation:

Stat Sheet Week Ending June 7th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-428.0-3.4%-1.0-8.0%
S&P-39.0-2.8%-107.0-7.3%
NAS-48.0-1.9%-177.0-6.7%

Highlight of this past week: SU used its energizer bunny to zip up 23.30 points as we closed it out.....And that's not all.

In this Issue---
SplitMaster Basic System---
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We had 2 good winners going and it wasn't sell date, but we saw that our Indicators were showing the markets to be overbought on Thursday, so we closed these out--SU and WFT. And the year to date profit for this strategy keeps mounting. If you count the totals so far for June, we are looking at a 41.78% profit for this year. There is not many other investments making that kind of return this year.

No tears over closing these stocks out early either, with SU showing an exciting 23.30 point profit from buy date. WFT made less, but cost less, so the 11.21 point profit for it was nothing to sneeze at. We think this is an example of what we have been saying--If you can't beat them, join them. Further down in Comments we will talk more about beating them, or at least fighting back. Both of these stocks are in the energy sector. We are very pleased with our results so far this month. Now we are looking for some more split announcements, but they have slowed down to just about nothing. The announcements seem to run in spurts, tho, so maybe we will see some new ones soon.

 Big Dipper System---
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We have 2 stocks in the Big Dipper, but they are more or less treading water. FWLT was way down and made a great comeback, but has stalled around this level. GFIG is above our buy price for the Dipper, but it, too, seems to be stuck in a fairly tight range. We're still looking for others, too, but our splitters have held up so well we don't see the drops to qualify for a Big Dipper.

Options---
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Even with the volatile markets, we continue to see good opportunities in writing puts. Our method of selecting stocks and which strike price centers around good stocks that take a dip and then we go to a strike price that is even lower, so if the stock is put to us eventually, we would like to buy the stock at that price. It is working out nicely as a sort of dividend return.

 Momentum Plays---
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This is a repeat of the last three weeks. We had another win but --- only one play. Momentum Plays The difference this week is, we did have a play GES, that could have been a second win for the week. It would have been a bigger profit than normal as well. But the stock made its moves pretty fast and we just missed the entry on it. That happens but it sure would have been a fun play to be in. There will be more of those kind of plays at some point, but right now this strategy is in slow mode. On top of that, we are in the third month of the quarter and earnings announcement, in general, are slowing down until the new quarter.

You members have most likely noticed that we are testing a number of other types of momentum plays. Some of our testing is looking pretty exciting. If our testing continues to show positive results, we will start making some of these other momentum plays to pick up the slack when things are slow in the earnings announcements. We'll have more of this in the near future.

Three Indicators---
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If there was any doubt about the power of the Indicators, all we had to do was to look at the results on Friday. On Thursday we had 2 of the 3 indicators showing overbought conditions--but the one that really is the most powerful of the 3 is the W Indicator. On Thursday it was very high, meaning that there was a good chance that there would be a decline on Friday. Boy, we all saw what happened on Friday. The Dow dropped almost 400 points and Nas followed right along with a drop of 75 points, with the S&P joining in at a loss of 43 points. Those are big numbers, folks. I have to admit that I couldn't resist and shorted a stock with a high W--BUCY--which was a recent splitter that took off to the upside. On this bad market day, it went up against me, but in the last 15 minutes came down to be a profit and I covered the short. It was too volatile for a normal play, but the W did come thru for me.

The play we also look at during these times is to get an option on the SPY. Looking for a decline, we would be interested in a PUT play. It is becoming more evident that the greatest return is to buy the put near the close of the day the W is at a high point or visa versa. Of course, with more return could be more risk, but our studies show that on a net basis, this has been a good method lately. I personally played that put I mentioned to team members just a week ago, buying the put near the close and then seeing the market go against me on Friday, but on Monday, it went my way and showed a very good return, with the Dow dropping 134 points and the SPX dropping 14 (the SPY is based on the SPX). On Friday, with the huge drop in the SP, we saw the put option go from the buy price of 1.76 to close at 4.79. Another way to look at it, 10 options bought at $1,760 returned $4,790 in one dayor a net of $3,030. We pointed out the possibility of a play on Thursday's web site entry. And all this came from our W Indicator. Of course Friday, based on a number of factors that all came together at the same time, was an extraordinary day. But even a normall down would have produced a decent profit.

 The Economy, The Markets & Commentary---
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Oil jumped over $10/barrel on Friday. And that was after going up $5 the day before. Just as a quick interjection -- this sure looks like a classic bubble to us. Is oil about to make a major correction? It is really hard to say. World supply and demand verses speculative trading is hard figure out. And if there will be a major correction, when and by how much?? But, we at SplitMaster think the stage is being set for one. Only time will tell. Moving on.

On Thursday, our local gas prices were raised another 11 cents to be around $4.35 in our S. California area, with some places close to $5. If the next letter comes and says the top of my head blew off, you will know it was because of oil. And this is hitting all over the world. There is no reason in the our whole universe for this to happen. When our "representatives" say there isn't much they can do about it--they are lying. Here is the proof. Having been a former teacher, I always liked history and math. We need to look at history to see what happens when it is repeated. Being an old geezer, I have seen all these following things in my lifetime. In the oil market as well as in the stock market, margin rates are set to control speculation, for one thing. They can change the margin requirements--in this case, raise the margin requirements to a level that will stop most of the speculation. Margin rates have been changed before for this very reason--to control speculation. Another thing that can be done is to make the oil buyers be required to take delivery--there goes speculators. Can't be done?--it can be done. Rules are changed and created all the time. What is the Fed doing? They are changing the rules all the time in an effort to control the economy as a steadying influence. Price controls---Control the price as Nixon did when the inflation rate was just 4%--here is a quote about that --The internet site is econ review

"August 15, 1971. In a move widely applauded by the public and a fair number of (but by no means all) economists, President Nixon imposed wage and price controls. The 90 day freeze was unprecedented in peacetime, but such drastic measures were thought necessary. Inflation had been raging, exceeding 6% briefly in 1970 and persisting above 4% in 1971. By the prevailing historical standards, such inflation rates were thought to be completely intolerable."

During World War II my father ran a restaurant and price controls were put in. He had to sell at pre-war prices---even tho his cost of food, beer, etc., went way up. Was that fair? No, but it was done.

Rent control is in existence in parts of the US right now. Is it fair? No, as the landlord's costs go up, but he can't match the raise in costs with rent raises---but that's the way it is.

President John Kennedy forced US Steel to roll back a price increase. Was that fair? No, not in a free enterprise system---but it happened in 1962.

Do we have controls in increases in rates for electricity, natural gas, and water. Yes, we do. They are still high, but look what happened when rates were de-regulated for electricity--they skyrocketed. The telephone companies were more or less de-regulated, but they had much tighter controls back when Ma Bell, ATT&T controlled the market---and prices were kept way down compared to now.

Yes, there is all kinds of evidence that controls can be put on just about everything--and have been. Why our "leaders" refuse to help us is beyond belief--except that the lobbyists and their campaign contributions keep the status quo.

Here is something that really should get your blood boiling. Read the quote below from the web site shown.

Google "Green River Oil Shale" and here is one of the sites.
oil shale

"Oil Shale Resources

While oil shale is found in many places worldwide, by far the largest deposits in the world are found in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming. Estimates of the oil resource in place within the Green River Formation range from 1.2 to 1.8 trillion barrels. Not all resources in place are recoverable; however, even a moderate estimate of 800 billion barrels of recoverable oil from oil shale in the Green River Formation is three times greater than the proven oil reserves of Saudi Arabia. Present U.S. demand for petroleum products is about 20 million barrels per day. If oil shale could be used to meet a quarter of that demand, the estimated 800 billion barrels of recoverable oil from the Green River Formation would last for more than 400 years1.

More than 70% of the total oil shale acreage in the Green River Formation, including the richest and thickest oil shale deposits, is under federally owned and managed lands. Thus, the federal government directly controls access to the most commercially attractive portions of the oil shale resource base".

There you have it---we have more than 3 times more oil than in Saudi Arabia--and that would last us more than 400 years. And you know what? It is economically possible with oil at $30/barrel. As the above also says, most of it is on Federal land--so we don't need to worry about imposing on private property. Yes, search the net under "Green River oil shale" and see all the sites and all the data and information that is currently available. And--that is not counting the oil offshore of the US---which is always facing opposition because it doesn't look good, or it might interfere with a form of marine life we have probably never seen. Water can't be sent to us from the Sacramento river because a fish a few inches long would be interrupted---species disappear every single day--and we find new ones, too. If it comes to water for people or water for a fish no one knows about--guess what? I want water.

The bottom line is we are being manipulated and lied to by a small group of people that control us and the world. It doesn't have to be this way, but we are allowing it to happen. Feel free to contact your "representatives" and show them the data, the proof that these energy prices do not have to be. I keep volunteering to do the job for a lot, lot less than they are being paid now, but no one takes me up on it--which gives me the right to keep harping about it---with the facts to back it up. Good luck to all of us--we need it.

Today's Thought---
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Passion is the genesis of genius.......Anthony Robbins.....Motivator (and my former student in high school)


Mike

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