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Author: Mike Celeste Editor: Tony Ponzo June Circulation:

Stat Sheet Week Ending June 21st 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-464.0-3.8%-1.0-10.7%
S&P-42.0-3.1%-150.0-10.2%
NAS-49.0-2.0%-246.0-9.3%

Highlight of this past week: PCU announces 2nd split in less than 2 years.

In this Issue---
SplitMaster Basic System---
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Even tho it was a bad week for the major indexes (and it could get worse), our Basic Plays have done pretty well, keeping up a good year. ATW and PCU are both above the buy price. PCU just came on line Friday and is up almost 3 points already. ATW was up over 3 points, but settled back a little bit, but still above buy price. We don't get a whole lot of split announcements these days, but as we always say, we believe that those that do split are from companies that are doing well--and there is always some company that is doing well.

 Options---
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This was options expiration week and a number of written options were nice and profitable. We like to write the option strike price that is quite a ways away from the current price at the time. That way, if writing a put, we want it to be at a strike price that is attractive to buy if the stock is put to us. When writing a call, we are hoping the stock goes up, but if it doesn't go up very much, we are still in line to make a writing profit.

 Momentum Plays---
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There is not much to talk about concerning earnings plays. Earnings announcements have really dwindled down in general. We might have one or two during the week but for the most part, there will not be much action in earnings plays until about the middle of July. The testing on the W plays, which is a longer term momentum play but sitll a day trading strategy, has been doing very well. Some of you more aggressive members may want to start trading these for real. We are going to test a little longer as we have a few aspects we want to verify before we make it official. More on this in the next section.

 Three Indicators---
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The W Indicator is still king of the 3 indicators, with the Nas 3 straight day play being next. This past week we had 3 up days in a row end on Monday, with the Nas, followed by 2 down days, and then the big hit on Friday. So, that one was a good indicator, too. The W on our papertrade test plays has been doing extremely well, and we want to bring it in as an official strategy as soon as possible as mentioned above. The daily emails we send, showing the papertrade test plays have shown a good deal of consistency. This strategy would be for day traders. We had one on Thursday, CNX, which was a play to the downside and from the open to the close of the day showed about an 8 point drop. We did have our first loser in quite a while--all of 12 cents on GRMN. The other plays met their profit goals. The 2 mentioned here were at each end, big win and a small loss.

 The Economy, The Markets & Commentary---
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The Power of the People--We think the people have spoken. Last week we asked everyone to send out copies of our report on oil, etc. to everyone on their email list, your governmental reps and the media. It just might be that we did something pretty special---On Wednesday, President Bush came on TV for a special reason. He called for opening up the Green River field and ANWR, both of which we mentioned. The really good part was that he stated his facts using almost word-for-word what we had presented---the size of the field (3 times bigger than the Saudis), and how long it could last at current consumption (400 years). We would like to think that someone with the ear of the President read our report and had it checked out--and found it to be true. Whatever happened, the President did present it and we applaud the decision to listen to the people.

I have to laugh at the "experts" on CNBC that come on and say there are no more big oil fields to find---they actually say this. Unbelievable. Others say that it would be 5 years before we start getting the oil into production. You know what? If we never drill, we will never ever get any production---and if we drilled back in the 1970's when the 1st oil crisis hit, we wouldn't be in this position today. Instead, we incredibly capped existing oil wells and just about stopped drilling in the US territory. We then relied more and more on foreign oil. It was humiliating to see President Bush go to the Saudi's and ask for more production, only to be rebuffed by them. Hey, we are the power, and we have the power to do things differently. Here we are, asking them to increase production, while we say we won't increase production right here in the United States. Does that make sense? It doesn't to me.

OK, we heard a lot of good things from President Bush, but we didn't get all that we asked for, so I am writing to ask that we continue to hammer away on this gas and oil subject. The drilling needs to be done, no doubt about it. The other point we mentioned was the quick remedy to the high oil prices---raising the margin rate required to buy oil. It is only 5-7%, and the critics of margin rates say raising the rate will increase the price of oil. What kind of fairytale land do they live in? If you make it harder to speculate, less speculation will be done and that will bring prices down. Look at it another way. There is a 50% margin rate to buy stocks. In my lifetime I have seen it fluctuate--from no borrowing to just 10% could be borrowed, to the present 50% requirement--which was last changed in 1974--far too long ago. If a low margin rate is so good in oil, why don't we eliminate the 50% requirement for stock and say we can borrow 100%, opening up the speculation spigot? No, that is not a good thing--a good thing is to make it harder to speculate--and the people that really need oil futures and actually use the oil, like airlines, ships, etc., will be able to get a more stable oil market---with lower oil prices. The requirement also could be that if you buy oil contracts, you have to be able to take delivery of the oil--or gas. Speculation can be seen in another sector--the hot housing market a while ago. Look what happened there. The speculators snapped up houses as they were being built, and sold them when they were finished, at higher prices. Well, we all know that didn't last, and you read that here 2 1/2 years ago, when we reported this could not continue. Throughout history we see many examples of speculation and how it eventually crashed whatever area it was involved with. Speculation is bad, has been bad, and always will be bad. Eventually it catches up with a situation and it isn't fun to go through. Now, we are not saying that all of the high price in oil is due to speculation. For sure, much of it is due to supply and demand. But the fact that oil went from about $100 a barrel to $135 and higher in about two weeks, is certainly due mainly to speculation in our view. That difference would translate to lower prices at the pump - maybe not to where we would like to see them but better than they are now.

So--tell everyone you can that we need to raise the margin rates for oil--and raise them a lot. It can be done, and it should be done. Congratulations to all of us for our efforts in this and the results we have seen so far. (By the way, no government people have asked me to work for them yet--I'm still available, and at a cheap price.)

 Today's Thought---
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Did you ever notice: When you put the 2 words "The" and "IRS" together it spells "Theirs"?


Mike

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