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Author: Mike Celeste Editor: Tony Ponzo July Circulation: 6782

Stat Sheet Week Ending July 13th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-188.0-1.7%-2,164.3-16.3%
S&P-24.0-1.9%-229.0-15.6%
NAS-6.00.0%-413.0-15.6%
In this Issue--- SplitMaster Basic System---
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We had some glitter taken off the gold on our Basics this past week--along with all the rest of the stocks in the market. A big gainer was reduced to being just "a gainer" and a gainer was turned into a loss at this point. One good day in the market could turn them around, we think. Hey, our big winner, ATW lost 23 points in 4 trading days, and recovered about 6 by Friday---that's a huge hit, and we're still ahead.

 Big Dipper System---
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Usually, by far, when a stock gets on the Big Dipper list, it is already down quite a bit. And since we feel that splitting stocks come from good companies, we feel the dip price will recover. We are finding out that even good stocks can go down, and then go down some more. This has happened in the past when there have been major declines in the markets. SplitMaster has managed to ride them out with these good companies and we feel that this will happen again.

Options---
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There weren't many chances for options trading this week, but there were a few--even if some of them came in our papertrading test strategies. We had an opportunity to write a covered July call in ATW for those that like covered calls. We also had some SPY option opportunities as a result of our 3 Indicators.

Here is what was reported during the week--"Re the paptertrade test play--Yesterday showed a huge winner based on the 2 Indicators that showed being oversold. 10 SPY call options went up from open to close a total of 1.15. That meant that 10 calls bought for $2,200 made a profit of $1,150. A little over 50% in 1 day. Let's hope we can continue this." This is the sort of thing that is possible when following these indicators and when they are in multiple agreement. Don't forget, these potentials may be picked up by team members on the daily postings on the Big Dipper page, at the top. (We are working on rearranging these categories, so please bear with us.)

Then, there were some trading opportunities in SPY options during the day as this volatile market opens up these opportunities. One problem is getting the order in fast enough. We were shut out several times because by the time we prepared the order (even with some of it prepared in advance) and rechecked the current price, it had moved the direction we expected already and we had to decide if we were willing to give up some of the goals set. In other words, if you are looking for a 20 cent profit, and your price has moved up 5 cents already, you have to decide if 15 cents profit is worthwhile. "Nimble" is the key word here.

 Momentum Plays---
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Not much to report for this past week as we were in-between earnings season. We did attempt to make one play which we have won on before. That play was, FAST. But though its earnings beat the street the company warned about the future and that coupled with this terribly weak market, took all the momentum out of the play so we passed on it.

This week starts earnings season again and we should have plays coming in. We are still testing the W plays however and may start playing them in earnest in the next week or two. So far it is looking very good for this play and if it continues, we may put more focus in these W plays than in the earnings plays as they produce bigger profit. More to come on that so stay tuned.

 Three Indicators---
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We did have some opportunities using these indicators this past week. The options section above also pointed this out. And they were right on the money--but--it takes steady nerves to play this market and you are betting that the market is going to turn around after dropping 237 points the previous day. That did happen--last Wed. And--the next day was positive--but nerve-wracking - no doubt about it. Seasoned day traders have pretty much learned to steel their nerves during these times, but everybody is affected at some point, even the big institutional traders.

 Feedback---
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Our longer term readers might remember the young mentored student we were working with--he is off to USC here in CA and impressing his professors as he did his high school teachers. You would also remember that our discussions on the housing industry spurred him to buy some Jan. 2009 put leaps for MBI and ABK while their stock prices were in the 20's. MBI hit a low of 3.70 this week and ABK had a low of 1.04 recently. Look at that profit potential. We are very proud of Jonathan for analyzing the sector so accurately. Congats to J.

 The Economy, The Markets & Commentary---
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The economy, in our opinion, has a long way to go before it is going to get that pendulum swinging the other way. What to do about it? Our outlook is that long term investing is not the thing to be doing at this point. CNBC has all the "experts" on saying there are great investment opportunities out there---the only thing is that they have been saying this for months. If you go back and check them, you will see that those great opportunities, if purchased back then, are showing great losses. Someone is going to be right about this by saying the same thing week after week, month after month---but we don't know when that will be. So, when you hear CNBC people asking the "experts" what they would be buying that very day, take it with a grain of salt and look at the big picture. This economy is in trouble, and it is being duplicated around the world in the economies that are similar to us. It is much better to be buying after the recovery has started, and that is hard enough to determine. We stated a few months ago that we thought the bottom had been reached in the markets during their drops in March and the subsequent recover. Well, surprisingly, with all this selling, the Nas (our main indicator) has not re-hit the lows of March. The Dow has gone below those March lows but the Nas is still about 84 points above the March lows. We don't think there is any doubt in the vast majority of people that we are in a recession--and the official bear market line has already been reached for the major indexes.

In the meantime, while we are watching the financial game being played on a chessboard, there are plenty of moves yet to be made. Our feeling is that short term trading is the way to go during this period. We have shown it to be so time after time, by giving our signals and indicators that are profitable in both up and down markets. Sometimes it is via day trading our Indicators or our W selections and sometimes it is thru our programs usually lasting some weeks, using splitters--splitters being companies that are doing well in this economic climate. That is our analysis and a check of our record will back us up. Yes, we have losers, but in looking at our record for this year, we think it would be hard to match it. If you haven't checked our website lately, all of our "Past Results" are free to see for anyone--click to Past Results

Moving on--We have been joined by some real biggies in our attempt to get speculators controlled, as investors are controlled when using margin on trading in stocks. We've got to continue to hammer everyone we can, from government representatives and regulators, to the media and friends. There is no excuse for allowing speculators to do this to us, as they did in the electric rate scams a few years ago. I buy from you, raise the price and sell it back to you, and you raise the price and sell it back to me, etc. See the section below that discusses this, just about as we had explained it weeks earlier. It's up to us to carry this on--let's get to it, and not give up--keep sending to the same government people, again and again, until it is firmly tucked into those parts of the brain that will react positively to this. It can be done, and it can be done quickly--limit speculators by raising the margin rates from the current 5-7% level to that of stocks; 50% margin required. The oil users want this and don't let them fool you into believing otherwise. Send everyone a copy of the letter below, just as it was sent to our partner, Pat. (By the way, I'm still available for hire on this matter--one of the surprises of the year is that not one single offer has come in to hire me--I just don't understand it. Kidding of course, as I don't contribute enough to the politicians--but--you have to admit we have been right on the money with the issues of oil, housing and mortgage/credit--and our consistently accurate analysis of these markets should be worth something to the people that make decisions that affect us all.)

UNITED AIRLINE

An open letter to all airline customers

An Open letter to All Airline Customers:

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.

For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.

Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

The nation needs to pull together to reform the oil markets and solve this growing problem.

We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com

Today's Thought---
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No man will make a great leader who wants to do it all himself,
or to get all the credit for doing it......Andrew Carnegie, 19th century captain of American Industry

Mike

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