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

Stat Sheet Week Ending July 26th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+135.0+1.2%-1.0-12.3%
S&P-3.0-0.2%-210.0-14.3%
NAS+28.0+1.2%-341.0-12.9%

Highlight of this past week: POT call option made 12% in approximately 6 minutes.

In this Issue---
SplitMaster Basic System---
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While our Basic plays remain in the doldrums, it is nice to note that we had some more new split announcements. We realize that in hard times there are fewer splitters, but there are companies that are doing well, and making new 52 week highs, besides. We welcome these new splitters and hope for more.

Momentum Plays---
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The new earnings season is off to good start. Begininng on the 18th we got announcements we wanted to play. There were a couple of picks that did not work out and were No Plays but we have had three plays, all of which were nice wins. All of the wins were less than 15 minute as well. Momentum Plays We look forward to this coming week.

The market has traded in such a way that we did not have much action with our W plays. This may change this week as we expect to report potential plays this week. So members, if this play interests you, watch for our signals.

Three Indicators---
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We had a indication of a down move coming, as shown by our W Indicator, and WHAM, BAM, on Thursday we saw the Dow drop 283 points, with the Nas also dropping proportionately. These indicators can not be ignored. The W Indicator is also proving to be enormously beneficial in our papertrade test strategy that we are just about ready to make official as mentioned above. More coming on this.

 The Economy, The Markets & Commentary---
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We had another good week in oil, meaning the price of a barrel of oil continued dropping. And we must remember not to give up in contacting everyone about raising the margin rates on oil contracts, and also for drilling in our country. Re the margin rates, let me say that this past week my Representative called me for input on the oil situation (I've been hammering his office with calls to raise the margin rates--and those people in his office are not very knowledgeable about it, let me tell you.)--Anyway, I was out at the time and he left word for me to call him back, which I will do early next week. People, we can do this--Oil has dropped over $20/barrel and we can get it down a lot more by scaring out the speculators that have put up only 5-7% in margin. They will get margin calls and prices can go even lower. Do not be fooled by radical environmental concerns, either. The last offshore oil problem was 39 years ago. Technology has come a long, long way since then---plus, the problem was cleared up. Also, look at ship wrecks involving oil--we don't stop oil shipping, do we? These things happen. There isn't any other way to economically get the oil across continents other than by ships. We have thousands of people killed by vehicles every year--do we ban auto's? Of course not. We have plane crashes, do we ban airplanes? Again, of course not. Accidents will happen, but we can deal with them, and we also find ways to cut down on accidents. We need oil to be reasonable in price--and speculators must be cut back. If stock margins are 50%, why can't oil contracts be at least that much? More airlines have sent me info stating that speculators are the major reason for high oil prices. Then, don't go along with the talk about new oil taking too long to get into production. If we had drilled 5-10 years ago, we would be in peak production now. If we don't start now, we will never get to peak production. Our consumers need help and we need it quickly. Please do your part in contacting everyone--government agencies, media and friends. We have seen the price come down and we can bring it down a lot more. Keep up the good work.

On the housing/finance problem---We don't think we have reached the bottom here. A report came out last week that said that another form of mortgage financing is coming up for rate adjustment and it will again hit hard with borrowers of that type of mortgage. We believe there was massive fraud committed in this area, and the Fed. is coming to the rescue--because it is too big to let fail. The world is not coming to a doomsday, but it will be painful. The inventory of homes keeps rising and the average price keeps falling---even tho we have seen a slight increase in some areas in number of sales, compared to previous months, etc.

The last time we had a financial crisis--in the savings and loan sector, it was because of the same thing. Relaxed lending rules. The results were that the FDIC had to come in and take over many of them. Now, who benefited from the relaxed rules?---The big boys, as usual. Who benefited the most from our current mortgage problem? Again, the big boys. Let's make a prediction about how this is going to work out in the long run by taking a look at what happened in the long run with the S&L's. The big boys got their money and the bank collapsed, to be taken over by the Feds. After a while the Feds sold off the bank and who bought them for about 10 cents on the dollar? Right, the same big boys that bailed out when the banks got into trouble. I'm predicting that there is going to be a fire sale in the financial sector, and those big boys that took the most out of the easy mortgage programs will be the ones that will get the fire sale price, using their original profits to multiply the profits at bargain rates.

More on the general economy - Earnings have been good from a number of companies. The one common thread there is that they have been able to raise prices without losing sales. As we have said before, the way they are doing this so successfully is to keep the price the same while making the volume of the product less. At some point, the public will be aware of this and realize their pocketbooks are still going down while prices seem to remain the same. We cannot take the hits from the housing and finance sectors, together with the huge increase in oil prices (which affect just about every single thing) and expect that the problem is going to go away quickly.

How can we profit in this type of economy? We still believe that stock splits are a good way--splitting companies are doing well economically. That is the number 1 reason. Another way is to take a look at the sectors that are being hurt by this economy--and depending on the stage at current time, Put options can be the way to go. Look at Hertz and Avis, for instance, in the car rental market. See their price a year ago and compare it to what it is now. There are many others, including all those from builders to home furnishings and everything related to the home.

There are tremendous drops in stock prices from last year at this time. Airlines we also already know about. Higher priced restaurant chains are taking hits. We just came back from a trip and all the restaurants and store merchants (especially clothing) were moaning loudly about how bad business is. (Conversely, how about the low priced restaurants doing even better--Hint, hint--McDonalds--near its 52 week high). Hotels are being hit--take a look at them and see what level can be next on the price drop list. Profits can be made--just put your thinking caps on and look for the opportunities. By the way, we would be happy if you would share your findings with us, so we can pass the idea on. Keep in touch.

 Today's Thought---
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Don't measure busywork. Don't measure activity. Measure accomplishment. It doesn't matter what people do as much as it matters what they get done........Larry Winget, professional speaker and author.


Mike

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