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Author: Mike Celeste Editor: Tony Ponzo September Circulation:

Stat Sheet Week Ending September 20th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-34.0-0.3%-1,877.0-14.2%
S&P+3.0+0.2%-213.0-14.5%
NAS+13.0+0.6%-378.0-14.3%

Highlight of this past week: - BIG WINS IN INDICATOR AND BIG DIPPER STRATEGIES - Indicator plays show 3 different day trades on SPY options for the three Indicator plays. Each more than doubled.--and--2 plays on the Big Dipper show 13% returns in 1 day for each of them.

Special Note: Last week we introduced some new services and new site features. There is a free and very beneficial feature we forgot to tell you about. On our home page at SplitMaster.com you will see an up-to-date reading of the market indexes and you will notice below there is a stock quote feature. Simply type in the box marked "stock quote" any stock you are interested in and you will get the last price quote and a ton of other information on that stock including charts and fundamental information and the latest news on that stock. CHECK IT OUT.

Also, don't forget our new strategy - The Indicators. This strategy continues to be amazingly accurate in signaling the direction of the market for a given day. Members can use these simple to use signals to play the indexes such as the SPY or SPX or their favorite stock. This month the Indicator strategy has been accurate 88% of the time and some huge wins have been made as discussed below. All members have access to this strategy. And for those who are not members yet, you can now sign up for just this service for the very low price of $19.95 a month. And with our 30 day, money back guarantee, if you are at all interested, why not give us a try today. To learn more go to -The Indicators and read the Indicators section or Level I and read the Level 1 section.

In this Issue---
SplitMaster Basic System---
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Talk about volatility ! The Basic plays went from dismal to recouping by the end of the week. We have lots of room to go to get back to even on some of the plays, but they are good stocks. If credibility and trust come back into the market, there could well be more to the recovery of these stocks. We are keeping a close watch on them, and have made some estimates on what prices to look for. More to come on this system.

 Big Dipper System---
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We caught a nice break this week, with 2 stocks doing exactly what the Big Dipper was set up for. DXPE and GHM were not put into the Basic system because of the severe downturn in all stocks, where the good were punished right along with the bad. So, we just set up a target price in the Big Dipper system, and we were conservative on our entry price. On Thursday, both hit the target price and on Friday we sold them at the open, with each of them showing a great 13% profit for that one day. In addition, ILMN moved to a decent profit position on the Big Dipper, so we set a target price after the market opened and it later reached that sell price and was closed out. Now we are setting some target sell prices on others, waiting to see if there is going to be more upside moves early next week.

 Momentum Plays---
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With this crazy roller coaster market it has been hard to find stocks that meet our criteria for this strategy but we did have a very nice win this week none the less and the strategy is posting a very nice 49.47% profit for the year. Check it out at Momentum Plays

Three Indicators---
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Our lowest priced strategy, the Three Indicators, had nothing short of a phenomenal week. The beauty of our strategies is that we plan for making profits in up or down markets. The indicators showed plays for Mon., Tues., and Thursday. Monday looked for profits on the down side and we saw a 504 decline in the Dow. Tues. and Thurs. we were looking for up moves. For Tues. the Dow advanced 142 points and Thurs. saw a rise of 410 points in the Dow. Now these indicators just give us some guidance as to which way the market is going at some point that day. If a stock follows the movements of the indexes, then the Indicator play is something that can be utilized. We follow the SPY and track the options in it. On each of those 3 days the option more than doubled--once for puts and twice for calls. It doesn't take a great deal of pondering to realize that if you can come close to repeating these trades, you can get rich over a decent period of time. So far, in September, we have had 8 Indicator plays and have won on 7 of them. There seems to be times when one of our strategies is working better than another one, and you can go with the one that has the hot hand (as they say in sports) and not play the strategy that is trailing the hot one. Because of the low price for this service, we have been asked by other team members to limit subscriptions, and while we are not doing that at present, we certainly will consider it for the benefit of our early followers. We don't want to do something that is going to affect the results.

Tony has mentioned our W play on stocks and I just want to take a moment to mention on one particularly bad day in the market we had something like 32 different stocks that fit our criteria for an up move of a point or more for the following day. I think 31 of them made that 1 point or more. We didn't put out the list for that many, but whittled it down to about 3--and they won. Some days we don't get any plays, and then get flooded on another day. Very exciting times for these new strategies that we have worked on and are available to you now.

The Economy, The Markets & Commentary---
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Let's see what we had this past week--Down 504 Dow points on Mon., up 142 on Tues., down 449 on Wed., up 410 on Thursday and up 369 more on Friday. Now that's what we call a wild week. Volatility reigned with each bit of news that came out related to our finance systems. We believe it was very close to collapsing and absolutely needed Federal intervention. The only problem is that the big boys are being protected, again, for "mistakes" they made in actions taken. I feel they completely ignored good common sense and did it thru greed. Now, when the Feds sell off assets, these big boys will be there to snap up the bargains---just like they did when the savings and loans failed in the mid-80's.
Back then, builders and contractors were allowed onto the boards of the savings and loans and were allowed to borrow from the bank for their own businesses. Therefore, much higher risks were taken, and the S/L's failed---where the Feds backed up the losses and then sold off the S/L's for about 10 cents on the dollar. We taxpayers paid for that, too. And who bought these assets at fire sale prices?--those same people that dragged down the institution and got big money for being in the top echelon of administration--buying a different S&L, but still getting the price benefit. You watch and see if this happens again. Mark Haines on CNBC is furious about this and is going to especially be watching to see if new officers are going to be getting these 10 million dollar packages, etc. We're right with him on this one.

The rule changes on shorting is really upsetting the hedge funds and institutions, too. They would hedge a position with shorts and now there are certain stocks where shorting of any kind is not going to be allowed. It will be interesting to see the results next week.

We have been saying for weeks that the economy is not good and worse than what the "experts" were saying. While we feel that the Fed action this past week was needed, it is far from solving the financial problems facing this country--and in turn, the financial problems are affecting much of the other areas of the economy. Housing is still deeply mired in foreclosure action and dropping home prices. Commercial real estate has now joined the group and the bargain buyers are joining forces to raise capital to buy on the cheap. Personally, I feel we have more down side to go before bottoming out and then it will take a long time to get back to where we were. The last depression in housing took 10 years to get back the previous high levels--and that one was not as bad as this. Here in southern California the price list for the Los Angeles area showed that we have now dropped over 30% in housing prices from the prior year during the same month. Most knowledgeable people in the field feel that more price drops are yet to come. Our local paper that publishes foreclose notices is still loaded with those notices and we were in a pretty solid area. Top level price areas are still doing much better, but they have seen an increase in foreclosures, too.

Combining with the poor economy, we see that this is an election year and usually the controlling party puts thru programs to attract voters. This election might turn out to benefit the loser, for the winner will be looking at boulders being thrown at him from all sides and sectors. It doesn't appear that any of the candidates has enough experience for this sort of thing because it hasn't happened in their adult lives--all the negatives hitting at the same time. We can only hope that there is enough intelligence out there to work our way out of this mess.

Fortunately for us, we have planned for these sorts of actions in the stock markets. What I mean by that is that we have worked long and hard to find strategies that can show profits in both up and down markets. We have had them before, writing puts and calls, for example, at opportune times, but now we have gone further. Our day trading programs have passed our highest expectations and while we can't guarantee that these extraordinary results will continue, we have confidence that the logic behind them will hold up. Long time readers know that we have pretty much hit the economy right on the button for the last years---hitting hard at outrageous home price increases, with 100% loans and no proof of income. The "experts" say they couldn't see this coming, but anyone with 1/2 a brain could tell that mathematically you couldn't keep doing this. As far as I'm concerned, the "experts" knew exactly what they were doing, but because of the huge amounts of commissions and profits being generated we saw GREED go to the top of the list for these people.

Oil has continued to follow our predictions and efforts. The price dropped as low as $91/barrel and then bounced back up by the close of the week, but we have managed to take the starch out of their speculative actions. Funny thing to point out. We have talked and talked about the low margin required for oil contracts--about 5-7%--and how that encourages speculation. That is a well known fact--and how it can work like a two-edged sword, too. When prices are dropping, margin calls come in for more cash. Anyway, look at shorting. When it is perceived that shorting is a negative for the markets, the rules are very quickly changed to either prevent shorting or restrict it compared to prior rules. I will repeat--very quickly the new rules were instituted. They could have done the same thing for the margin on oil contract speculation--but they still haven't done it. But at this point it may not be needed as oil is correcting.

Manipulation was in the markets on a large scale and it still is--however now the Fed is doing some manipulation of its own. There is talk that the Fed will make profits on these transactions, and hence the taxpayers will be repaid---don't bet the house on it, let me tell you. Of course, some people already bet their house on the rules in affect at the time, and they lost their house---don't let it happen to those of you that averted it to this point. Be very leery of what is being fed to you--a lot of double-talk is the general talk that comes out of the mouths of the politicians. To point out another bit of evidence along those lines---Greta Van Susteren was interviewing someone on Fox. She asked how come Hillary was now so supportive of Obama when she was so opposed to him and critical of his platform when she was running in the primaries. The answer was that people running for office will say anything to win. When Greta followed up with the question of whether we should then believe anything that they say, the double-talk answer came out, completely avoiding the question. It was stated some years ago by the campaign people that everyone knows that you can't believe what the politicians are promising---aren't these sorts of statements disgraceful. There is no accountability to any one in these campaigns and later on, in the offices they are elected to serve--and this includes the high ranked officers of these financial companies that steered their companies into certain failure with their fiscal policies. This next week should be an exciting one, also--so pay attention to what is going on out there--it could well affect you.

 Today's Thought---
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If you can smile when things go wrong, you have someone in mind to blame.


Mike

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