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Author: Mike Celeste Editor: Tony Ponzo October Circulation: 6765

Stat Sheet Week Ending October 4th 2008

ChangesWeeklySeptember3rd QuarterYear to Date
IndexesPointsPercentPointsPercentPointsPercentPointsPercent
Dow-818.0-7.3%-693.0-6.0%-499.0-4.4%-2,940.0-22.2%
S&P-114.0-9.4%-117.0-9.1%-115.0-9.0%-369.0-25.1%
NAS-236.0-10.8%-276.0-11.7%-202.0-8.8%-705.0-26.6%
Important Member Notice: Some members had questions about the new Indicator strategy. We will make a few clarifications here but if any members still have questions, do not hesitate to email us. The new Indicator strategy is really meant to give signals as to what the market in general will be doing for a given day. The indicators may signal an up market, a down market or a neutral market which means no plays. Members can use these signals to make a SPY or SPX option play or to play a stock that they like to follow. In other words, if our Indicators state that the market should be going up on a certain day, you would play CALLs or buy a stock that you have picked. You would only use these indicators to play a stock if you have determined that the particular stock you are watching generally moves with the market. And of course if the market is indicated to go down, you would play PUTs or short the stock if the stock can be shorted still. Although we do state on the Indicator page that a SPY CALL or PUT would be in play, this is not a specific "do this or that at this exact point" type of strategy. It is meant to give a general direction of the market to the members so they can make their decisions as to what to play or not play.

We do not send out an email on this strategy so members should go to the page each night after 6 pm Eastern time (3 PM Western time) to see what the indicators are signaling for the next day.

Don't confuse a SPY play signal on the Indicator page to a SPY play from the Momentum Strategy. Sometimes we have a SPY play that is signaled from our Momentum Strategy. When that happens we will send out an email the night before concerning that play. Of course, if you are a Level I member, you will only be able to view and play the signals for the Indicator page.

Highlight of this past week: Indicators & Momentum plays both had good days on Friday. A good start for October.

In this Issue---
SplitMaster Basic System---
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The splitters have taken big hits right along with the market, and altho we feel they are good stocks and will show decent earnings, we are working on some new plans to help the situation. More to come later, after we have finalized our thoughts.

 Big Dipper System---
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The Big Dipper, along with most stocks, needs to see some positive news come out, either about the sector they are in, or individual news about each particular company. If that happens, and we get a decent rally, we will be exiting some of these.

 Momentum Plays---
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With all the indecision from Congress as whether or not we have a bail out bill and other various factors that have tossed the markets around like a yoyo, we have been staying away from making plays in this strategy this week out of concern of some news coming up that would change a play right as we were making it. Actually we did not get many signals so it kind of worked out anyway. Then on Friday, we get the vote and what happens, the market tanks. Hard to figure but we still feel there will be a rally at some point next week though it will mostly likely not be a long rally. We just have to see.

At any rate, on Friday we did get signals for four up W plays. The stocks were EMN, ETN OII, PPG. The bail out bill was supposed to be voted on and most likely pass before the market opened. So we thought we were going to be making these plays. However, the vote on the bill was still pending at the open so we decided to pass on the plays to be safe, but watch to see how they did. We are pleased to state that every one of the four stocks more than made their profit goal of a $1 or more even though later in the afternoon the stocks dropped with the overall market but our plays were long since finished by that time. Turns out we were being too cautious. But --- we are also pleased to say that a number of members emailed us that they went ahead and made a couple of the plays anyway and did well. Congrats to those members!

The point is however, all four picks made it and our signals continue to be on target!

 Three Indicators---
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The month of October had its first W Indicator move, pointing to the upside. That was for Friday and the pre-market leaned to the upside, so it was a play. Team members should definitely keep in mind that we do not send emails when there is an Indicator play as stated above. We have put a new page on the website and each day it will indicate if there is a possible play or not. So, each member should take a look and see what is shown and act accordingly.

At this point, for the year, we see that since we started the program in June, 2008, we have 26 wins and 8 losses, for a winning percent of +76%. Yes, that is based on the SPY, but we feel that similar results are likely for stocks that follow the market direction. This is also shown by our winning results using the W system for Momentum stocks--see that sector. We can't post every stock, so we take the SPY, which does move in the direction of the market , to be sure.

 The Economy, The Markets & Commentary---
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The bailout bill has passed the House and the Senate previously passed their version--President Bush signed it into law and now we have to wait and see if it does what is intended. Our feeling is that we have a long way to go to get out of this mess that greedy people put us in. I'll bet that maybe, repeat MAYBE, there is 1 person in 100 that knows the real details of the bailout bill. I was called by my Congressman, David Dreier this past week, along with others on a town hall talk call. Unfortunately I didn't get to ask questions before time ran out, but I didn't hear anyone, including Mr. Dreier, mention exact details of the bill. For instance, what is a bad debt or a good debt. Is there really a crisis? The president said every day counts, yet the reps took 2 days off for a religious holiday that was not on the calendar and the stock markets were open along with government agencies. They were paid for those 2 days, too. It was said that their "people" were there to work on it, but---no vote could be taken with them out. I thought we had a separation of church and state--and I don't care what religion is involved--Barney Frank said the Republicans had hurt feelings and they put them before country when it was voted down the first time. Putting religion before country, in a crisis especially, seems to be what they did, all of them. I'm not saying anything against religion at all. But - it just seems that no matter what, a crisis means emergency and has to be dealt with now. A doctor would not leave a patient to suffer for a day due to a holiday and our politicians should not leave the country to suffer an extra day if it is truly a crisis.

More about the "crisis". My newspaper and TV are still showing lots of ads for mortgages and financing for cars, etc. Sure, some businesses are hard up, but there are always times when some businesses are hard up---take a look at business failure rates during normal times. It is tough to be successful in business, and by far, most of them fail in a relatively short time. We just can't believe what we are being told, and that doesn't even touch what we are NOT being told.

The deposit insurance coverage was raised to cover $250,000 per account, but there was no mention of how much this is going to cost. Yes, it is a good idea, but there was so little in the fund at present that a major collapse could easily wipe out the FDIC. Fees are going to have to be raised to cover this, which in all likelihood will mean that the net paid for savings accounts will be less.

The guarantee that we the taxpayers will get all our money back is still in there, as far as I know. If the institution doesn't pay us back in full, we are to be able to collect at the end of "x" years--is it 5 years? I couldn't keep up with all the changes. Anyway, there is a tendency in matters like this for lobbyists to go to work and get the guarantees changed or eliminated. That was pointed out on one of the TV discussions. Also, does the payback include interest that we are going to have to pay? What happens if that company is no longer in existence because of a takeover, etc.?

Now that the bill is passed, and we know very little of the fine details, let's see who is going to run this show. There is going to be a lot of money made by companies that will help sort this all out. Maybe they will be public companies and their stock could look attractive.

Yes, we now have to wait and see what is going to happen and how fast it is going to happen. The stock markets apparently didn't put too much faith in this bailout solving the problem quickly, for we went from being up well over 300 Dow points on Friday to ending down 157 points. There was a range of 486 points between the high and low on the Dow for Friday. When you go from a big gain, to a big loss in the same day, that doesn't seem to invite confidence---but we wait and see what our elected officials have put us into--along with the tremendous cost of the wars in Iraq and Afghanistan that we are still paying for--in dollars and lives. Let's keep our fingers crossed that they are doing us right !!!

 Today's Thought---
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The real art of conversation is not only to say the right thing at the
right time, but also to leave unsaid the wrong thing at the tempting moment.


Mike

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