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Author: Mike Celeste Editor: Tony Ponzo November Circulation: 6760

Stat Sheet Week Ending November 1st 2008

ChangesWeeklyOctoberYear to Date
IndexesPointsPercentPointsPercentPointsPercent
Dow+946.0+11.3%-1,526.0-14.1%-3,940.0-29.7%
S&P+92.0+10.5%-196.0-16.8%-499.0-34.0%
NAS+169.0+10.9%-370.0-17.7%-931.0-35.1%

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Highlight of this past week: A good week with three nice wins in the Momentum strategy and no losses :-) Momentum Plays

In this Issue---
SplitMaster Basic System---
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What was a very bad month called October did manage to end the week with a very nice gain. The splitters came along with that and we are hoping that we can get the rally to continue next week. If so, there are some splitters that have made enough of a comeback to sell if we can get just a bit higher prices. In the meantime, we continue to hold GFIG, for example, as it is paying over 6% in dividends. Even tho they adjusted positions and reported earnings that were lower, the company is still paying the dividend. See comments in the Big Dipper on ISYS as it stands in the Basic.

 Big Dipper System---
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We did get off a sell on a winner in the Big Dipper. ISYS edged into plus territory, and since it is also on the Basic System list, we took the profit and watched the stock go somewhat higher by the end of the week. It is very close to being a sell in the Basic now, so keep your eyes posted on this one.

 Momentum Plays---
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Finally we get multiple wins in this strategy this week. We had two medium size wins and one very nice big win and no losses. So we had a very nice week indeed. Our play on Friday (ESRX) took longer than usual to get into profit territory. So we became a little impatient and took the profit when it finally came. Not long after though, the stock started to move up and those members who held on made out very well indeed. But that's OK we still received a decent profit.

That makes six wins for the month and no losses for a 100% winning month. And our profit percentage for the year on this strategy stands at over 77%. So this strategy has held up very well during this terrible year in the market. We look forward to another good week coming up with even more wins. Check out this week's results at Momentum Plays

Three Indicators---
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There weren't many plays in October in the Indicator system because there was so much volatility that the ordinary rules really didn't apply. We had so-so results, winning 2 and holding one from Friday that is currently in a losing position.

The Economy, The Markets & Commentary---
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By the time the next newsletter comes along we will have a new President Elect--finally. It is going to be exciting to see the voting results roll in Tuesday night. It appears that right now Obama has a lead over McCain, but there are some polls that are calling it pretty even, on a nationwide basis. The state vote totals are what count, so let's see if the "experts" can get it right with their predictions.

At the end of this past week the BIG question is whether or not we have made a bottom in this market. The last week of October was a big winner and a number of "experts" are saying that the bottom has been reached. CNBC was full of positive thinking on Friday, and it seems we take it on faith that the markets look about 6 months down the road. If the economy improves 6 months down the road, the market move this week could be a sign of things to come.

If the look isn't into the future, the recent news that has come out has definitely been on the negative side. Just on Friday these reports came out. US personal spending was the worst quarter, thru September, in 28 years. The measure of manufacturing activity saw the reading fall to 37.8, much worse thant the 48.0 figure that was expected. On Thursday the figures on the economy for the third quarter showed a decline of 0.3%. Since October was so bad, it is expected that the last quarter could be worse than that, and thereby qualifying for official recession terminology. That would mean 2 quarters in a row of decline. Of course, we could see a tremendous rally in November and December--and keep your fingers crossed. Those 2 months are historically good months, and also historically, we have seen many bear markets end in October. My personal feeling is that we are not out of the woods yet, but if we make 2 steps forward and 1 back, we could still see a net gain off the October bottoms. If more news on the negative side keeps hammering us, it may take more time. There is so much uncertainty out there that it seems to me we could go down before going a lot higher. But, whenever the markets come out of a terrible slide like the one we've just had, it seems that the turn up comes suddenly and with no apparent explanation at the time it happens. It just happens. Some how the collective action of all the traders and investors is much more knowing than traders as individuals. Then too, maybe the market turning up is substatnially responsible for leading us into better times. Who knows for sure but for certain, the next weeks and months will be interesting indeed.

Credit cards are starting to get more publicity, and that also is on the negative side. It seems that there are so many people behind in their card payments that the credit card companies are trying to get a change in the rules. The change is one that they fought so hard to change earlier. When the new bankruptcy rules were put in place these companies wanted their debt to be excluded from bankruptcy--a change from the old rules. They got it. Now they want to be able to forgive a certain amount of the debt. The reasoning is that collecting some debt is better than collecting none. This is working its way thru the system, so it will take a while to see if changes do occur.

Now there is a big stink going on about a part of the bailout bill. We have continually pointed out that we were never given the full exact details of that massive money lending program. Now it is coming out that the final version did have something about no "golden parachutes" for the executives when they leave, but it didn't cover the bonuses that Wall Street is famous for. It seems that there are efforts afoot to give out some pretty big bonuses and people are howling mad about it. The screaming could be attributed to Halloween, but it can also be for this. There are rumors that some banks are making plans to use the bailout money to pay dividends to stockholders, the aforementioned bonuses, and in addition---use the money to buy competitors. A lot of people think that this is not what was intended as a use for taxpayer money. As a followup to the bailout, the Treasury has to sell bonds to pay for the bailout. We hope that conditions are good for this because the US doesn't have any choice--they have to get those bonds sold. If you are unhappy about the use of these funds by the banks, you might want to let your government reps know--after the election, in case there are some new people in there besides the President.

A quick mention of oil. There has been a very rapid drop in gasoline prices--finally. They are still not relative to the percentage drop in oil, but we will gladly take it. There is even a question about how much money the Saudi's need, especially related to their huge investment and borrowings related to building Dubai from scratch. I don't think there really is much sympathy across the US for the debt load carried by the Saudi's. Maybe our new government policies will finally move to using our own sources and more development of alternative sources that will create and keep jobs in the US. It seems both parties have more or less seen the light on this issue and we can only hope that they will act on it.

Lots to overcome, but adversity has been overcome many times, and we look to the future with hope and faith that when it gets down to it, we can make good decisions.

 Today's Thought---
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Think about this...No one ever says "It's only a game" when their team is winning.


Mike

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