mailogo:: Newsletter
Home :: Strategies :: Membership :: Past Results
Author: Mike Celeste Editor: Tony Ponzo November Circulation: 13537

Stat Sheet Week Ending November 12th 2005

ChangesWeekly
Indexes Points Percent
Dow+155.0+1.5%
S&P+15.0+1.2%
NAS+33.0+1.5%
Highlight of this past week
FAST QUADRUPLED the buy price in the call option, going from $2.50 to $10.20, where we closed it out, while letting the stock ride a little longer to it's own sell date on 11/18, next week.

In this Issue---SplitMaster Basic System---
***************************************
We were sailing along with almost a perfect record going, but then the energy stocks had to react to the drop in oil prices and 2 of our plays ended the week in negative territory--and both of them were energy stocks. We have another energy stock that is closing out on Monday, DNR, but it had enough profit in it to withstand the drop and then it recovered somewhat on Friday. Barring any real negative news over the weekend, it should do very well on its sell at the open.

Big Dipper System---
************************
Boo-Hiss !! The energy drop took one of our plays and dropped it into the BD system. At first it recovered very nicely, but then the next round of energy selling took place on Thursday and it hammered those stocks. On Friday our BD recovered 2.5 points, but it wasn't quite enough to get it back into positive ground. The company is doing well, and we think that by sell date, it will move back into positive territory.

Options---
************
With the huge gain on FAST CALLs, we see the November returns on Calls at a positive 151%. That might be a little much to expect for the whole month, but we are in there trying. And try we will, on a specific option. DNR is closing out on Monday, at the open. The market makers of the CALLs are at it again, with the bid price on the option being below the true value of the option. We have the Nov. 20 CALLs (after the Nov. 40's split 2-1)--the stock closed Friday at 22.90, giving a true value to the option of $2.90. Well, the bid price listed is $2.70, meaning they are chopping off 20 cents of true value, with absolutely no time value. In answer to that, this is where we short the stock, then exercise the option and turn it in to cover the short sale. I like to do the short first, as I put a limit order in and then know exactly where I stand. If prices stayed the same as Friday's close, there would be a $20 difference on each CALL contract--which should be enough to cover the extra commission costs--if you have any. We know that some people have accounts (with a higher minimum of assets) where they pay a quarterly fee and then no other commissions, no matter how many trades they make in that quarter.

S+P 500 Options---
*********************
With our 2 S&P written PUTs being safely far enough away from the market, we are looking ahead to next week, Thursday, when they expire. Also, during the week, we will be looking at selecting a new play for this system. We actually would not mind a little drop in the S+P 500 average around the middle of the week, so that the PUT prices would rise a little bit.

Auto Trading Program - Doing great!
***********************************
Our new Auto Trading prgram is growing and making a lot of members excited. If you are interested in an easier, faster way of trading the SplitMaster strategies, with a low commission structure, send us an email with your questions to Contactus

The Quest---
*************
Both of our new plays in this system are nicely ahead. (TRID and BBY). Bowing to that old feeling we sometimes get, greed, we wish we had more of those contracts. No--get rid of that thought--be happy both are up. BBY fell a little this week, but is still showing a nice profit. It will be interesting to see if we can continue this run. We want to have plays during these winter months, because they are the best months, simply put.

Chart Indicator---
*******************
Since moving into positive ground, it has continued to remain comfortably above the Positive/Negative break even line.

Stock Split Comments---
****************************
As we mentioned last week, there were more new split announcements that rolled in this week. We had 5 new ones that met our criteria. Two of them will be in the Big Dipper system only, as they are 3-2, but all are welcome.

New Option Testing---
*************************
Both of the systems continue to show excellent promise. The credit spread play was made on WFT this past week, so we shall see how that one works out. BRO was attempted, but we could not get it off. We look for a move up or down in order to make a profit on credit spreads with the up move producing the biggest gain. But it is nice to have a play that, if the underlying stock goes in the wrong direction, you could still make a profit. The only thing this play does not like is a stock that doesn't move much. But even then, the losses are minimized.

The other new one, the Pattern/Probability System (I think this is going to be the official name for it) made me moan and groan, big time. I'm in EBAY and BBY and mentioned others that fit the criteria--CAT, AET, and GPS. All of them are up from the buy dates for each one. I sat there and watched CAT and AET at prices below the buy date price, and did nothing. GPS got away to the upside right away. I mentioned checking out INTC, AMD and DOW. All 3 checked out as meeting our standards--and all 3 are up nicely. A new reader, Jeff, wrote and asked if TKR fit the model, and it did, with some reservation--that being that it has to push into a new 52 week hi to make it work. We are looking at 11/22 to see if it is anywhere around 28.29, where it was on 11/1. We would be looking for 10% or a 12/31 closeout. Watch the others as follows--CAT--11/1 thru 12/31 or 10 points; AET--11/1 thru 12/31 or 10 points; GPS--10/27 thru 11/30 or 1.5 to 2 points; INTC--11/1 thru 11/30 or 2.75 points; AMD--11/1 thru 11/30 or 4 points; DOW--11/1 thru 12/31 or 5 points.

Tip of the Week--
*************************
I'm just wondering if there is any possibility in being nimble when watching Jim Cramer's show on CNBC. He mentions a lot of stocks, but gives more strength to some. I notice that the aftermarket prices on the ticker-tape at the bottom, almost immediately start rising while he is talking. IRBT was one, TRDO, AQNT and GIL were others--this past week. We haven't done any strict study to see if profits can be done on a consistent basis by buying in that aftermarket. Just a thought--if anyone does any serious tracking on this point, let us know and we will share it with the others.

The Economy---
*****************
WHO-RAY !! It is still November. The major indexes have gone up 7 of the last 8 trading days. November is living up to its billing--and we have no objection to it continuing to do so. Having said that, it might be nice to take a breather around the middle of next week, settle down a little bit, and give us an opportunity to make some plays at more beneficial levels. In looking at the oil situation, we think our earlier statements are bearing credibility. Oil inventories continue to increase and it has hit the oil prices, with the price now being $13 below the record levels earlier. You can't just build up inventories, especially so much higher than at this time last year and not expect prices to fall. Of course, gas hasn't dropped down to the levels it should be, but at least the price is dropping. And don't expect any help from the Congressional hearings--I don't believe it will ever happen. The pols make it look good for our benefit, but that's about it, in my opinion. The energy stocks took big hits this past week, and it did have a negative bearing on some of our plays, but they seemed to reach a bottom. Recently it did the same thing and it was a buying opportunity, when oil rallied a bit. I don't think prices will increase very much this time, barring an unexpected happening, but there is still a whole lot of profit in oil at $50 per barrel and higher. One negative that I have been mentioning and expecting, also, is the real estate market. I've said that I don't think it will be a soft landing, with prices holding instead of dropping in these hot areas. I think they will fall like they have at the other times like this. Toll Bros. came out this week and warned, and I think it is what is going to happen to the others, too. Mathematically, you can't keep up these sales and increases in prices--they will go down. To me, the only question is how far down. Mortgage rates on 30 year loans went up this week for the 9th straight week. That put them at levels not reached in a little over 2 years. My dad always told me that every dollar you go up in price, you lose another buyer. I believe that.

Today's Thought---
**********************
Give a person a fish and you feed them for a day; teach a person to use the Internet and they won't bother you for weeks.

Mike

The Splitmaster.com information system delivers email to addresses provided by subscribers. To Subscribe or Un-Subscribe go to our Newsletter page.