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Author: Mike Celeste Editor: Tony Ponzo June Circulation: 6739

Stat Sheet Week Ending June 27th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-102.0-1.2%-343.0-3.9%
S&P-2.0-0.2%+16.0+1.8%
NAS+11.0+0.6%+261.0+16.6%

Note: Due to the 4th of July holiday next Saturday, there will not be a newsletter.

Highlight of this past week: The Momentum Strategy has another winning week and sits on a 322% profit year to date and another success in the Indicator Strategy making the win rate 85%.

In this Issue---
Options---
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With the Dow dropping 2 weeks in a row, and some turmoil going on in the market, we might want to take some time to look at writing some Puts. If there are some stocks held that are up, we could also look at writing some Calls. These are for experienced traders that have the OK from their brokers to do this kind of transaction. In writing Puts, the goal is to decide which stock you might want to buy---at a discounted price. Check the strike price that is attractive to you and then see how much the option is selling for. By writing the Put you will be receiving the option price and the money goes into your account. If the stock does not drop to the expiration point, or below, by expiration day, you have made yourself a nice extra "dividend", or credit to your account. If the stock does drop below the strike price, you have already decided that you wouldn't mind owning the stock at that price, plus you get an extra discount from the amount of the option price that was credited to you. If the market stays flat, you will most likely see the price of the stock run pretty flat too meaning you will not be put the stock. However, that's assuming no unexpected news comes out before expiration day. Be careful about earnings releases during the time frame of the option---that could help or hurt you. Many option writers do not like to be holding written options if the earnings are going to be released during the option period. This is the same thought for Puts or Calls.

For Covered Call consideration, it goes the other way. You have a stock that you wouldn't mind selling at a higher price. Pick a strike price you are comfortable with for selling and see how much the option price is, and if it is acceptable to you, write/sell the Call and you will be credited with that amount in your account. If the stock price does not go above the strike price by expiration day, you keep the stock and option price that was credited to you. If the stock goes above the strike price by expiration day, you give them the stock. You had previously decided you were satisfied with selling it at that price, plus you again get the option price added on to the strike price--as it was already credited into your account.

Remember, these plays are not recommendation. We tell you about them only for educational purposes. If you do plan to make these kind of trades, make sure you understand thoroughly the risks involved and talk to your financial advisor first.

Momentum Plays---
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We had a good week with 4 trades and one loss. The one loss was small and a couple of the wins were pretty good profits so our profit margin for this strategy now sits at over 322%. The winning week was nice to see after that somewhat dissappointing results from the prior week. Those dissappointing weeks are rare for this Strategy but we are spoiled and don't like to ever see them. Of course we know that is not realistic but we keep trying for all wins.

It is also good to know that while we officially had 4 trades last week, a substantial number of our members made a few more profitable trades and we love to see it. These are on plays that we call but somehow missed getting in ourselves.

The SR SPY plays are still dragging though. The market seems to be making one big move (up or down) at the open of the market, then seeks a level and stays there most of the day. That makes it hard to get into a play with any decent profit. That will change eventually though. As we always say, things go in cycles.

Learn more

Indicators---
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There was another Indicator play this past week, and the result was another win. We don't care which strategy wins, as a win is a win, but this is my personal favorite, during these difficult market times. If you are in the market and are allowed to trade options, and if you aren't a team member, you might want to take a look at this strategy. We have a special low rate for this strategy and there is even a free trial period, so you can be receiving all the advance info from the pre-announcement to the conclusion of the trade, and see just how these trades turn out. We have another play coming up on Monday, so team members be sure to keep on your toes by reading the Indicator page and being ready for any entry signal on Monday.

Learn more

Feedback---
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We had a chance this week to have an in- person chat with 2 of our long term followers---Pascual and Amy were very nice in their comments about the newsletter and it was gratifying to get this kind of feedback. Thank you from all of us at SplitMaster.

The Economy, The Markets & Commentary---
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The Dow was down for 4 of the 5 days this past week, but the one day it was up, it was in the triple digits at nearly 200 points. That was not enough to wipe out the losses from the 4 other days, but it was a big help in the weekly score. We had warned that Mondays were triple digit days for the Dow in the previous 6 of the past 7 weeks. This past Monday saw another addition, with the Dow down 201 points.
That makes 7 out of the last 8 weeks we have seen triple digit moves on Monday.

The reports on the economy seemed pretty mixed, with a slight bias to better news. However, it appears investors are seeming to realize that we will not be snapping back as fast as had been hoped for. Washington held hearings--again--with Bernanke defending himself about how he handled the Merrill Lynch takeover by Bank of America. There have been charges of a cover up regarding the pressure that the Fed put on Bank of America to go thru with the deal. It didn't seem that there was any smoking gun that came out that tied Bernanke to a cover up, but there was a lot of political showboating going on by both sides--as usual. One point that we continue to make from time to time---we judge the state of the economy based on the number of stock splits that are announced. This is because it is our opinion that stock splits come from companies that are doing well. How well can also be a determination. There are companies that are doing well at this time, but it doesn't seem they are doing exceptionally well. We continue to see that only 2 stock splits have been announced that have a ratio of 2-1 or better, from actively traded stocks. That is since last September. There was a time when there were 2 per day that were announced. This is always at the back of our minds when we try to determine the state of the economy. Right now we are more on hope than facts, or less bad still seems to be the gauge of the state of the economy.

Congress is deciding on some new programs and it appears there will be quite a bit of cost increases to the taxpayers---what else is new? It seems that Congress is again being pressured to quickly pass the programs and we expect that it will be another situation where haste is going to make waste. New programs without proper analysis are doomed to failure, or at least be overwhelmingly costly. With all the bail out money that was available, we didn't see positive results here in California, where the legislature is again late on passing a budget. The word is that they have increased every tax possible, and there still won't be enough income for the state to have a balanced budget. Other states and cities are probably facing the same problems. The debt to the taxpayer is still mind boggling, and unfortunately there isn't much that can be done until we see results. Predictions are all over the place, so listen to the "experts" and see if you can tell whether it's all political mumbo-jumbo or whether someone is actually making an intelligent point. Every single program is so hard to figure out, we believe the only thing we know for sure is that it is going to cost us a whole lot of money.

Today's Thought---
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Don't compare your life to others. You have no idea what their journey is all about.

Mike

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