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| Author: Mike Celeste | | Editor: Tony Ponzo | | August Circulation: |
Stat Sheet Week Ending August 12th 2006
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| Changes | Weekly | Year to Date |
| Indexes | Points | Percent | Points | Percent |
| Dow | -152.0 | -1.4% | +370.0 | +3.5% |
| S&P | -14.0 | -1.1% | +17.0 | +1.4% |
| NAS | -28.0 | -1.3% | -148.0 | -6.7% |
| Splitmaster Strategies |
| Basic | ............... | +13.4% |
| Big Dipper | .............. | +25.8% |
| Option Calls | .............. | +105.0% |
| Option Puts | .............. | +33.0% |
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Highlight of this past week:---GRMN---stock up about 2.5 points in just 2 days.
In this Issue--- SplitMaster Basic System---
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In view of the past week's market action, we are not doing too bad at all. We have 6 stocks currently active in the Basic System, with 3 up from buy date, 1 down about 2.5 points, and 2 down just a matter of cents. We have only 2 more splitters on the list to come up as new buys for the rest of August--at this point.
Big Dipper System---
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Everything is still quiet with no plays currently active in the Big Dipper, and none close enough to pay much attention to. In a way, this is a good indication.
Options---
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We continue to be conservative in our selections for the options, due to 3rd quarter blues seen annually, and general market conditions, where emotions are ruling about 98% of the market. We had 2 new plays start this week and one is up and one down a bit, but a net plus for the 2 of them. At this point, it appears that overall, our split picks are becoming stronger little by little.
Update on new Spread testing
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The testing on the new spread play continues and is looking pretty good. Unlike the previous credit spread we were testing, this spread is a debit spread. It is a combination of long CALLS and long PUTs. While the credit spread starts with giving a credit in your account, it is much harder to get into than the debit spread and often by the time we could send a trade signal on this play, the opportunity would be gone. So that is why we discontinued that play. It is also very tough to close the play at the best possible price, because it moves so fast.
With the debit spread, although you start the play with a debit, it is much easier to deal with and it accomplishes the same thing. It is designed to make profit whether the underlying stock goes up or down. And it is designed to minimize losses. The one thing we do not want to see is the underlying stock price not moving much. For example, if the stock moves 2, 3 or more points either way, the trade is most likely going to have a profit. If it moves only 50 cents though, it will most likely lose but lose a limited amount depending on the number of contracts played. So the play is also designed to be pretty safe. The hardest part is to find a stock that will move in a short time and to have the right combination of options and contracts. But findng that combination is our job to do before the signals will be delivered. Most of the picks are from our list of split stocks but is entered into around earnings announcement. It is also (most of the time) a one or two day play.
Will we start posting this play?? We are not sure yet as we want to do more testing. But at this point it is looking pretty good. If the testing continues to give positive results, we will explain more in future newsletters.
Chart Indicator---
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The CI continues to be negative. It seems every time it gets close to neutral it just heads south again, to negative. We have had more and more inquiries about the CI, as readers are realizing the accuracy of this indicator. A good test will come when we get the next Positive indicator---and we will get it.
Stock Split Comments---
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Split announcements are slowing down the last couple of weeks, but that gives us time to catch our breath and keep out of harm's way during this 3rd quarter. This is also pretty typical for this time of year. We have 2 more scheduled for buys in August and 1 is a 3-2 splitter and will only be on the Big Dipper list. With 6 on the books now, we are still having a pretty average month considering it is August.
The Economy---
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Earnings continue to come in at a pretty solid rate, with a few exceptions, here and there. It seems to us that the "experts" weren't expecting as good reports as have been shown. Another point is that companies have been conserving cash and interest rates are not affecting them as much as they usually would during all these rate hikes. Consumers, on the other hand, have been spending and borrowing at high rates, so they have been hit by higher interest charges on their credit cards. High gas prices and high use of gasoline seems to be paid for at the expense of other sectors, like restaurants--but consumers are running out of savings and equity loans on their houses, so there isn't much left for them to raid in order to keep up their standard of living. Something has to give--will gas prices drop, or will the high prices start to have a meaningful affect on the economy---stay tuned.
Oh, one last comment---Last week I mentioned that a recent splitter that we closed out with a 17 point profit in 3 days, HANS, was having its earnings come out this past Monday. They hit expectations right on the nose, and up 85% from the same time last year. Sounds pretty good, doesnt it? As usual, it was just the opposite. The stock dropped over 10 points, which means over 40 points pre-split. That brings it down to showing a 93 point drop from our sell price. Man-o-man, what a short that would have been. I hope some of you did it on your own.
Today's Thought---
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"Our attitudes control our lives. Attitudes are a secret power working 24 hours a day, for good or bad. It is of paramount importance that we know how to harness and control this great force." - Tom Blandi
Mike
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