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| Author: Mike Celeste | | Editor: Tony Ponzo | | October Circulation: |
Stat Sheet Week Ending October 7th 2006
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| Changes | Weekly | Year to Date |
| Indexes | Points | Percent | Points | Percent |
| Dow | +171.0 | +1.5% | +1,132.0 | +10.6% |
| S&P | +14.0 | +1.0% | +102.0 | +8.2% |
| NAS | +42.0 | +1.9% | +95.0 | +4.3% |
| Splitmaster Strategies |
| Basic | ............... | +13.7% |
| Big Dipper | .............. | +19.8% |
| Option Calls | .............. | +123.0% |
| Option Puts | .............. | +65.0% |
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NOTE: Sorry for the late newsletter. There were technical problems with our Internet provider in our area. Something totally out of our hands. Hopefully all is well now.
Highlight of this past week: -- Big Dipper -- had another potential opportunity.
In this Issue---
SplitMaster Basic System---
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We need a swift kick in the pants to the 2 current picks. They are both showing great value, but are in the sector that is not the most popular at this point. If investors take a close look, they could well push these up quickly.
Big Dipper System---
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On Sept. 17 we mentioned the possibility of making multiple plays in the Big Dippers. We have 2 currently going and both showed opportunities for getting out at a decent profit and getting back in, even below the original BD buy price. Both have again recovered to be profitable and with a little extra move could well reach the target sell price before sell date arrives. To remind you of what we said back in Sept., it was that often the BD's bounce off the buy price, showing profits, and then settle back down before coming back up again. That is just what happened with PCU and DRQ this past week. Keep your eye on the BD's and see if the future holds more of the same. Team member Bernie is very good at this strategy.
Options---
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Lately, we have had option action in the Spreads, and you can see that we are continuing our Beta testing on this strategy, with some team members actually playing it and doing well. We remain eager to see more plays on upcoming splitters. The last few weeks have been slow on this test though as there is not that much action in the way of qualified announcements. This week will be slow too but we can see ahead to next week which looks to be very promising. Much more on this strategy in the coming weeks.
Chart Indicator---
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The past week saw the CI getting close to showing (if not already there) an overbought position. The spread between the Nas. daily hi and our break-even chart number was 70 on Thursday and 65 on Friday, when the market pulled back just a bit. Keep your eye on it---
Stock Split Comments---
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We are still waiting for new split announcements, and while waiting, thought we might take a guess (just a pure guess, nothing factual behind it) as to what sector the next round of splits would be coming from. The energy and commodity stocks are definitely out of favor, as could be seen by the split results in that area---they were hot for quite a while, tho. We seem to be hearing more about the financial sector being the "in" group at this time. The reasoning is centered around the belief that interest rates have stabilized and increases are more unlikely. If that proves to be the case, we are guessing that there will be announcements coming from financial stocks. It has happened before, of course, as they keep rotating sectors based on the factors that apply to each one.
The Economy---
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The news on the economy seems to be showing that we are running along at a fairly even keel---and the markets like that. The Dow finally made a new hi since 2000, which shows where the leadership is, as many other stocks are not even near all-time highs. There are enough that are, tho, and we expect to see split announcements coming from them at any time. Nas made a recovery high, but is still way, way far away from its all-time high. As mentioned above, interest rates seem to have stabilized, with Bernanke coming out this week saying that the housing sector is in decline and since that is such a big factor in the economy, it doesn't appear that inflation is of that much concern at this point, thus a stabilizing affect on the economy. We all know that the market does not like surprises, so if the economy is on an even keel, that is good for the markets. October 1 is also the time of year that we pay attention to some of the leading retailers--that is the sector we favor as the expectations of the Christmas season are optimistic. Last year we saw good gains in Target, Costco, Best Buy and some of the others--These are not mentioned in the same breath as splitters, but just a general observation for those that have other investments. Just for information purposes the opening prices on the above as of Oct. 2, (first day of trading for October)----You may have other retail favorites to watch, too.
Target (TGT) 54.71
Costco (COST) 49.57
Best Buy (BBY) 53.56
Also in consideration--
WalMart (WMT) 48.62
EBAY (EBAY) 28.40
Today's Thought---
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If you want to know the value of money, go and
try to borrow some.......Benjamin Franklin, Poor Richard's Almanac
Mike
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