Splitmaster Newsletter 2006-12-31

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Author: Mike Celeste		Editor: Tony Ponzo		December Circulation: 7343

Stat Sheet Week Ending December 31st 2006


Changes	Weekly		November		3rd Quarter		Year to Date
Indexes	Points	Percent	Points	Percent	Points	Percent	Points	Percent
Dow	+120.0	+1.0%	+241.0	+2.0%	+784.0	+6.7%	+1.0	+16.3%
S&P	+7.0	+0.5%	+17.0	+1.2%	+82.0	+6.1%	+170.0	+13.6%
NAS	+14.0	+0.6%	-17.0	-0.7%	+157.0	+7.0%	+210.0	+9.5%
Splitmaster Strategies
Basic		......................		+0.4%		+9.0%		+22.7%
Big Dipper		......................		0.0%		+20.8%		+40.6%
Option Calls		......................		+36.0%		+88.0%		+211.0%
Option Puts		......................		+84.0%		+244.0%		+309.0%

Highlights of this past year:-- SplitMaster Systems finished another year of beating the major indexes.

In this Issue---

Team feedback--Bernie is at it again.

SplitMaster Systems--A look at the year

Chart Indicator--Place a bet?

Split comments--The big question??

Economy Reports and Commentary--Inflation or Recession?

Today's Thought

Team feedback--

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From time to time we hear from good team member, Bernie, and it seems he is up to his old tricks again. He wrote in and said that he didn't wait for the Big Dipper price to hit on EMR; he said he doubled up on it when it dipped and the following recovery got him out at a very nice profit. Bernie has a good feel for these things (as opposed to me, stuck on computer stats) and he is doing very well. Remember that Bernie is available to everyone and he is registered. Very BIG congrats to you, Bernie, keep up the good work---and thanks for sharing with us.

SplitMaster Systems---

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Everyone should probably take some time this week to look over the stats that are at the top. When we close the books on another year, the first thing we look at is our yearly total and then how we did compared to the major indexes. We are pleased to say that we were again successful in showing a net yearly profit and beating the indexes, leaving intact our record and that makes 31 years in a row that stock splits have been profitable. The figures above show Year, Quarter, Month and Weekly results. Overall it was really a tough year, no matter what the "experts" are saying about it. Keep in mind that just the previous year, 2005, the Dow had a losing year. Then, along came the severe reactions in May - July in 2006. Since our splitters are in play about a month, we were hit hard and did not have time to recover re those particular stocks, as indexes did the last quarter. We keep harping about the 4th quarter and how glad we are to see it come. This year was no exception. We had a good quarter and so did the markets in general. Splitters that closed out in November gave us our 2nd best percentage gain of the year (April was the best). We do want to point out that we are aware of how difficult it is to exactly match the results of our systems. The problem is deciding how much to invest in each splitter, be it stock or options, or both--because there are varying numbers of splits in play each month. Above all we want to be consistent in how we calculate and we have done that. The goal is to invest the same in each splitter--if you have a $10,000 bankroll and there are 10 splitters in a particular month, we would calculate on $1,000 for each one. If there were 5, it would be $2,000 for each. We post the upcoming splitters for the month so that it can be an aid to members--and granted, it could change if there was a last minute split announcement with a buy date for that same month. In 2007 we are going to make an attempt to get even closer to realistic figures. More on this a bit later, as we are still working out the details. Whatever it is, we will be consistent with the calculating for the entire year.

Chart Indicator---

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Our favorite indicator is treading ground right now. It was Positive for the longest stretch in quite a while, being positive from August 16 to December 22. It briefly went negative and currently is treading water at neutral/neg. On Thursday this past week it was just about dead even and slipped slightly on Friday. We don't think anyone can say that this CI hasn't done its job. Take a look at the markets from Aug. 16, when we went positive and see the gains from then until the end of the year. Using this for splits and other investments continues to make this a very valuable tool in our arsenal. We have said before that some of the team pull back on the amount per play during negative times and increase the amount when the CI is positive.There are all sorts of variations available in any of our systems, and that makes for interesting observations and discussions. I wonder what the betting line would be for the CI in the upcoming weeks--most "experts" seem to be positive. At the same time, we remind you of ol' Dads predictions about January. Sell by the 10th day of Jan. and sit for a while. This statement is for the general market though and not necessarily for specific strategies.

Stock Split Comments---

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Again we take a look at the stats of the past year. This time we are looking at the number of stock splits that met our criteria. For the year the total was 82. Now that was 22 less than the 104 of 2005, but higher than the 57 of 2004 and the 69 of 2003. The problem came in the monthly distribution of the numbers. For the first 6 months there were 59 splitters that closed out and then they dropped down, starting in September. We still can't find any logic for this happening, and it really is puzzling because we were expecting good results for the market in the last quarter, and we got good results. There were plenty of companies that did very well in both earnings and stock market prices. That is usually a great indicator that stock splits are going to follow. We still feel that is going to happen, but we have to admit that we thought this would happen by now. When it does,tho, we will be more than ready.

The Economy---

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The economic news sort of goes along with our Chart Indicator position. The markets can't seem to make up their minds over what is upcoming for 2007--there are continuing fears about the threat of inflation, while at the same time, there are many believers that there is a threat of a slowdown or even a recession. Our feeling is cautionary, but that can work to our advantage. I hate to sound like a record playing, but time has proven us right for 31 straight years about the benefits of stock splits (and our figures go back only to 1975, and we believe it has been this way throughout modern times). Stock splits come from companies that are doing well--bottom line. And since we have shown that for every bad turn of events there is a good turn of events for some others. That will not change--maybe fewer in number, but that is going to remain a fact, and I'm willing to bet on that. The good turn of events will convince some of those companies to split their stock, and we see no reason why that shouldn't result in profits when investing in splits. No guarantees, but we like studying history and history does repeat itself, over and over. I would like to mention one particular item that caught my eye this past week. My hometown area in NY State has a very large company that services food and many other products to large fast food companies, among others. They just announced some layoffs because their customers have been cutting back on their orders. Are people eating out less? Are they cutting back? The Christmas retail reports aren't finalized yet, but the last we read, it wasn't particularly exciting. Now the hope is that the gift cards will be used in the upcoming weeks. The shift from physical presents to gift cards is dramatic (and I'm right in there with that group). Keep your eye on this segment and let's see what happens. It might just be a good indicator of what's ahead for the year.

Today's Thought---

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You may delay, but time will not......Benjamin Franklin

And--From all of us at SplitMaster--Everyone please have a most Happy New Year, and please be careful out there--The celebrating done by shooting guns into the sky and overdrinking by others makes for dangerous situations. (Yes, bullets just falling from the sky can kill people, too). We have enjoyed corresponding with you and hope that 2007 meets all of our expectations.

Mike

PS--Remember that the major markets in the US will be closed on Tuesday, Jan. 2, 2007, in respect for President Ford's funeral.

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