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Author: Mike Celeste Editor: Tony Ponzo January Circulation: 7323

Stat Sheet Week Ending January 13th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+158.0+1.3%+93.0+0.7%
S&P+21.0+1.5%+13.0+0.9%
NAS+69.0+2.8%+88.0+3.6%
Splitmaster Strategies
Basic...............-1.9%
Big Dipper..............0.0%
Option Calls..............0.0%
Option Puts..............0.0%

Highlight of this past week:---RG---- currently showing a very nice profit in the stock and the CALL option is up over 100%.

In this Issue--- SplitMaster Basic System---
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While we closed out a loser, SIAL, this past week, we have RG coming up as a sale on the open for Wed., 1/17. Basically, we have to get by Tuesday without any major negative news coming out on the stock (markets are closed on Monday). SIAL was a disappointment, as a week earlier the stock was at a profit. It lost only 1.9%, so it wasn't major---but the CALL was even more of a disappointment (see Option section.) At the current price for RG, we have a net winning total for the two Basic plays. By the way, RG made a new 52 week high on Friday.

 Big Dipper System---
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Our current Big Dipper play can't seem to make up its mind which way to go. It seems to alternate days of up and down. This stock is very volatile and several of our team members have been playing it multiple times at nice profits. Good going, people. We saw a stock on the BD list fall 10 points just on Friday, and it still didn't reach the BD buy price. It was a 3-2 splitter that had gone up considerably and also came out with great earnings, beating the estimates by a wide margin. We are keeping a close eye on it to see if we can add it in as a play even if it doesn't hit the present target buy price--The stock looks good on fundamentals.

Options---
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We took a loss on SIAL CALLs, but we are still ticking (tribute to Timex). RG's current CALL price has more than made up for the loss in SIAL, and with just one more complete trading day to go to sell date (open on 1/17), we remain optimistic. The CALL buy price was 4.40 and the current price is about 11.00 (adjusted for the split), so you can see how anxious we are. Team members--With the position of the CI and the Nas, we would have no opposition to getting out at this price a day early. (See comments below.)

 Mometum Play-Update
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For the last two weeks we have had no plays so there is not much to talk about. This is normal though as we have talked about before. The first two weeks of the new quarter is generally quiet. But in the third week the new announcements start in with plenty of action. And next week it looks like they will do just that. So testers, be prepared to start receiving our trade signals on the Momentum Play this coming week.

 Chart Indicator---
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Yes, the CI is in positive territory, but be very careful out there. We are approaching a spread level (Big Dipper page, top, for team members) that is coming a bit close to an overbought position. The spread is 60, up from 52 the day before. Over 70 is a pretty good indicator of oversold.

 The Economy---
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The major indexes have started out the year doing very well---as expected. We are now at the danger point for several reasons. Our old theory of selling at the 10th day of Jan. is just about here (markets were closed until 1/3). The Nas is up for the 5th straight day, indicating a pullback. Last year the Nas was up for the first 7 days, to 1/11, and then pulled back--as expected. It did not return to that 1/11 level until sometime in March. The CI is at high levels and is sending a warning signal. The CI is still positive and our supply of splits is still awaiting a surge (popular political word these days), so we are not too concerned about this as it affects our splitters. Not at this time of year, that is. Earnings reports will start coming in next week, and you can expect to see volatility one way or the other, as surprises of both types hit the news. A reminder of something we repeat every now and then---Expectancy drives markets more than actual facts. This is true in all types of business, from real estate to retailing to stocks and bonds. Remember what fear and non-based optimism have done to us in the past--that ol' pendulum keeps swinging, back and forth--from the depths of pessimism to the heights of bubble-bursting optimism.

Just a brief mention about the housing market. The lies--oops--contradictions--keep coming. When the bubble was being discussed about how far a decline could go, it was stated months ago that the decline wouldn't be bad this time--a strong reason being that builders were not building much on spec this time around. They were building based on orders already in the till. Well, I guess that isn't quite accurate, as the reports are currently saying that builders were building as many and as fast as they could and NOW they are building based on orders and working off inventory. Another sneaky way of showing that inventory is going down in the condo sector is that many of the condos are being rented out instead of sold, and that takes them out of inventory. The definition of decline has changed, too, as we have noted in the past. Earlier the definition was that the market would level off and not drop much. Now it is saying that 10% is not a steep decline. Ask the person that bought a home for $500,000 that is now worth 10% less, or $450,000--and add in almost another 10% for closing costs if he has to sell--is that a steep decline? I say it is and I say that we are not done; we are not at the bottom yet. Keep tuned.

Gasoline comment---oil prices are at 18 month lows and gasoline in California keeps going up in price. Nothing more need be said.

Today's Thought---
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If you do not conquer self, you will be conquered by self.....Napoleon Hill

Mike

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