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Author: Mike Celeste Editor: Tony Ponzo February Circulation:

Stat Sheet Week Ending February 10th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-72.0-0.6%+118.0+0.9%
S&P-10.0-0.7%+20.0+1.4%
NAS-16.0-0.6%+45.0+1.9%
Splitmaster Strategies
Basic...............+3.3%
Big Dipper..............0.0%
Option Calls..............+32.0%
Option Puts..............0.0%

Highlight of this past week: Check out our test on the Momentum Strategy at:----Past Momentum Plays--- We had a good week and now at a red hot--2 losses out of last 17 plays.

In this Issue---

SplitMaster Basic System---
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Our very unique play on GROW continues to bring new information. The latest news was the release of earnings on the stock. That news was terrific, but the reaction in the marketplace continues to be non-reactive. We did have a very nice up move in the earlier part of the week, with the stock rising to a high of 53.60, but then it fell back. The earnings more than doubled---what do they expect out of this stock. We feel there are some shenanigans going on from outside the control of the company, and all we know is, the news continues to trickle in. No split date has been announced, but the news could be updated at any time. In the meantime, members have continually stated they want to hang on to the stock until a split date is announced. (see Testimonials right below)

The Testimonials ---
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Tester, Robert A. reports on a Momentum Play he made this week--

"I went in on the EXBD FEB 85 @ 2.85 got out @ 5.10". (Very well done, Robert !)

Bernie and a number of other team members have written in about excellent results trading in GROW. Bernie says he loves the stock. These members have really taken advantage of the stock's up and down moves by buying it after it drops and shorting it after it goes up and have profited handsomely.

This stock has been a real pain to deal with, due to those extraordinary circumstances. (See below, Big Dipper)

The Beta Test team members that are playing the Momentum System have been sending in very nice reports of their trading activities. This is very satisfying to us, and they realize we are still in the testing mode. However, Tony and the Splitmaster staff have worked very hard to refine the criteria and it is paying off.

Big Dipper System---
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Part of a news release on Grow--This could be an explanation.---

"With regard to the outstanding proxy for GROW, Mr. Holmes said, "The Wall Street Journal recently published a front-page story spotlighting an abusive tactic called 'empty voting' whereby rogue hedge funds borrow shares in order to manipulate shareholder votes in a proxy. Mark Hulbert of MarketWatch wrote a similar article published in the New York Times. We have seen high volatility in GROW shares that we believe may be amplified by such tactics. We do, however, expect to prevail in our effort to obtain shareholder approval for a stock split, which we believe is in the best interests of our shareholders. We recommend that GROW shareholders ask if their brokers are loaning out their GROW shares to these rogue hedge funds."

 Options/Momentum Play---
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While we are waiting for the split options to pick up in volume, we can see that the terrific action is in the Past Momentum Plays. Our split options will pick up soon, of that we are very confident as we see the plays coming in the future, but we are seeing more than enough action in the Momentum area, and that is bringing smiles to everyone's face that is following it. Now a word from Tony.

This week was a very encouraging week in the Momentum Strategy. We reopened the test to our testing members on Monday. Since then we had nine plays. Out of nine plays we had two losses and one loss should have never happened. The SplitMaster team accidentally executed the wrong strike on the QSII option. Had the right strike been executed, there would have been a win instead of a loss. Many testers however, did make the right play and made a profit. Plus, out of the last 17 plays there have only been 2 losses with the QSII mistake being part of that total.

We had some frustration in some of the plays but they were good frustrations. By that I mean there were a number of plays that we could have made much larger profits on if we had taken slightly more aggressive action. Slightly means, if we had watched the play just 5 or 10 minutes longer, a .40 cent profit for example, would have been a $1.50 or $2.00 profit per share. That is pretty substantial considering this play lasts less than one trading day. So we are going to be a little more aggressive this week. We do not want to be overly confident though so we will still stay on the conservative side during this testing period.

We are happy to say though, that a number of our testers played things more aggressively and made those $1 and $2 profits on a number of plays. More on this next week.

Chart Indicator---
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It is pleasing to see that even tho we had a down week in the major indexes, our Chart Indicator is still positive. In addition, when looking at the RSI on the Nas, we see that it is much closer to being a buy signal than a sell signal. Nothing is for sure, but we are positive and looking pretty good.

 Stock Split Comments---
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New split announcements are still increasing, and that is a good sign. We had 4 new announcements just this past week that met our criteria and will be coming on line soon. Team members can see the Feb. numbers when going to the Big Dipper page, at the top.

New RSI System---
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Last week we mentioned a new study that we are working on, in addition to the Momentum Play. This uses the RSI indicator as its main tool. We are feeling our way and testing as we go, but it has us very excited. In combination with the great results from the Momentum section, we hope to come up with 2 more profitable strategies.

The RSI play is 1-3 days in length, at this point. It might be stretched out to 1 week, but that remains to be seen. At any rate, I personally made 2 actual plays this week to test the theory. The first one was to short RDEN at 21.79, on Wed. 2/7. The stock closed Friday at 21.50, so it is in the profit column. This play would be shooting for only a 50 cent move, or out on a reversal of direction, based on the RSI reading. At a higher price range, the goal would be 75 cents around the $30 level and $1.00 at higher levels. We will follow this up with additional work using option prices. The Momentum play is working at a profit of 30 cents or higher on the options, and doing very well, so this can be planned along those levels, too--more studying to be done, tho. The next plays I did using the RSI was on a splitter, CMCSA. I bought 5 Feb. 40 CALLs at $1.00 each, on Friday, 2/9. Remember, these are to be short term plays. We're telling you about them so you can follow these actual plays to see how they do. We can already see that there could well be variations in the criteria, but we want to approach this one step at a time. We think there can be tremendous potential in a combination of the Momentum Play and the RSI Play. Of course, the Momentum study is much further along, but we are progressing--and team members that are playing it (including Tony --I am trying to get in, but am slowed by other work)-- even tho it is still a study are doing very well. We are getting lots of good feedback, and that is very important to us. We can help members better when we understand what they are doing with real plays.

 The Economy---
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Most of the economic indicators seem to remain mixed, with some very good earnings coming in, along with reports of more layoffs--but layoffs in one way can mean more earnings per share if there is competent reorganization being done. All in all, our take is that the leaning is toward positive moves in the economy. One indicator that we look at from time to time is the VIX, which is the Volatility Index. It was under 10 at one point and Friday it closed at 11.10. We feel that is a good sign when the volatility increases. We get more opportunities for movements in the stocks, and if we are correct in our split decisions, the movements should be in the direction that makes profits for us. In regard to the major indexes we again see that the highs made by the Nas on 1/16 still have not been topped, going along with our Jan. theory. At the same time we have shown only 2 losses out of 17 plays in our system. We like movement, and in the Momentum plays we think we finally came up with something that makes a profit whether the stock goes up or down. That's a pretty nice feeling--

We'd like to make a bit of commentary about writing PUTs, which is part of our strategy on splitters. A quick factor that is important when writing PUTs on the splitters. Altho we say we don't "buy" something when in this play, we do use margin, and we point out that it is usually equity in the account that is just sitting there; maybe in the form of stocks or bonds that are held. Now, when using margin for writing PUTs, you have to be sure you have enough margin to meet the requirement of your broker. Each brokerage house seems to have different rules about that, so if you are interested (and I like it a lot) in writing PUTs, please check to make sure you are qualified--both in margin amount and trading approval from the broker.

Final comment--Our blood is starting to boil again, and we hope we can educate you to see the opportunities that are out there--and from the feedback we have been getting, it is obvious that we have some very knowledgeable team members. A repeat statement--by exchanging thoughts we all benefit.

 Today's Thought---
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Aspire to Inspire before you Expire.........Author unknown

Mike

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