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Author: Mike Celeste Editor: Tony Ponzo May Circulation: 7282

Stat Sheet Week Ending May 26th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-50.0-0.4%+1.0+8.4%
S&P-7.0-0.5%+98.0+6.9%
NAS-1.00.0%+142.0+5.9%

Highlight of this past week: ADI and MW Two quick winners on Wed. made for a very nice day--and team members even beat our profits.

In this Issue--- SplitMaster Basic System---
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With the expected buildup of split announcements we see our list building up. There are currently 7 in play now and before the month is up, another 4 will be joining the list. Right now the prices are fluctuating pretty wildly, so we would like to see some stability come back. Volatility can often be a good factor for splitters, but right now it makes for tension. During this week we saw some nice prices in the splitters.

Big Dipper System---
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Even tho we have only 1 Big Dipper in play, we have to say that frankly, we are disappointed in it. BPO had some problems in their split announcement, so it is on the list for an unusually long time. There was a decent profit in the stock, but it eroded away until it now is under our buy price. The company is involved in all phases of premiere commercial properties, and while residential real estate is taking a hit, commercial is doing very well. The stock was upgraded and also the star rankings on it gave the company a 5 star rating. The earnings were up, and the rest of 2007 is expected to be at the upper range of estimates. So what happens? Yep, the stock goes down. To add to the frustration, when you take a look at the daily volume, you will see that the overall volume has been down for 12 straight days. Even after all the years in the market, I still find it hard to understand---especially seeing this in a strong market.

 Options---
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We finally got to write a PUT at a decent price, saw it go profitable the same day, and then come back to where we wrote it. On the other hand, the CALL jumped in price on our buy day and we were not able to get in. HOWEVER, the price has dropped back, so team members can revisit the CALL and watch it, as it is close to our suggested target price. It is still showing on the Options page on the site. BWLD is the stock.

 Momentum Plays---
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It was a good week all in all and another net winner. Momentum Past Plays --The SplitMaster team executed four plays out of eight potential plays. The first three were not only winners but they were plays that only took about 10 minutes to complete. Then Thursday, we had a play GYMB that did not want to cooperate with us. In the end it lost us 1.10 per share. That cut into our week's profit but we still pulled a fair net profit. We just missed one play that would have given us a nice profit too. The order was put in just a second too late and the stock took off and left our order behind. But that is the nature of the play and this is to be sometimes expected. Many members however, reported to us that they were able to profitably execute plays we did not and made more profit on other plays that we did make. We love it when members beat us and it is happening more and more as members become more experienced with the play. At this stage we feel we need to be more conservative to accommodate our overall day trading members. But more experienced and aggressive trades can do very well. In fact, as we have stated before, some of the more experienced members only want to know what plays we are considering and they take it from there.

Because of plays like GYMB, we are discussing the idea of adding stop losses to the plays. Some members are already doing this and you may want to consider this too. We know of one member that had a stop loss at $.50 which you can see would have cut our loss by more than half. We will keep you posted on our decision on this matter. Our main concern about stop losses, is those times when the stock goes in the wrong direction, and then the option or stock gets stopped out, then turns around and goes for a profit. There is a balance we need to achieve with this process and that is what we are brain storming on this week. We will keep you posted.

Chart Indicator---
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The market action this past week has seen the CI flirting back and forth between positive and negative. Right now, with an upday on Friday, we are above the break-even line. We remind ourselves that it is still May and we have those strong memories of May 2006, so the nerves are tested. At least it is still positive at this point and we are hoping for a steadier upward move, at least until the expected summer doldrums.

 Stock Split Comments---
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With the very long list of splitters for buying in May, and because of the market conditions, we pulled several off the buy list for the Basic System, while leaving them on the Big Dipper list as potentials. So far this has proven to be a wise move. The extreme volatility in the markets certainly applied to these stocks and even tho they recovered somewhat on Friday, after Thursday's sharp fallback, we feel we made the right move.

The Economy & Commentary---
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To show again how emotion plays such a major part in the stock markets we take a look at the housing report that came out this week. New home sales had an incredibly strong month--and the market tanked on that report. That came out on Thursday and the markets took that and decided that with the good news the bad news would be that there might not be a chance for a cut in interest rates by the Fed. Here we have some major dents made in the inventory sitting out there in new housing, which is good news to me. Interest rates and mortgages in housing have their own problems to work out, so why is it such a major blow to the stock markets? Emotion is all I can think of. Often times, when the market has been making one new high after the other, it seems that investors look for a reason to reverse positions, no matter what the news is. For the prospective home buyer, that was also good news. Prices are coming down nationwide. Yes, certain areas are still increasing, slightly, but when we put it all together, we are seeing price drops. New home sales and inventory deduction came about in part because of two factors--dropping the price and increasing what comes with the house. That's good for the buyer. It is not as good for the builder, but it really is good for the builder, too. He gets his inventory cut, and his carrying costs go down as a result. Resellers in the residential market don't lose, potentially, if they are reinvesting their proceeds in another home. If they drop their selling price, and that is the general rule, then that means that when they go to buy another house, that house has dropped in price, too. Of course, that is all in generalities, but mathematically it works out. Whether we are at the bottom, I don't know, but it does seem that we are working in the right direction. All of this affects the stock market and while the Dow saw a small weekly drop of less than 1%, it is still a powerful force---and fighting it can be expensive. The large caps are back--and how !! When the housing market straightens out, and consumer confidence returns, more people will feel comfortable in investing in stocks. Nothing goes in one direction forever, for that ol' pendulum does reverse and go back the other way at some point. We are not looking for much during the summer, but overall we are confident. Let's hope that this summer decides to be different and we see some strong upward direction. (Definitely makes for a more enjoyable vacation--and more willingness to spend a bit more)

 Today's Thought---
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Women and cats do as they please---
Men and dogs had better get used to it........(A wise person)

Mike

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