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Author: Mike Celeste Editor: Tony Ponzo June Circulation: 7269

Stat Sheet Week Ending June 2nd 2007

ChangesWeeklyMayYear to Date
IndexesPointsPercentPointsPercentPointsPercent
Dow+161.0+1.2%+565.0+4.3%+1.0+9.7%
S&P+20.0+1.3%+49.0+3.3%+118.0+8.3%
NAS+57.0+2.2%+80.0+3.2%+199.0+8.2%
Highlight of this past week: GIL closes out our month with a win. (Click on link then click on Last Mo Detail)

In this Issue--- SplitMaster Basic System---
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As we enter the half-way month of the year we find that it appears that the splitters are getting back into their normal rhythm--moving ahead. We have 10 splitters on the board for at least more than 1 day and nine of the 10 are ahead. (The losing position is a new entry, down 1 point at this stage.) This is good news to us for more than the usual reason of wanting profits on the plays. We wanted to see that the system works on a pretty consistent basis. While it is pretty scary to buy into a position that is at or near its high, we have seen that it has paid off, as it has in past years. Because of a 10 point jump in one of them, POT, we decided to take the profit early. 3 days and 10 points is hard to argue with. We still haven't reached our regular sell date of 6/6 on the stock. Here is a question for you--Would you take 10 points in 3 days or wait? We like the logic of taking it, remembering what happened last May 2006, when large profits were held and then disappeared by sell date, or dropped to very small profits. OK, this time POT split 3-1 and in the few days since, there was a 2 day span when the stock went from 67.12 to 74.68---repeat--in 2 days. Of course, that is multiplied by 3, or a jump of 22.68 points in just 2 days. We still think we did the right thing by getting out with that 10 point profit in 3 days. How many times is that going to happen? Not very many, we think. Did any of the team members hold onto this one? Let us know if you did, and congrats for making a huge profit.

 Big Dipper System---
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Our single Big Dipper that is in play moved back into profit, but is still nothing to rave about, that's for sure. It is a 3-2 splitter which usually does well as Dippers. We feel that the strong market is holding the stocks from dropping to our target buy prices. We even saw a stock get downgraded on Friday and it went up--and that is very unusual. That stock was DELL.

Options---
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Now that options are looking better as well as the stocks, we would like to take a moment to say that our suggested buy prices are guidelines. We have to price them the day before they are bought, and pre-market conditions the next day could well influence some adjustments to those prices. That happened this past week when strong openings moved up the option prices and we just missed a couple. If you have been trading some time, you know what I am talking about. Nothing is etched in stone--for those that are watching the market and not doing automatic trading. If you don't have time, you don't have time, and we feel that you will still see good results--no guarantees, of course, but we fall back on our old saying--36 straight years of profits on stock splits, without 1 losing year. We know that there are trying times within the year but over the course of the entire year, we like the odds.

Momentum Plays - This Week---
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We had our first losing week in a long time. We only had two plays and they both lost. We back tested the plays to see if there was anything we could have done differently. On STP, there may have been a way for us to read the signals differently that would have kept us out of the play all together. But back testing is easier than live so it is hard to say if we really could have made a different decision. However, SHLD was just one of those plays. All the signals pointed towards a play but then the momentum just fizzled out. Those kind of plays are going to happen.

The good news is the losses were not huge but it is still frustrating to us to have two losses in a row. As mentioned before we are testing plays with our enhanced tools and we made four test trades on Friday. Since this is the third month of the quarter, the plays are slowing down a little. So on Friday, we had no plays that we would have published to the members. We found, what we considered, marginal plays and made the trades. We had three winners and one loser. We made the losing play later in the day which we do not normally do so, it is questionable if we would have really made that play if it was not a test. We'll post those plays on the site so you can review them and we will mark them as test plays. Momentum Past Results

We plan to do some heavy testing over the next week to get back to our winning rhythm and improve upon our win rate. Our goal is to get to and stay at an 80% win rate. We are also starting to make use of stop losses in an effort to lessen our losses through money management. We are now working on a balancing point so as not to be stopped out too soon. Also, we are considering a trailing stop idea. Since most brokerage firms do not do an automatic trailing stop on options, it would require a member to manually cancel and raise the stop as the option goes higher. This is a fast play so there are going to be times when it will not be possible to act on this strategy in time. But with this strategy, if a play is going in one's favor, you can continue to raise the stop and if a play takes off, it can really make for a profitable play and take away the nervousness from the prospect of having a stock reverse suddenly. More on this with our day trading members as we progress.

Chart Indicator---
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The CI is definitely in positive territory, but we are growing more cautious each day. The Nas has been up for 5 straight days (the Dow 4 of 5), and there is usually a pullback after 3 straight days, let alone the spread between our break-even line and where the Nas is now. Just a note of caution.

New Studies---
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We feel that progress is being made on our studies for both the Momentum plays and the Splitters. Having 9 of the 10 plays be profitable is some confirmation of that. We definitely are not finished yet, so the work continues. The main thing is that we feel we are moving in the right direction. More on this to come.

 The Economy & Commentary---
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These markets just don't want to go down. There is no doubt about it. Every time it appears that a pullback has started, the buyers jump in and push the markets higher. The feeling seems to be that there is so much cash out there, both in the hands of investors and companies, that there can still be room for advancement. We are not quite at that point yet, but we know better than to try to fight the ticker tape (momentum). Companies are using cash to buy other companies and/or to buy back their own stock. When they do this they feel that there is value in the moves in those directions. We especially like buying back their own stock--it says that they feel the price is too low. While the markets have been making new highs (and the S+P finally recovered from the 2000-2002 crash to make a new high, too), there are many stocks that are quite a ways from their old highs. Jobs have held up better than expected, and while income hasn't gone up too much, spending by consumers has continued to expand. Undoubtedly we still have more to hear from the housing sector, but at this stage, it hasn't been too strong a factor---not to say it won't, but when the markets go up like they have been, all you can say about the negativity in housing is that the stocks might have gone up even more if housing was solidly positive. All in all, we like what we see, but we are keeping our trigger finger ready to pull if we see profits threatened. We don't fight the history of our Chart Indicator, either, and that is at a cautious number. It's better to worry about losing profits than to worry about closing positions at losses---far better.

 Today's Thought---
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If you don't have a sense of humor, you probably don't have any sense at all............(And if you deal in the stock market you really need it.)


Mike

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