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

Stat Sheet Week Ending June 16th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+215.0+1.6%+1.0+9.4%
S&P+25.0+1.7%+115.0+8.1%
NAS+53.0+2.0%+212.0+8.8%
Highlight of this past week--GEO--makes nice profit of over 5 points.

In this Issue---
SplitMaster Basic System---
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As we near the end of the first 1/2 of the year, we see that we are still ahead of the Dow, but not by much, and we are not satisfied. We notice that with all the gyrations, SplitMaster has had only 1 losing month, March (resulting from the crash in Feb.)---including June, to date. We want higher numbers and we have been spending many hours working on it. See our "Split Comments" below.

 Big Dipper System---
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Another "but" applies in the BD system. We have a new play, and it did immediately jump up over 2 1/2 points the next day, but it then settled back--still profitable, but by a smaller amount. We are also working on this and the comments in "Split Comments" below also apply.

Options---
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We think that it is going to pay to take a closer look at some of the options in our current splitters. We missed some with our suggested buy price and some are lower than that now and some are higher. Once more--"Split Comments", below, has some application here. We want to ask our readers if they are interested in buying PUTS--on our Splitters if our tools signal a down play. This could be a shorter play of 2 to 5 days. Please email us and let us know if this would interest you. We think that there are opportunities for some trades within the time frame the splitters are being considered as plays. Currently we are posting only WRITTEN PUT (an up strategy) plays, not buying long on PUTS (a down strategy).

Again--email us and let us know if you option players would be interested. This would give us more action. Along with that, of course, we would also consider buying CALLS at specific times within the range of the split play, especially when the missed CALL is now lower than the original suggested buy price.

 Momentum Plays for Day Trading- Another good week!--
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We had another very good week in the Momentum Strategy with 6 plays altogether. Although, two plays had a small loss, we wound up with a very nice net gain for the week and we are still just about at our 80% win rate goal for the month of June. Momentum Past Results And the two that lost could have been winners. Let me explain. Earlier this month we discussed the use of stop losses. We said we would test out the stop loss strategy on our own plays putting the stop loss at .40 to .50 below our buy-in. We did just that and got stopped out on those two plays only to see them both turn around and go back up and make a nice profit. And those stocks turned just about the time they hit the stop losses. After that, we decided to either put our stop loss lower or put a target in our minds and watch very closely when it gets to that target. It is still important to not let a position get away so a trader has to be firm with cutting at some target when things are going against you. And every trader has to decide what their tolerance point is and stick to it. So I have to say that putting a target in one's mind instead of actually putting in the stop loss, can go against you. The tendency is to say to yourself, "let me watch it just a bit longer". And then it gets away from you. So members need to develop this strategy within their comfort level and everyone will have a different comfort level. We will continue to monitor and test this until we believe we have found that fine balance based on the data we record.

Members keep putting a smile on our face with their creativeness. This week we had a couple of members who report that when they first enter a play, if the direction goes against them they watch closely and when it looks like the direction of the stock is turning back they double the amount of contracts. This is actually a very good strategy as now they have bought the contracts at a cheaper price which averages down their over all buy-in cost. So now when they hit their target sell price, they have an overall profit that is bigger than their original target because their overall costs have been averaged down. Plus, if a member's overall average cost has been lowered significantly, they can lower their sell target a bit giving them a better chance of hitting the target. So we think this is a good strategy and we congratulate those members. But this strategy may not be for everyone. It does take some nerves to make this play and if this strategy would make you nervous, do not do it. Or at least wait until you have had a lot of success and your confidence is high.

We are pleased with our new programs that help see the momentum of a stock and show us how the buying and selling pressure is developing. So far for the month of June it has been serving us very well.

For those readers who are not Momentum Strategy members but are thinking of giving a try, send us your questions. We will be happy to correspond with you and do what we can to bring your comfort level to the point that you would at least give this strategy a trial run.

Testimonial---
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Made money on the LEH puts and RIMM calls.
Done for the day. Gee what should I do now? it's only 8:15!!,,,,,,,,,,Bernie (Day trading Momentum Plays)

 Chart Indicator---
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The volatility in the markets has shown up in the CI, with it being above, below and again above the break-even line. Currently it is above, and very much above. We warn that it is in cautious territory, and indicating the market is overbought at present. We could well see some sort of sell off soon. Remember how accurate this indicator has been. It has been a good year concerning corrections though. They have come several times but over the last several months, when they come they have been quick and the bulls get back in control fast. Yes, during those corrections, damage is done but then we see stocks quickly recover. If we have to have corrections, let's hope they at least continue this pattern.

Stock Split Comments---
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OK, on to some technical analysis. We have finished our new computer study of splits and as we suspected, the activity in splitters has been erratic, to say the least. Our job now is to analyze this data to update our criteria, depending on the time frame in the year, market conditions, etc. Believe us, the markets do not always have the same tendencies--not by a longshot. (See our comments in the Economy section below.)

In addition, we have developed a new software program that has been working out very well in the Momentum Play system. Now we are working on applying it to the splitters. We want to raise the average profit per play to levels superior to those in the first 6 months. In the Big Dipper area, for instance, we noticed that many times we see the BD price hit our target and immediately bounce up several points. With this new software we hope to find an earlier exit point, and then re-enter again if it falls back to the target buy price.

In the Basic System, we hope to apply this new criteria to exiting a profitable play earlier, and if enough time remains, watch for another entry point to get back in at a lower price. Also, if the stock drops, but not to the target Big Dipper price, we might get a fresh buy signal, and we can let our team members know about that, in case they want to add on to what they already have. I can tell you this--Our top producing team members do just that--increase holdings even if not as low as the BD price.

In Options--We expect that we will be able to take advantage of price changes in splitters to pick up CALL options that we might have missed in the original go-around. It is very difficult to predict an exact buy price on a CALL that is coming up for purchase the next day. We used to say to buy it on the open, but the market makers are just waiting like hungry lions for those orders and the prices were out of line. The result is that we miss buying some. It works sometimes to our advantage and sometime to our disadvantage. If the stock price drops below our entry price, the option follows. With our new software, we strive for seeing new buy signals and when that happens, we will let the team members know, and they can buy either stock or options, or both. At the same time, if a sell signal comes thru on the software, we can let the team members know and they can decide whether to get out of the stock right then, or maybe buy a PUT as a hedge, or again--maybe both sell the stock and buy the PUT. Writing PUTS can also be factored into this new software. A new buy signal might be at a lower price than our entry buy price and one of our strategies is to then write a PUT on the stock--and if the stock does drop down and be PUT to us, we are trying to have the price attractive at a support level. If it hits, we want the stock at that price and if it doesn't, it becomes a nice source of income.

By this time you are probably getting the idea of what this new source can do. Maybe you can make more suggestions as we go along--we always find that feedback works to help all of us. Right now we are applying it to the Momentum Plays, and still learning, but we are excited about these possibilities and the results we have been acheiving on the Momentum Plays.

 The Economy & Commentary---
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Wild times in the stock market is putting it rather mildly. The Dow has had 5 days of triple digit changes---2 up and 3 down days--along with last Friday, when it was also at positive triple digits until near the end, when it closed up 86 points. Let me ask you---Do you see legitimate reasons why the market goes down 329 points in 2 consecutive days and then rises 158 points and a couple of days later another 187 points? We don't see it. Try investing long term under these conditions. Yet, the "experts" and the "analysts" will give reasons---but always after the fact. We always say we can't predict the future---outside of looking back at the past (And that's why it's important to study history--contrary to what many students think of the use of history). Our split profits are based on many, many years of past results, so we predict (not guarantee) that the future will show profits for splitters. The same application applies to our Chart Indicator and we make warnings for the short future when history tells us that at these current levels we are either oversold or overbought. So far, this Indicator has been tremendously accurate--and that allows followers to make decisions that could well make profits or prevent losses.

The "experts" tell us in today's paper, via Associated Press, that the CPI rose at the fasted pace in 20 months. That means that consumer prices went up the most in 20 months. That sounds like a negative, doesn't it? Rising prices should mean that there will be less profit, unless the price can be passed on to the consumer. If it is, there is a good chance that there will be fewer products sold---solidly evidenced by the housing market where the incredible rise in house prices caused the sales level to drop to levels not seen in 12 years, when the last housing recession started working its way up from the bottom. The AP goes on to say, in the CPI report, that "Wall Street chose to focus on the lower-than-expected core reading, believing the Federal Reserve will be happy such underlying inflations pressures are beginning to ease and will leave interest rates alone at their meetings for the rest of the year." Our point is that at one time this type of report would be chosen as a reason for selling off the market. This time they chose to do the opposite. It was just the other day that the market took a dive because it was worried that the Fed wouldn't cut rates. Now it goes up because they are HOPING that the Fed will keep the rates the same. Current emotion is always the main trigger for the markets, and it probably always will be. As I have said many times--the same type of reports will result in exact opposite reactions in the stock market, depending on the prevailing emotion at the time. Just something to think about, and ponder on.

 Today's Thought---
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Until you can apply the information that you've learned,
then and only then will you be rewarded........Andy Fuehl: Founder, Wealth Builders of America


Mike

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