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Author: Mike Celeste Editor: Tony Ponzo August Circulation: 7232

Stat Sheet Week Ending August 25th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+300.0+2.3%+916.0+7.3%
S&P+33.0+2.3%+61.0+4.3%
NAS+72.0+2.9%+162.0+6.7%

Highlight of this past week: Momentum Past Results--turns in some profitable plays.

In this Issue--- SplitMaster Basic System---
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We have noticed that splitters are slowly getting back to basics (pun intended) and we are glad to see that. They have not shown this on the profit chart yet, but the trend definitely seems to be there. There are some occasional moves by splitters that are far outside the norm, both up and down, but the general trend seems to be up. Also, we are getting out of the summer doldrums and getting ready to move into the fall season. We are aware that Sept. is about the worst month over all the years, but that doesn't seem to be the case lately. We have had some rough hits in the market at different times of the year, and we don't think you can pin down one specific time frame. Once we get back on track, our guess is that we will stay there for a while---speaking of the splitters overall, that is. We don't think that our spllitters will suddenly reverse direction after being on such a winning streak for every year since our studies started in 1975. This year it is the options market that has given us the most concern on one hand, and satisfaction on the other. More below.

Big Dipper System---
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We cleaned out SPAR by selling out our 2 positions---the original buy and then the buy when we got a new signal from our software. That new signal did generate a decent profit, but the stock had dropped so far down that we weren't able to get back to even on the original purchase. Market volatility prevented us from entering new positions, so we will wait for new signals in this sector.

 Options---
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There is no question that the options area is one that concerns us the most. It has not been a good year, thus far, for options. Plain and simple, it has not been anywhere near our normal results---SO--We have put in a whole lot of time studying the patterns and past results and think we are going to have much better results in the near future. Sometimes there is a hot splitter and it doesn't have options, so there is nothing we can do about situations like that. Also, we want to get back to writing more puts. The prices seem worthwhile for this system, even tho not many of our team members get into it. It seems to us a good way to raise income--if the market maintains stability.

Momentum Play - Finally some action---
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We finally had a couple of plays this week and they were both winners. The volatile swings in this correcting market earlier this month were so wild, it was impossible to pick a direction of a stock with any certaintly. And just as we got into a couple of longer term plays the market crashed giving us a couple of black eyes. But this week we saw ANF and ANN with profits back to back and we are looking forward to more to come. Momentum Past Results

We are entering the third month of the quarter which means there will be less announcement plays but we should still have enough action to keep us busy. However, we have been looking at and testing other types of momentum plays and perhaps we can add these to our plays from time to time giving us more action.

Chart and other Indicators---
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We are currently back above the break-even line, as shown on the Big Dipper active page, for team members to see daily. It needs to be confirmed, but it is nice to see that we are above, and our CI seems to be pointing in the direction we want. We could use a good break-out to the upside and get us back to positive. See SPX comments below.

 SPX---
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While we are still testing the SPX plays by using our 3 indicators, we remain very optimistic. We have made an adjustment to the Nas 3 signal, whereby we will not make a play if both the Dow and Nas did not close in the same direction. In other words, we want those 2 to both close either up or down, not one up and one down. There were 2 potential plays this past week and one lost 1.70 from 8/21 to 8/22, while another made 40 cents from 8/22 to 8/23. We did not post them on the site, as we had taken them out of the loop due to that price movement in the market and because we did not pre-announce the test. Even the week before, when the Nas was down for 6 straight days, there was a profit potential because the indexes were so violent that they allowed for a profit during the day, before closing. We don't have any plays going in this as of Friday. Keep watching, tho--I like this one.

 The Economy & Commentary---
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Did we see the bottom of this drop in the markets? No one knows for sure, but venturing a guess, like everyone else, we think that there is far more stability because it appears that the Fed is determined to make sure there is enough liquidity in the credit world. They stepped in a number of times and that seemed to take the steam out of the fear that the credit markets would bring down the economy. Granted, I don't think we have seen the final shakeout of the weaker credit companies, but the liquidity is going to be there. Right now, that liquidity has not worked itself into the economy, but the actions of the Fed should see funds being made available. Right now it is tough to get a loan, as I understand it. That really seems to be a natural thought, tho--There was a run on the bank that Countrywide runs, even tho the funds are insured up to certain amounts. Fortunately that sort of thing did not spread and there seems to be a calmness to the markets. Last week, tho, when our computers conked out, the markets had a volatility that we had not seen since 2002, and we all remember those times. Not fun, that's for sure. The volatility index more than doubled from July 19, the magical date of the Dow closing at 14,000. Another eye opener was seeing the S+P 500 index dropping to a new low for 2007. It quickly climbed above that number the next day, Aug. 17, but that was a real wild ride. I mean that was something to see---the Dow ran up 300 points in about 45 minutes on 8/16---what an incredible number in such a very short period. If we can get some credibility back into the credit area, then all we have to worry about are the 100 other things the "experts" always seem to find to worry about. Some companies are going to do well in bad times, some are going to do well in good times. Good companies give stock splits. With any sort of normal trading, we feel this will continue to be a profit potential for us. While we normally like volatility, we saw that too much of a good thing can be bad. The markets moving up and down 300 points in the same day is just too hard to trade and that's why we stepped aside for those couple of days of violent moves. Every time you thought there was direction being shown, there would be a reversal---in the same one day period. Far too much--and we hope it is over. The whole world economy will be better off if we don't see that again for a long time. (We bet that Warren Buffet was licking his chops and picking up some great bargains---can't wait to see what he did during this period.) Keep tuned as you won't find anything on shows put out by Hollywood writers that can match these exciting times.

 Today's Thought---
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The only limit to your impact is your imagination and commitment.............Anthony Robbins, motivational speaker (and former student of mine)


Mike

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