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Author: Mike Celeste Editor: Tony Ponzo October Circulation:

Stat Sheet Week Ending October 6th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+171.0+1.2%+1.0+12.9%
S&P+31.0+2.0%+140.0+9.9%
NAS+78.0+2.9%+365.0+15.1%

Highlight of this past week: Past Results---makes a good 7% profit in same day.

In this Issue--- SplitMaster Basic System---
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We couldn't quite get the right signals going for the splitters, so it was a quiet week for us. However, the splitters did show their strength, along with the general market and did well. And, we just closed out the month of September and if you look at the Past Results page (then click on Last Mo Detail) for September, you will see that things are starting get back to our normal profitable action with 6 nice winners out of 7 plays. Now that is what we like to see. And even though the September option Past Options plays only had three plays, they were all winners. Take a look by clicking on the links.

Options---
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We are doing more studies on the options, still working to try to get optimum entry and exit points. We feel we are headed in the right direction, but we need to fine-tune these buy and sell dates.

 Momentum Plays- still slow---
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Stocks with earning announcements that fit our criteria are still slow to come. This coming week looks to be very slow again and it is to be expected for this time of the quarter as we have been saying. Next week will be a different story as the earnings announcements really crank up. In the meantime the SPX play has been keeping us busy and giving us successful trades. See Past Results.

 Three Indicators---
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Next week should be a good test of the 3 Indicators. All 3 of them are showing that the market is overbought, and we would then expect some sort of pullback. It will be interesting to see what happens. The thing that could postpone the pullback is the good employment report given on Friday. This is making the mood of traders very positive and could extend the up trend. Sooner or later though, there will be a pull back which will create opportunity that we can take advantage of.

 New SPX System---
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We did have a successful play in the SPX this past week, making 7% within the one day. However, it was a real battle. The SPX options are not like regular options on stocks. One day it seems like you can put in an order on either the bid side to buy or the ask side to sell and easily get executed. Then on another day, the orders don't get executed as they should. And the price of the option does not move with the change in the S&P as it should. Wednesday's play was a good example of that. The S&P kept dropping just as we anticipated but that option would not increase in value. Finally, we got out with just a .15 profit. The play should have made at least a .50 to .70 profit but the option just would not move. This is puzzling and you can be sure we will be studying this issue intently. In the meantime, we may be considering closer to-the-money options to assure fair movement in relation to the S&P. That will mean going into a more expensive option but we sure do not want to get stuck into another frustrating situation.

We think there is definitely one item we need to stick to. We feel it is much better to put in an order that is at or very close to the bid side of the option. It seems that we are able to get it at some point, and then we can immediately put in a sell order at a satisfactory higher price, maybe close to the ask side. Then, if the spx option drops, it gives you room to still be in at a cost that is less than the new ask side. Some members have simply played the bid/ask game, and are successful in making smaller, but consistent profits. We will have a new play for Monday, so team members be aware that there will be an alert coming on Monday, after we get a clearer picture of the open. Also, we remember that the time value deteriorates over the weekend, so we don't want to have that waste away on us by going in at the close on Friday.

 Stock Split Comments---
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Take a look at the list of splitters and use a chart to see how they have been doing lately. Yes, the general market has gone up, but the splitters are doing their thing and support our theory that companies split because the company is doing well. We are pressing to get our signals working faster for us, so be ready for some new buy or shorting announcements.

 The Economy & Commentary---
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This past week saw that the government reports are ruling the markets. Thursday showed that the markets were frozen solid, in fear of the labor report that was coming out on Friday. It was almost funny---but we didn't do anything in advance of it, either, we have to admit. Friday saw a favorable report and the market tried to make a new high on the Dow, and did on the S+P. Then, the "experts" came on CNBC and almost all of them said they expected the good move upward and gave reasons why the economy should be considered favorably. One or two continued to be worried about a recession or pull-back due to some signals that show we should be more concerned. When the market wants to go up, it can make bad news look good, and when there is extreme pessimism, they can find bad in good news. That's the nature of the beast.

I hope you are keeping an eye on those retailers that we mentioned recently. Check the prices on 10/1 for COST, TGT, WMT, etc. and see how they are doing. This is the pattern play time of year for them.

Today's Thought---
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One of the most difficult things is not to change society,
but to change yourself...........Nelson Mandela, former President of South Africa.


Mike

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