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Author: Mike Celeste Editor: Tony Ponzo October Circulation:

Stat Sheet Week Ending October 13th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+27.0+0.2%+1.0+13.1%
S&P+4.0+0.3%+144.0+10.2%
NAS+26.0+0.9%+391.0+16.2%

Highlight of this past week: SPX--goes from $5.10 to $16.50 high in one day.

In this Issue---
SplitMaster Basic System---
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We don't have much action going on at present in the Basic, with just one play going--and it is back and forth around entry price. It did show life this week, with potential for an upside move, so we are being patient. When one of our systems isn't very active, we offer others and lately that has been the Option Strategy, specifically the SPX plays--see that section and also Testimonials.

 Options---
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One of the main purposes of investing besides looking for profits is to cut your losses, or try to prevent as many losses as possible. Our option signal came this past week that said to get out of our DKS call at around 4.50, which was only 20 cents above our entry price. Now that might not seem like much of a good deal, but look what happened to that call right afterward--it closed shortly after at 3.10 bid, 3.40 ask for the October 65 call. As a point of information about possible re-entry, we would now be looking at the Nov. call, as it is too close to the October option expiration date. We were happy to hear that some people got out of the call at even higher prices, as our Alert went out when the stock was rising, so we were glad to hear that. Of course, one of our old time players got out somewhat earlier at a price of 5.10, when it appeared there was a topping of the stock at that time. Good going.

This past week's real excitement came in the option plays in the SPX system, so be sure to read that section, along with the feedback we received, in the Testimonial section.

 Momentum Strategy - Some changes---
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We have just completed the typical two week quiet time in Momentum plays based on earnings announcements. Starting this week however, those earnings announcements come back into play at full force. Of course, our two weeks were anything but quiet as we had plenty of action in the SPX plays. (See more on the SPX play below) This is basically a Momentum play if you think about it, as it is a short play based on the momentum of the market. So we are posting the past plays in the Momentum Strategy past results. A few members gave an opinion that it makes sense to post the past SPX plays there and we agree.

In the past two weeks we have noticed that the SPX play seems to be more reliable, more profitable and a little less rushed than the earning plays. So we have decided to concentrate more on the SPX play. We will still do earnings plays too but we will limit those plays to stocks we have had profitable experience with and know them to be big movers. That way we can zero in on bigger profits on all plays. So the bottom line is, when we find earnings plays we like, we will post them but if we have an SPX play going too, we may only post it so we can concentrate on one thing at a time. Also, we may start playing the SPX play more than once in a day if we see the signals back up more than one play.

The other change we intend to make is to allow Level II members to get on to the Level III active page. There are some technical things that have to be dealt with there but in the meantime, we will send our signals via email as well as on the active page.

So there are a lot of good changes coming up and we hope you enjoy the them and let us know if you have any suggestions.

Three Indicators---
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Twice this past week the 3 Indicators all told the same story, and that was that the market was overbought at that immediate time. This should be very beneficial to team members who lean more to the trading side, rather than the long-term investment side. The markets did react downward at those times and we were able to make some very interesting plays in the SPX. A reminder to team members that this Indicator info is posted daily on the site, on the Big Dipper page, at the top.

 New SPX System---
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Look closely at the "Highlight of the Past Week" at the upper part of this letter. This is the sector that is hot at this time. We made nice profits in our plays and our team members reported even better results, AND the possibility was there for incredible results.

Our 3 Indicator signals we use for this play were right on the money, and that "Highlight" showed it was possible to make TRIPLE your investment in the same day, with that SPX put going from 5.10 to a high of 16.50. Admittedly, it takes a trader with ice water in their veins to hold onto a put like that and see if it is running up (we didn't, but some team members reported some outstanding results better than our own). On that day, however, there were actually opportunities for entry at 2 different times. The market dropped some, making the SPX put go up, then the market made a short rally. That enabled some to get in the put again--and BINGO !!--the market fell apart, with the SPX showing those remarkable results.

Everyone can visit our Past Momentum Plays, or the Past Options Plays, and in the lower half of the page you can see all the results for our SPX plays from the past as well--and we are conservative. Knock on wood, we don't want to jinx the situation, but you can see that this system has not had a losing play in either the Test period or the Official Play period. We know we will eventually have a loss, but you ride a winner as long as you can.

As our team members know, we send email Alerts when we feel it is a good entry point--and those are preceded by postings on the site (Big Dipper page for team members) that show the 3 Indicators and the numbers needed to be considered a signal. Lately there have been signals frequently. That is not always the case, but right now it is, and as we said, we go with the current hot hand.

It has been very gratifying to get the feedback from team members that are using this system. We feel that a main goal we have is to educate our team members, and also for us to learn from them. (Remember Randy's idea of buying deep in the money calls at 1/2 the price of the stock, or less, with a delta of 100, and then writing a higher strike price call that is above the current price?) The feedback we are getting is showing us that there is a multitude of ways that our SPX plays have been used to generate excellent profits. See below---

Testimonials---
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Here is some feedback we received this past week, regarding the SPX System (except for Debbie, who is making $ in splitters and the SPX)-----------

1, "yup, I made over $3,000 today but could easily have made 20+"

2. " Hi Mike and Tony,
Misread the alert this am and went in at an avg of 5.60 on 10 contracts(various prices ranging from 5.80 down to 5.3). Just cashed out 3 minutes ago @ 7.00 for all 10 contracts!
Nice call, keep up the Nice work!!!!!!!!"

3. Splitmaster Notice 2007-10-12--just did it again. SP was +7 bought the put--- sold the put. this is too much fun. I've been trading the 1550's I got in at 8 out at 9 then in at 7.60 and out at 8.50 just got back in at 7.60 (hope I'm not pushing my luck!!)--followed by our question--"Was that you getting out at 8.50? Hope so--"

Answer--"lol..yup"

4. Partial (other part was personal)--
"... I do play the Basic every once in awhile, "CTSH" -Cha-ching) are very helpful in my trading!!
Keep up the good work, you're helping my kids college tuition!!!!
Your friend, 'R'..."

5. Report from Debbie is that she is going in and out of our splitters' options as she feels the situation calls for that---and is doing extremely well. We call her the "Guru" and we actively seek her reasoning. We all learn from each other, and Deb is another example of this.

 Stock Split Comments---
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We have a few upcoming splitters, but the number of announcements has been pretty sparse lately. That is a bit confusing to us because in the past when the market is making new highs, like it has been now, there is usually a flood of split announcements. We expect that the new announcements will eventually come through, but for now, we are being patient and working with what we have.

The Economy & Commentary---
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It is fun to watch CNBC TV and see all the "experts" give their opinions---and they are all over the place when talking about the economy. Some see everything being rosy, some see it being good, but fading, and others see outright doomsday coming. It's sort of like watching a court case on TV--The prosecution has their "expert" give his analysis of a crime scene, and the defense has their "expert" give his---and they are just about always very opposite from each other. So much for "experts" that create a wash for the situation. Who do you believe? The big battle currently is over 2 main issues--Is there inflation or isn't there? Also, is the housing problem going to carry over into the general economy and create some havoc? Those that discount inflation continue to use core readings as "bible" because they exclude those sectors that are running very high. For crying out loud, just as an example, oil futures reached a new trading high this past week, above $84/barrel. We continue to ask--Are we supposed to give up driving and eating and buying a home, just so deleting those makes the situation look better. Remember tho, our old reminder about how things that are bad in one way are good in another way. There is a tremendous increase in businesses and adjustments that are working to do the opposite----cars with more electric power, more solar power for homes, more companies that say they can help people avoid foreclosure. Those things all create jobs for other people.

All in all, the economical reports continue to be read with analysis that comes up with different conclusions. For the investment markets, this can be a good thing. Differences of opinions are what make the markets move. On the past Thursday we saw a 248 point range in the Dow--first being up over 100 points, then down over 100 points. We feel that historically the stock market is very overbought--and when that happens, any little news item can panic the "crowd" and reverse the markets. Some warnings come in from a big company or two, and the market falls. Retail sales are both disappointing and also showing gains. China's trade surplus swells, but the wWst Coast entry points are down considerably in cargo unloaded when compared to last year at this time. And so it goes--what is the investor to believe and what does he hang his "hat" on? We don't know about most of this, but in the home real estate area we feel we do know what we are talking about--and have been talking about for about 2 years worth of warnings. The price bottom has a long way to go in this sector, relatively speaking, we feel. On the other hand, we also feel that there is going to be aid coming to people that deserve help--from government and private industry.

As long as the volatility doesn't get out of hand, we feel this sort of 2 way analysis can be a time for investment opportunities. Someone always suffers, but someone else always benefits from bad situations, too. Pick the winners.

 Today's Thought---
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It's choice--not chance--that determines your destiny............Jean Nidetch, consultant



Mike

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