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Author: Mike Celeste Editor: Tony Ponzo November Circulation: 7224

Stat Sheet Week Ending November 3rd 2007

ChangesWeeklyOctoberYear to Date
IndexesPointsPercentPointsPercentPointsPercent
Dow-212.0-1.5%+35.0+0.2%+1.0+9.1%
S&P-25.0-1.6%+22.0+1.4%+92.0+6.5%
NAS+6.0+0.2%+157.0+5.8%+395.0+16.4%

Highlight of this past week: CRS (then click on Last Mo Detail)--closed out with a huge 14.39 point profit in 1 week.

In this Issue--- SplitMaster Basic System---
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Our timing system paid off royally this past week, with a sell signal coming on CRS. We were able to get out, and some got even higher prices as the stock ran up a bit further----BUT----after we sold, the stock dropped almost 16 points in that big sell off in the market. It actually went just a bit below our original buy price, and then bounced back a bit, but still 10 points below our sell price. Congrats to the software program that said sell.

Big Dipper System---
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Team members should remember to check the Big Dipper page to see the target buy prices on the splitters that are active. At present, none of them are near the target buy price---a sign of the times of the market as related to splitters. They are doing well. Keep watching, as we might run into a downspell or get a downgrade that will temporarily push one of them down to the buy level.

 Options---
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We did get a new call play off on Friday, but missed our target price on some others. Not to worry, tho, as we have plenty of action in the options on the Momentum and SPX plays.

Momentum Strategy - Slow week---
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It was a slow week this week with only three plays - two wins and one loss. Past Momentum Plays--We still had a net gain for the week but the one loss we had was the most frustrating play we have had in a long time. Members who followed the trade know exactly what I am talking about. We stayed with this play all day long. We kept chasing it by changing our sell price looking to get out. Every time we changed the price we almost got the sell off but the stock backed off just before our order could get executed. To add to the frustration, a couple of times, we should have had the sale executed but the market maker would not take it. In the end, we could have sold the position much earlier at the price we finally got at out at. In fact, we could have sold for a better price, had we just decided to get out and cut our losses earlier. So the SplitMaster team started a discussion on this trade and we decided to make a new rule.

The Momentum play is meant to be a quick in and out play. We try to catch the a momentum move and ride it as far as we think it is safe to do so. The play is not meant to be one that we watch for hours to get profit. The bottom line is, if we get into a play and it does not make its move in 30 minutes or so, we missed the momentum. We do not want to be married to any Momentum play because, it takes away from getting into other potential winning plays. When you start putting so much attention on a play that isn't doing its job, it's hard to concentrate on these other plays. So we think it is best to cut the play even if it means losing and move on to something else that could bring profit. Also, often, when we sit and watch a play for a long time, it tends to continue drifting away from our direction making things worse. Yes, of course there are also those times when a play, after a long time, suddenly makes a good move in the right direction, but that doesn't happen often enough to justify the wait.

Also, if a play quickly starts to go bad after we get in, we need to put a limit on how much we will let it get away from us. In the past we talked about .50 being the limit of loss. We even discussed stop loss limits which some members utilize. But we have found that often a play will quickly hit that .50 loss point then turn around. So the SplitMaster team does not employ stop losses at this point. But you can be sure that we will be watching closely when a play does this and if we do not see signs of the stock leveling off and turning back around, we will get out as fast as we can. Again, members can set their own limits for this and if stop losses bring you a sense of security, by all means, use them.

Now, the above discussion will have exceptions as all things do. Sometimes a play can move so fast that before you know it, you are a dollar in the hole. That doesn't happen often but it can happen. In this case, it might make sense to hold onto the play and try to get a better price at some point in the day. Also, when this happens, sometimes the trend reverses and starts back and shows strength again in the direction you are in. It may not come all the way back to the point that you need, but when this happens, you can buy more of the position you are in at a much lower price, which in turn, cost averages down your investment making the profit point much lower and giving you an advantage. We only want to do this if we see the strength building back in our direction, however. You longer term members know that we have employed this technique in the past.

Lastly, sometimes if the signals are there on an SPX play, once in awhile, it may make sense on an SPX play, to hold it overnight. We just had a successful play doing that not too long ago. The play was at a loss at the close of the market but the next morning, the market went sharply in our direction and gave us a nice profit within the first 15 miutes of the day. So, there is a lot to consider on this play and we will certainly keep you informed, via our signals, of what we are thinking and doing each day.

Three Indicators---
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We really saw the power of the Chart Indicator this past week, when we notified our team members that the market was showing to be oversold on 2 of our 3 Indicators--just before the very sharp decline of 362 points in the Dow on Thursday. This is one of the tools that we used to determine an overbought price on CRS, getting out at over a 14 point profit, and then watching the stock drop those 16 points the next day.

 New SPX System---
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On Friday, our SPX play was done, in and out in less than 2 minutes. Now we think that is pretty fast, and it showed that when things are clicking properly, and if you aren't greedy, nice things can happen quickly. Admittedly, we warned our team members about the overbought conditions of the market facing the opening on Thursday--and some of them trade on their own once we point them in the right direction. However, we got wrapped up on a very time consuming Momentum play that took all of our focusing away from the SPX as Tony mentioned above, so we missed a terrific opportunity for a multi-point play---not the normal 30-40 cent profit result. Congrats to the team players that trade the SPX on their own now that they have the hang of it. It's nice--all we do is provide a little education and away they go. We constantly get feedback about more than one play being completed daily. (Not every day, but many days, anyway). We were even extra profitable on one play we held overnight, which is unusual for us, but conditions seemed right and it worked out very nicely. You can see all of our SPX plays on our site (lots of free info even if you are not yet one of the team), Past Momentum Plays You know, I still feel badly about the one loss we have had in the SPX plays since we started--and it was only one member that wasn't able to get out in time. However, we base our whole business on integrity, and with that one 20 cent loss to one member, we still posted it as a loss. Even I continue to shake my head at our results in this play. More losses will come, we're sure, but we are getting more and more confident about the way we play this system. If you are not on the team, we are taking just a limited number of new subscribers into this system--we don't want to mess up the volume on the options.

Feedback---
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We like to think that we listen to our readers and act in concern as though we were on the receiving end of our system We made a change to our Momentum procedures and here is some feedback we received-----

"Hi Tony,
You said:
We have decided that we will not hang on to any Momentum play too long. The play is either going to work within 30 minutes or so or not. The purpose of the play is not to wait all day to see if we can get a profit. The purpose is to catch the momentum and after about 30 minutes if it has not done it, obviously we missed the momentum. So we feel it is best not to be married to any play. Get in and get out, then move on. Also, we are going to try hard not to ever let a play get more than .50 away from us. Sometimes it is hard because a stock will really move fast but this is what we are aiming for.

Amen brother! I couldn't agree more. I think the tendency to hang onto plays when they don't do what is expected was the only glitch in this momentum system, but now you are correcting this. Your % win rate might dip slightly, but it is more important to protect against plays with big losses, in my opinion. I even think that SPX play that you held overnight was risky, though in that case I do think you had a really good reason to think the SPX would be down the next day (anxiety over fed announcement).

Anyway, just wanted to let you know I applaud this decision!
Best,
Brian"

Thanks for that feedback, Brian--we hope we are making it more comfortable for our members, and thus potentially more profitable.

 The Economy & Commentary---
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Boy, if there was ever any doubt about the "experts" that "guide" investors, it was evident this past week when the Fed announced a small cut in interest rates. Everyone, including us, was riveted on that announcement on Wed. We knew that the market would be volatile after the decision was announced, and it was. I think we counted 4 up and down moves in the 1 1 /2 hrs left in the market after the announcement. Now the markets had anticipated and built in an interest rate cut. The main question was how much would they cut. Well, they cut the minimum 1/4 point and we had thought that it might not be enough to keep the market advancing. Wrong on our part. The market closed up 137 points on the Dow. That was a shock to us, as the markets had already advanced to overbought conditions before the announcement. We guess the nature of the Fed action finally set in as the Dow dropped 362 points the next day and at one point on Friday, was down over 100 more points. Those "experts" were on TV on Wed., saying why the market was doing so well after the announcement--and the next day those "experts" were on TV explaining why there was that major collapse in the market on Thursday. We never hear them giving warnings about immediate overbought conditions like our Chart Indicator does. We look to the next day in the market and say what our Indicators show. The "experts" look back at the day before and say they could see that coming---always after the fact. OK, not every single one of them, but by far the majority do. The interviewers on CNBC are always asking them what they would be buying that day---but it is only very rarely that they go back and point out what was said a week or so earlier. Yes, we don't like this type of market advice. How is the average investor to decide what to do and make a sound judgment play with his money? One day it is rosy because the market is up, the next day when it is down, "they" talk as tho they knew it was coming for "x" or "y" reason--again, always in hindsight. Why can't they be honest about it? Sometimes I scare Tony and Pat because I can't stand hearing this coming out of the TV and I break out with a loud yell, ranting and raving about how wrong it is for them to do it this way--at least I think it is wrong, so I have to vent (just like now.) We don't predict the future, but we do show what our indicators tell us, and we do it in advance--and our indicators are short term, let us be clear on that. We continue to feel that our basic programs will continue to do well as split plays because companies that announce a split are companies that are doing well. From the beginning of the year to the end of the year, stock splits have shown to be profitable going back to the beginning of our studies in 1975. The economy is so huge that when bad things happen to one sector, it is an opportunity for companies in another sector. They do well, and bingo--maybe a stock split. Our day trading systems also use our indicators. None of our programs are very long and we don't pretend to be looking into a crystal ball and predicting the long term future. So far, we have been successful using this format and while we tweak them from time to time, they have been good to us.

 Today's Thought---
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If you want to make good use of your time, you've got to know what's most important and then give it all you've got.
.......Lee Iacocca, former Chrysler CEO.


Mike

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