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Author: Mike Celeste Editor: Tony Ponzo December Circulation:

Stat Sheet Week Ending December 8th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+254.0+1.9%+1.0+9.3%
S&P+24.0+1.6%+87.0+6.1%
NAS+45.0+1.7%+291.0+12.0%

Highlight of this past week: SPX leads the way to a great December start.

In this Issue--- SplitMaster Basic System---
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We had a nice profit in IDXX but it dropped back and took a 19 cent loss by sell date. That was a disappointment, but then we got hit with a downgrade in another good winner, FLIR--but before sell date. It had a great profit going, too, and dropped over 3 points on the downgrade, but later that day came back and at one time was actually at a profit, before closing down 90 cents as the market sold off. Funny thing, too, about FLIR. It hit over 71 and we were just about ready to sell and buy a put, We got beaten to the punch by the downgrade, but it is still showing a decent profit.

In addition, our other 3 active splitters are showing very nice profits---KMT, BWA and DNR. Let's hope they keep their upward move going. December is usually a good month for the markets and we don't want any deviation this year, do we?

 Big Dipper System---
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We have been thinking about a slight revision in our Dipper strategy and wanted to run it by you. Let us know if you see any faults in our reasoning.

Many investors believe in stop loss orders. Normally, we do not, and especially when it comes to the Big Dipper, for a drop is what we are looking for. Our computer studies have shown that if they drop to a certain level, most of the time they recover to show profits from that level. How about this thought? Maybe if we adjust the target buy price on the Big Dipper potential, but only when the stock is rising, we might catch a higher dip price and make some profits on it that way. For instance, FLIR. We had a nice profit on it. If we reset the target buy price for the Dipper when it was up near what we thought was a high water mark, we could stand a chance of getting it back again--and since we were going to sell it in the Basic, we would want another buying opportunity. Ok, set a new Dipper price based on 71. That would have been at 65.00. Along comes the downgrade and the stock drops to a low of 63.78 and closes at 66.70. We would have picked it up at 65.00 and been nicely ahead by the end of the day. And that would have been our 2nd entry into the stock, since we would have sold at 71. originally.

Another one, DRYS, is an upcoming splitter, but on our Watch List. It dropped to our projected Dipper price of about 81.75 on 12/6 (a low of 81.05 on that day). As of Friday's close it is 89.82. Because the stock did not get to our Buy date for the Basic System, we didn't already have it in there yet. But, we were still watching it since announce date. It is a wild stock, having gone from 97.00 as the first price after the split announcement down to a low of 69.63 and back up to 99.01 and then down again to 81.05. I think that qualifies as a "wild" stock ride.

So, we are keeping a close eye on some of these that are pretty volatile, and hope we can catch them for a short term Dipper play. We will report more on this theory later.

 Options---
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While we are tightening up our splitter option strategy and wanting more plays there, we can find much comfort in the other options that we track. The SPX, as shown below, has been combining with Momentum theory and we continue to have great results. That's what we like--enough strategies to show profits when one or the other is taking a breather---PLUS--making money whether the markets go up or down. We have long had requests for these types of plays, and right now, we are delivering them to team members.

Momentum Plays---
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December has started off a little slow but profitable. We have had two plays, both SPX options and both were profitable. So we continue our high percentage of wins. Momentum Past Plays The SPX play on Thursday reached its profit goal in only four minutes. That's the way we like to play them. However, Friday's play took nearly two hours to accomplish. Of course we are happy to take the profit but we like to do it much faster than that so we can concentrate on other plays. The market traded in a very tight range on Friday and that was the cause of the play being so long. And once again, the market maker was being stingy. The way we see it, our out price should have been executed a number of time before it was. But, in the end we got our profit and we are happy for that.

Three Indicators---
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Our Nas 3 Indicator was powerful this past week. On Tues.,. 12/4, it ended the day with its 3rd straight down day. The next day the markets took off to the upside, to the tune of a gain of 196 points for the Dow and 47 (equal to 235 Dow points) for the Nas. On Thursday, 12/6, the W Indicator said the markets were overbought, so we played the put side on the SPX on Friday--and won.

Let us know if you are following our 3 Indicators, if you are a team member. We like to know what is being done on the other end, and the feedback is always helpful. We know we use them for our personal trading and we are doing very well with them.

New SPX System---
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This SPX system can be frustrating, exciting, exhausting (our eyes glued to the streamer screen)--but it has been enormously successful. We have had 32 winners and only 1 loss up to this point. In addition, we have had a number of personal tests and they have all been successful. We don't know if this win rate will continue this high for a long time but we do expect at least an 80% to 85%. With that rate, it doesn't take long to build up the balance sheet. Let me just say that we like it a whole lot. It is for the day trader, and if you are not a member yet and are interested in day trading check our Momentum Strategy.

The Economy, The Markets & Commentary---
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We don't do much predictions about the future and normally leave that to others. Instead we base our expectations on past historical trends in stock splits and our other strategies. However, we do have enough experience to remember what has happened in the past. In this instance we are referring to the housing debacle. For about 2 years we have stated that we didn't think that housing market could hold up. Then we stated back a ways that we felt there would be a bailout coming. It happened to the Savings and Loans, Chrysler, NY Central railroad, and others. We kept that in the back of our mind, and when this housing situation crumbled, we expected a bailout. OK, President Bush came on TV and rolled out a bailout for current homeowners that are in so much trouble. But---we don't think this is going to be the final program. The rules are pretty tight at this point, and there won't be a great number of people that can benefit---one of the rules being that you have to be current on your house payments--and--there has to be some equity in the house. That equity part can easily eliminate a goodly number of people. Why? Because they were able to purchase the house with little or no down payment, and now the value of the homes has declined a doggone good ways from the purchase price. That's what the heck is happening out there. The decline in price has meant that there is no equity--if it is calculated honestly (no, change that to "correctly"). That's why we think the bailout criteria is going to change. Fair? We are not talking about fair. The people that do qualify are going to be able to keep their low rates of interest for another 5 years. Is it fair that someone else was forced to re-finance at worse terms, and lost that low interest rate? And on it goes about the others not in this select group. Then there are the investors that are not being helped--at this point. Wait until the lobbyists for the banking houses that hold all this paper get to work on the legislators. I'm betting that they get something, too.

The question is whether the credit markets received enough to stabilize and help the problem. The market had a very good week, but the economy still has to withhold downward pressure from the effects of inflation. Lots of exciting times ahead. Stay tuned.

Today's Thought---
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See everything as a potential...and don't let fear get in the way.........Anonymous


Mike

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