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Author: Mike Celeste Editor: Tony Ponzo December Circulation: 6819

Stat Sheet Week Ending December 15th 2007

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-286.0-2.1%+877.0+7.0%
S&P-37.0-2.5%+50.0+3.5%
NAS-70.0-2.6%+221.0+9.2%

Highlight of this past week: SPX has 4 plays during the week and wins on all 4.

In this Issue--- SplitMaster Basic System---
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We currently have 6 active Basic splitters going, and that is nearing capacity for most investment accounts, based on our past history. We don't want to extend beyond our ability to get some of each play, for that is what our system is based on. Right now we are doing OK and it would appear that we will still be able to function with some of each one because the next splitters have yet to set their split dates. By that time we should have closed out a few so that the new ones will fit right in. We slipped just a bit this past week, but we still show 4 splitters of the current 6 active plays are ahead of buy price. With the market so volatile this week, having 4 out of six in the profit column is definitely a good sign.

 Big Dipper System---
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Team members should check the Big Dipper page daily to see if there are any changes to the Big Dipper target buy prices or if there is any other change made, such as sell date, etc. We received feedback that was receptive to a change in the Dipper target buy price, depending on an up move in the stock. We are adding and adjusting those prices and you can see them on the site. It is sort of a moving stop price, as the stock advances. If the stock drops we don't change the price as we already have the target price that we feel will be supported. We have added new splitters to the list, so be sure to check it.

 Options---
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With the Call options being pretty quiet, we looked again to writing some Puts and there were a couple of attractive premiums out there. We were looking at the December strike prices and saw that DRYS and FWLT had some that looked favorable with 1 week to go until expiration. Remember that we feel that if the stock does end up getting put to us, it would appear to be at a good price. And since these are splitters, we expect them to go up and consider the downs, only temporary thus creating opportunity.

 Momentum Plays---
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OK - It was a rough week with this strategy. Not that we lost, to the contrary, we won in every play that has been closed. Momentum Past Results What was rough, was getting into the plays on the SPX resulting in only four plays for the week. The market makers have definitely become harder to deal with. The other thing was getting out at or above out usual profit. Here again, the market maker was playing hard to get. In a couple of our plays, we saw moves in the right direction that should have easily taken our sell prices, yet they would not go. So we had to wait longer for the out. Like I said, every play turned out to be profitable but yesterday's play was perhaps the most frustrating play of all.

We got into the play earlier in the day than we usually do. I think next week we will wait at least an hour before we go in. Things are just easier to read after an hour and there are usually less surprises. Anyway, yesterday, we got in easily. But then the market went against us. We knew the market would eventually come back down which is what we wanted since we were into a PUT. The news was bad yesterday and there was lot of negativism. What we didn't know is that it would take all day! And when it finally did come down to where we should have had our exit price easily taken, the market maker had changed his price range and we were not close. This was frustrating to say the least. Those who were in the play with us know that we finally got our sell order off but not until after we cut it by .20. Then, to add insult to injury, in the last 40 minutes or so of the market, it drops big and that option started going for a much better price. We could have received a pretty big profit. But, there was no way to tell that would happen like that and we are grateful for the profit we did receive.

There is one other thing that happens when we get into plays like that. It tends to distract from other plays. There is no reason, while we are into one play that we can't make other plays. For example, there are two things we could have done yesterday. When the play went against us, we could have made a CALL play and made a profit on that. Then when the market starts back down, buy more of the original option at a much lower price to average down the overall cost. In hind sight that would have been the thing to do. This is being aggressive though and while we might do this for ourselves, we are not sure how you members feel about this kind aggressiveness. . Send us an email sometime, and let us know what you think.

And talking about buying more at a lower price to average down the cost, we have one frustrating play, COO that is still open. Here is a stock that by all logic should be down much further than it is. The company reported big time losses, well below the streets expectations, and yet the stock just stays around 38.80. And every time the stock takes a little move down and gets us close to a break even or a profit, it jumps back up. We keep hoping it opens down $1. If it did we would have a pretty good profit on it especially since we doubled our position. Members, keep your fingers crossed. Maybe Monday it will do what it should do and drop $1 or more.

Three Indicators---
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Those of you that are old enough to remember Frankie Laine might recall one of his most popular songs with the words "rolling, rolling, rolling". When we look at the 3 Indicators, that is what comes to mind to me, because they are continuing to roll right along. On Monday we had a W Indicator signal that showed overbought and on Tuesday the Dow dropped 294 points and the Nas did even worse, dropping 67 points, which is equivalent to a drop of 335 Dow points. I personally tested another theory we are working on by buying 6 of our splitters at the open, one day this past week. The goal was to see if I could make 1 point or more that day, or take no more than a 1 point loss. By going long in this way it ended up that 4 of the stocks were winners, with 2 losing--1 point on one and 86 cents on the other. That meant the net was a positive and it happened in the first 10 minutes of the day, so it was over quickly. Monday will be interesting to watch, looking to see if selected splitters can do the same, again.

New SPX System---
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We were able to continue with our phenomenal results in this system, as discussed above, even in spite of the actions of the Market Maker. We had 4 plays last week and were winners on all 4. However, also as mentioned above, the last one on Friday, was very draining with the market maker lowering his premium on us at mid day. We have to take note to see if that occurs on the next month's Friday, one week before expiration. We don't want to forget about these things. We feel that winning under these conditions strengthens our belief in the SPX play. The new totals for this system shows 36 winning plays and only 1 loss---and that loss was taken by only 1 member, as we exited a position right about the same time, but that 1 person was not able to get out in time, so we still reported it as a loss. Maybe one reason for this very high rate of winning plays is due to the fact that we are not greedy about how much profit we take. Consistency is the name of the game here at SplitMaster, as that will end up showing excellent returns over the course of time. Day traders could do a lot worse than playing this system, so if you are a day trader, but not yet a team member here at SplitMaster, you might want to give us a trial run.

The Economy, The Markets & Commentary---
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Boy, these markets continue to be volatile and it is evident that there is a great difference in opinion about what is going to happen to the economy, especially when it comes to the Fed actions in the credit markets. This past week the Fed took a step that was originally hailed and the market was up over 200 points--Wednesday--early on. Then, the "experts" came in and decided that it wasn't that good a move and by the end of the day the Dow was up only 41 points. Thursday saw another 44 Dow points added in, but by Friday, the "analysts" didn't like anything and the Dow fell 178 points. This type of action just magnifies the problem in the credit markets. Is the worst over or not? The big boys just can't seem to agree. We feel that this uncertainty on the part of the market movers will continue If we can time these up/down moves fairly accurately, they will provide us more opportunities to catch the ongoing momentum and take advantage of it.

If you are watchers of CNBC TV, you are able to see the great debate going on about the credit markets. Steve, from the studio end strongly debates Rick in Chicago. Other "experts" are dragged in and give their input, too. What really makes my blood boil, is that all these people have answers and suggestions about what to buy, etc. (we like Rick in Chicago, by the way) but rarely, VERY RARELY, does anyone at CNBC go back and see how accurate their predictions were. Every single day, the staff is asking the "experts" what they are or would be buying right now. No one goes back to say "You said this was a great opportunity 2 weeks ago, and the market has dropped 400 points since then--how come the stocks you mentioned are down even more?" Also, they always have a reason why the market did what it did yesterday--what about the reason for a move tomorrow?"---and be accountable for it. Accountability is so dearly lacking today, in all aspects of life, both professional and personally. Here at SplitMaster, accountability is very important. That's why we post our record, every single play, win or lose. You know exactly how we have done in all our computer picks. We certainly don't win them all, and we certainly make mistakes, as every human does, but by the end of the year, we seem to show a winning record, year after year. When you watch CNBC you would get the impression that all of those "experts" never make a mistake and their fund, etc., is just booming. Sorry--not so--and we wish that there would be someone there that has the power and would do what a reputable reporting body should do. Be balanced--and make the information fully reported and accountable. The story of the boy that cried "Wolf!" comes to mind often. When these people keep saying that these are great buying opportunities, they will eventually be right. The sad part is that they will be hailed as a guru and called on for opinions for years to come (and paid really big money to do it). I could mention names of those that fit into this category---wrong most of the time, but right once--but there isn't any point in it because that's the way it is, and we are just going to get more of this same stuff, no matter how silly it is. Eventually their star fades and new stars come in--over and over and over. My suggestion is to take note what some say, and if they are consistently accurate, pay attention to them, for they are rare, indeed. OK, enough venting over a pet peeve about accountability---let's just hope that someday things change. Why it is so difficult I have no idea, but change is very difficult to achieve, no matter what the subject. It does happen, tho, and when you take a breath and look back, we can see major changes in our lives. Change is inevitable, but its pace creeps up on us. As John Lennon once said, "Life is what happens when you are busy making other plans".

 Today's Thought---
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The doors of wisdom are never shut.......Benjamin Franklin


Mike

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