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Author: Mike Celeste Editor: Tony Ponzo February Circulation: 6820

Stat Sheet Week Ending February 16th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+166.0+1.4%-917.0-6.9%
S&P+19.0+1.4%-118.0-8.0%
NAS+17.0+0.7%-330.0-12.4%

Highlight of this past week - DRYS- in the Big Dipper makes a big move up and is sold for a nice profit. Also, JASO and KWK in the Basic Strategy make big moves up and are sold for very a good profit as well.

In this Issue---
SplitMaster Basic System---
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We saw the markets make a big move up this past week, and the move took some of our basics to very nice profits, so we sold early. That meant that KWK and JASO averaged over 11% profit for the period they were in the system. We like those numbers, especially in view of how the markets have been acting. JASO especially was a welcome sale, as it wasn't in the system long and was very volatile--dropping 10 points shortly after buy date, and then rushing up over 16 pre-split points in 4 days.

 Big Dipper System---
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Again, it paid to wait and it was well worth it. DRYS was in the Big Dipper an extra period because we felt it was a good stock and should make a comeback. This stock went from 64.51 to over 80 in 4 days, and we took our profits. This is another stock that we felt was a good value and worth holding past the original sell date. Doggone it, the stock went from 76 down to 48.21 and then back up to our sell at 81.05. Now I ask you seriously---why would a good stock take a dump that low? It beats me, but it sure is bad on the nerves. Of course, the results are worth it, but even so, it is hard to understand. All we can say is that value will tell the story at some point. The earnings came out Thursday and we didn't want to wait and take a chance where the stock might take another dive. Well, the estimates by the "experts" were wrong, again. Yes, the company beat the estimates by a huge 43 cents. Funny thing, the stock made a big run-up in the aftermarket on the announcement and then couldn't hold it, falling back to a price a bit below our sell price. This way we got out with a nice profit after it was down so much, and we didn't have to worry about what the earnings were going to do to the price.

Options---
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In the option area, we have been concentrating on writing puts and calls on stocks. DRYS was a Big Dipper and we wrote puts on the stock and saw the stock put to us at 65. So, owning the stock, and believing in it, we wrote calls against the stock. With the big run-up the stock was called away from us on this past Friday, resulting in us making money both on the written puts and the written calls. We also did it with another previous splitter, PCU. Almost the exact same thing--wrote the puts, had the stock put to us, wrote the calls and when Feb. expiration came up, we liked the stock so much that we bought back the written call and expect to write a March call on it next week. The income is a nice percent play and we also will get the dividend on the stock, worth 1.40 per share.

 Momentum Plays---
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This strategy continues to frustrate us this week. After such a great winning rate, we find it hard to get a decent play off. It seems odd that as we have difficulty with one strategy other strategies - The Basic and the Big Dipper - do well. We continued to test the Momentum plays on our own this week and they did not test all that well. The SPX options are still tight with it taking a lot of move in the market to get a decent profit. That plus the market continues to be so volatile makes us come to the conclusion that it is just a tough time for this system. So we'll keep watching for things to loosen up and when the time comes we'll go back at in full force. When this will happen is still the question though? We are hoping things look better this week but we'll play this as cautiously as we need to. It's better to lay off for awhile and preserve capital than go into plays that are so unpredictable and change direction in an instant. A good example of this unpredictability, as Mike states above, is DRYS. It announced after hours on Thursday. It beat the street by .43 and guided up for the future. The stock went up over $7 in after hours. It was still up in the morning over $3. So you would think this would be a great CALL play. Well, it never really took off again and in fact, after awhile, the stock took a dive and ended the day $3.50 down. Very confusing. We could only attribute this to profit taking after the great run up it had prior to the announcement - a case of "buy on the rumor, sell on the news."

 Feedback---
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Member, Fidel wrote to us back near the beginning of February, pointing out that he has continued to follow the homebuilders since making big profit on their puts, back in August. There was an indication, he said, that maybe it was time to get back in. We hadn't kept up with the building stocks and when we saw that they had huge percentage recoveries off their lows, we decided that it wasn't quite right to jump in for calls, etc. We have tracked some leaders and they have had some pretty good fallbacks from the 1st of Feb. Now we definitely have prices that can be used to test the lows, should the stocks get back down there. So we'll see if they come back down to those levels and may decide to start buying some of these stocks at that point. ---- something to keep an eye on.

The Economy, The Markets & Commentary---
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It appears that the markets are facing up to the fact that we are going to have some sort of recession, if we are not already in it. (I feel we are in it now) The markets continue to be extremely volatile, with the Dow showing daily triple digit moves a good part of the time. Lately we have seen alternate weekly prices of up, down and up again. This past week was a net up week. An interesting observation was that on Wednesday the Dow was up 175 points on whatever news caught the buyers' attentions, and then on Thursday, the very next day, the Dow was down the exact same amount, 175 points, based on that day's news. It always befuddles me to think that we investors are supposed to react that quickly to news and then reverse it the next day. Is everyone out there day trading? I don't think so. CNBC continues to drive me up the wall with their daily request from their guest "experts", asking them what they are buying now (today) in this kind of market. What about the answers from last week, or last month, etc. Sooner or later, a daily pick is going to be correct. As it is, I can't tell how these people did, as I don't have the time to write down their different picks every day--with no accountability for what they said at an earlier time. We at SplitMaster live and die with our picks---they don't always win, and there are some bad losses, but we are honest enough to post every single pick on our site, with buy and sell dates, along with the results. Why can't these people be honest enough to see who is picking good stocks and who isn't? Goodness gracious, they are being paid huge salaries to do this--and no accountability thru the media. It seems that CNBC caters to them so they will get these "experts" to come on the show. If they were put under the gun, probably too many would turn down an appearance request.

This sort of goes along with the CEO's that make tens of millions on stock options and don't see much drop, if any, when times get bad. The "Golden Parachute" is still alive and well in the "good ol' boys" network. OK, I'll get down off the soapbox preaching stand, but I will always wonder why accountability doesn't seem to carry much importance. Of course, politics is beyond accountability. My one rule for elections continues to be a "wish" rule. I wish that when a politician (all of them) says he/she will do this or that if elected, he/she should be held accountable with a law that says if he/she doesn't do it, he/she resigns. You would very quickly see their campaign platform change to "I will TRY to do this or that" instead of "I will absolutely do this or that if and when I am elected". As we have said before, this is an exciting election and the key word this time around seems to be "Change". Let's carry that a bit further and add accountability. Oh, there I go, dreaming again. Still, it continues to be exciting and we shall see if there might be some real change, no matter who wins.

Today's Thought---
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Life is not measured by the number of breaths we take, but by the moments that take our breath away.........Unknown



Mike

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