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Author: Mike Celeste Editor: Tony Ponzo March Circulation:

Stat Sheet Week Ending March 1st 2008

ChangesWeeklyFebruaryYear to Date
IndexesPointsPercentPointsPercentPointsPercent
Dow-115.0-0.9%-434.0-3.4%-999.0-7.5%
S&P-22.0-1.6%-48.0-3.5%-137.0-9.3%
NAS-32.0-1.4%-119.0-5.0%-381.0-14.4%

In this Issue---
SplitMaster Basic System---
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Not much to talk about--we had some decent profits, but the last 2 days of the week took care of that. Back to basics for the Basic.

 Big Dipper System---
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FWLT had fought its way back from a much lower price and was showing a small profit. We thought it would have another day of up move and then we would take the profit. However, the earnings were going to be released the next day, and we thought they would be good--they weren't and the stock dropped 11.90 that day. That sure was painful --and we are back to watching for a comeback.

 Options---
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We are still looking more to writing puts than buying calls at this point, what with the market volatility. However, the first 1/2 of the week saw prices go up, which meant put prices to write went down. Then Thursday and Friday saw major declines in the market and now we are wondering how much further down we will go. Dilemma---what to do. We have chosen to wait and see if we have hit a short term bottom, or if the decline will carry forward into next week.

 Momentum Plays---
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It appears that our Momentum Strategy is performing like the market. Up for a couple of days then down. This week we had two winners, one of which (AZO) was what we like to see - a fast play with a nice profit. But then, we got clobbered on a play that performed very unpredictably. SHLD announced badly, gapped down as expected, retracted nicely then started back down. Unfortunately, as soon as we got in, it turned around and not only went up but went substantially into the positive side. We are still scratching our heads on that one especially with the kind of earnings announcement they had. Like I said, some of these plays are just like the overall market, wild and unpredictable.

So what do we do during these times? Make fewer trades and trade more cautiously? How do we do that? Concerning earnings plays, by waiting longer in the morning and letting a stock form its ranges first. This means, instead of trying to catch the initial ride of a stock's momentum, let it settle in, form ranges and then go into the play once we see the pattern. Now, some plays go flat after the initial momentum and that would mean we have no play. But that would be better than getting caught in these totally unexpected moves. Other stocks, such as this week's play, AZO, formed a nice reoccurring pattern that we were able to move on. Once the market settles back down, we could go back to our original plan.

Concerning the SPX plays, there were big moves in the SPX this past week, but it was too tough to get a good handle on it. Paper trading is usually accurate to test things, but not on the SPX options because the market maker still had a very tight rein on the SPX prices for the puts and calls. The best thing here is probably to just stay away until we see things ease up.

Three Indicators---
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This week we saw the Indicators being right on target, again. They also closed the week out with 2 of the 3 indicators leaning toward an up movement, with the 3rd indicator pretty close. Let's see what happens Monday.

 The Economy, The Markets & Commentary---
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You know, this was a very strange week in the markets. The first half of the week, no bad news could take the market down--it wanted to go up, and we know that it is very difficult to fight the momentum. The last 1/2 of the week, saw the other truism kick in---Sooner or later, good news is going to make the market go up, and bad news is going to make the market go down. In the first part of the week, bad news was ignored, while the 2nd part of the week saw the bad news crunch the market, more than making up for the up move earlier. It seems the markets don't know which way to take a real position on, and it appears we just have to wait it out. We aren't making any predictions, other than to say that we believe Larry Kudlow is off in his own world---Housing news was all negative this week, and very negative, not just negative. Larry thinks housing has already hit bottom, as we mentioned last week. All his other positive points are being shown to be way off base, too. There are positives out there, and we have mentioned why---what is bad for one sector is good for another. Time will be the best factor to sort it all out.

Today's Thought---
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Question--If you were to spell out numbers, how far would you have to go until you would find the letter "A"?
Answ. One thousand (You don't believe it?--Start counting and try it.)


Mike

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