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Author: Mike Celeste Editor: Tony Ponzo March Circulation: 6815

Stat Sheet Week Ending March 29th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-145.0-1.2%-1.0-7.9%
S&P-15.0-1.1%-153.0-10.4%
NAS+3.00.0%-391.0-14.7%

Highlight shows SplitMaster has winning results for each of the 1st 3 months of 2008 on our Basic System, compared to losses for the major indexes.

In this Issue---
SplitMaster Basic System---
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While it was a losing quarter (barring any miracle on Monday) for the major indexes, our Basic System managed to show a profit for each of the 3 months to start 2008. That is not to say it was easy, as it was far from it. We do feel it was a major accomplishment to net wins for this time. We look forward to the future and hope we can make some adjustments that will result in even bigger wins. You can check on the web site at SplitMaster.com, and click on Past Results then click on the Past Basic and see the numbers.

Big Dipper System---
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For the first 3 months we had only 2 plays officially close out, and both were winners. We will be the first to say that we still have some on the list that are active and are losing at this point. Team members please note that we have added new buy prices on those 2, with the hope that we might hit a bit lower and thus average our buy cost. Those 2 stocks are CMI and FWLT.

 Options---
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We don't want to sound repetitive, but the options have continued to have high time values in them, so that makes it attractive to write the options instead of buying the options. If you own the stock, you would write the call. If you just want to aim for some income, you would write the puts. They have worked out well for us. PCU, a former splitter, was a good example of writing a call--using the March 110 call and receiving over $5 for it. The stock was picked up at $100 and it closed out March under $110, so the premium for that call was income. The stock is still higher than $100, so that is a profit, too. Right now the PUTs on GFIG are looking attractive--altho the stock is a shorter play, the PUT can be held a little longer. We are thinking of posting our covered CALL plays on the site for members and will have more on that in the future.

 Momentum Plays---
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Although this is the time of the quarter that is very slow in earnings picks and will be that way until about the15th of April when things will heat up again, we manage to get a play from time to time. This week we had two picks. One was PVH. That one just did not have enough action in it so we never made a play on it. The other one was APOL and that turned out to be a nice win in about five minutes, about 14%. We could have hung on for awhile longer and made an even better profit but in this volatile market, we are happy with our fast win. We could still get a play or two this week so members, watch for our emails.

 Three Indicators---
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Last Tuesday we saw the strongest indicators give a sell signal and we saw the Dow drop 110 on Wed. That can help in decision making when writing/buying options, etc. and we'll be talking more about that to the members.

 SPX System---
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We are taking a look at a longer SPX options play as a test. It has been so hard, as members are aware, to get in and out of the SPX options at a reasonable price for the fast plays, so we thought it might be good to test a longer, more relaxed SPX option play. During these volatile times, traders nerves have been really tested, so making a slower play may be what is needed at this time. The strategy this week looks for lower SPX prices from the opening Friday until some time next week. Friday went that way, with the SPX dropping 15 points, so we shall see what happens during next week and let you know what we find.

 The Economy, The Markets & Commentary---
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We are finally encouraged about the prospects for the markets. That is not to say that we won't have lower prices from here, but we do think that the bottom on the Dow, for example, has been reached--at least for the foreseeable future (until something else of a major problem might arise). The reason why is that we are going by the Fed's statements that it intends to shore up the sector, such as the sector Bear Stearns is in. More lending was done for others since the Bear solution. If the markets can feel that the Fed won't let a major collapse hit, then that is good enough for us.

There are even encouraging signs, sort of, in the housing market--here in CA, for example. Various real estate agents are reporting that the prices have moved so low that there are some houses that are drawing multiple offers, and at prices higher than the listing price. The reason for all this is that we have seen prices drop about 20% out here, and that came at the fastest decline rate since they began keeping records (in the 1980's, I think) Of course, we at SplitMaster have been predicting major price drops and major foreclosures, so it wasn't a surprise to us--we are not "experts" for those "experts" were predicting price declines of 2-3%. What a joke. I think we shall be happy to remain "non-experts". The reason for the multiple offers is that the banks are finally facing up to the fact that they shouldn't be carrying so many houses in their inventory. That is not their business. Therefore, the prices on the foreclosed houses are so low that potential buyers can't resist and they have come back with these higher offers. Still--it's a long way until all the inventory is gone thru, but it is a good sign--at least here in California.

Consumer prices continue to be a major negative, and that is mostly due to about 2 factors. One is the very high gasoline cost that we consumers have to pay. The other is that so many of our goods and products are seeing price increases because the producers are being charged surcharges for deliveries, and the added cost is being passed on to us. Corn is probably going to see some relief in the price structure, but that won't be seen until next year's harvest comes in. So much corn has been diverted to the ethanol program that corn for other uses has gone sky high (and there are lots of uses for corn). It is expected that more corn will be planted this season, but that doesn't help now.
We mentioned that a reporter for the LA Times contacted me about prices for bread, pizza, wheat and flour. I gave him my input, and he insisted I back it up with receipts showing old and new prices, (which I provided to him). I was glad to see that he was thorough and not just taking someone's word for prices. The story came out on the front page of the Sunday LA Times and he did quote me by name, which was a nice acknowledgement for being a legitimate contributor. Maybe more can be done to help if more media attention is given to the fact that inflation is strangling us consumers instead of reading about government "experts" reporting that inflation is under control.

Nothing much new to report on the election front. All 3 candidates have had baggage attached to them, and it will be a while before we see if there is going to be a clear leader. For another week, many eyes (sports fans, anyway) will be glued to the TV sets for the March Madness games in the NCAA basketball tournament. We need something to relieve the stress. Enjoy and root for your favorite team.

 Today's Thought---
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You become what you think about .....Earl Nightingale, author
(So, we like to think good things about stocks...mike)


Mike

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