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Author: Mike Celeste Editor: Tony Ponzo April Circulation: 6805

Stat Sheet Week Ending April 26th 2008

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+43.0+0.3%-373.0-2.9%
S&P+8.0+0.6%-70.0-5.0%
NAS+20.0+0.8%-229.0-9.5%

Highlight of this past week: CMI kept its engines roaring and we closed out with a great 17.6% gain in the Big Dipper System.

In this Issue---
SplitMaster Basic System---
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There is a stock, RBA, that just got into the Basic system on 4/23 and it has gone from 81.84 to 88.42 in 3 days. That's an excellent return, especially in such a short time. It is on the sell list for Tuesday, 4/29, but we might sell it a day earlier, on Monday, 4/28. We will watch the pre-market indications and make a decision. If we decide to sell on Monday, we will send out an Alert before the market opens. Here is a stock that's business is real estate auctions. Here is another example of the other end of bad situations. Real estate is hurting big-time, and what happens when these houses need to be sold quickly? One choice is to auction them--and that is where RBA steps in and benefits. Bad for one, great for another. Team members should pay close attention to any email Alerts that come before the market opens on Monday, as there might be other changes.

 Big Dipper System---
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On Friday we closed out CMI, just from the Big Dipper system. It remains in the Basic system, but we wanted to take an excellent profit we built up, from the buy price of 46.75 to the sell price in Friday of 55.00. That was a 17.6% profit--feels good. Also, it continued up over 2 more points before the close on Friday, but that is OK, as we want it to continue to rise. Because we still have it in the Basic system, there is no reason to hope for a pull-back.

 Options---
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Our concentration continues to be on writing covered calls and writing puts. The time value on the options is so high that it is difficult to overcome when buying just the options. Our covered call on SU is showing the benefit of the program. The stock price is 115.13. That is above our buy price, We wrote a covered call on the May 115 for 5 when the stock price was lower.The option is now worth less than 5 as the time premium loses value. That's how we are protected. If the stock drops below our buy price, we are protected for 5 points, the amount we received for writing the call. If the stock goes up past 120, the max that we can receive is 115 for our stock and 5 more for writing the covered call, or 120 total. But, since we bought the stock at 113.70 we would receive 1.30 profit for the stock being called out at 115 and the 5 for the option for a total of 6.30. That is a good return for the time held.

Written puts are usually done on strike prices at around the Big Dipper buy price. That way, if the stock doesn't drop down to the BD buy price, we keep the amount received from writing the put and consider it sort of a dividend. If the stock does drop down and the stock is "put" to us, forcing us to buy it, we would have bought it at that price anyway, in the BD program. One more thing. You don't have to let a stock get put to you if you act on time. If you decide you do not want the stock and it looks like it would be put to you around expiration date, you can always buy but the put to close at whatever the current price is. Doing this, you could still gain a profit but you could lose too. It depends on how far below the strike the stock is and how much premium you initially received. The bottom line is, with this type of play, we have choices we can make which increase our odds of winning.

 Momentum Plays---
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We had a couple of plays this week and they were both winners. Past Momentum Plays So our win rate is holding up pretty good for the month. The only problem is, we should have had more plays this week as the announcements are pouring in. There seems to be two things happening. For whatever reason, the action in our picks are not there like they usually are. Several of our selected plays gapped nicely and looked like they were going to move but then just fizzled out. We hope this is not a trend and only an anomaly for this week. The other reason is we just missed getting into a couple of plays by either putting our order in just a couple of seconds too late or by putting in a low order expecting the stock to take a quick dip and get our price. We did this a number of times this week and we missed the play.

At any rate, we are ahead for the week on the plays we did make and there are plenty more announcements to come. So we'll forge on.

The Economy, The Markets & Commentary---
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This past week we saw the Dow and S&P just about dead even going into Friday. On that day the market opened up, went into negative territory and then rallied the latter part of the day to be up. That was the total up for the week on those 2 indexes. What is confusing to me is that there are some good earnings coming in, but "good" in a strange way. A number of companies are reporting lower earnings, but because they are better than estimated, the stock moves up, and it moves up substantially. There are many times when lowered earnings are forecast and the stock price drops on that news. Then the earnings come out and they are lower, and the stock price drops again---the lowered earnings news was not built into the stock price when the earnings were released. This time it seems to have been built in and lower, but higher than expected, is a definite positive. It also makes me wonder if the lowered estimates were purposely put out too low, so a better number, while still lower than the previous year, looks good to investors.

The S&P is also confusing. Its rise this past week comes at the same time as the futures for the S&P don't go up as expected. Going into 2009, the futures are showing prices just barely above current prices. That seems to indicate that we might be approaching a consolidation period. For a good part of the past week our indicators have been showing at, or near, overbought conditions. However, if the dollar continues to climb off the bottom, there could be a lot of money coming back into the market---and oil prices might finally drop to a more reasonable level--not as low as they should be, but lower. That's IF the dollar improves.

Consumers continue to take a hit in their pocketbooks, with rising prices, taxes, fees, etc. slapping them in the face daily. We just received, in the last couple of weeks, increase notices for sewer and garbage collection. Water rate increases have been approved, and more increases to come in our electric and gas bills. Vehicle registration is in danger of seeing an increase. It appears that everything the consumer needs and uses is seeing or facing increases---when job cuts and foreclosures are staring at us from the other end. When our government officials mess things up and get things in a financial bind, they start finding ways to charge us more so they can cover their deficits. When the utility companies mess things up, instead of finding ways to cut expenses they charge us more. That seems to be their answer to everything because it is the simplest thing for them to do. But what are we supposed to do to cover our increasing expenses? We can't easily go to our employer and ask them to give us a pay increase. And small business owners can't easily raise their prices on their customers or they face losing business. It seems to me that the citizens of this country should have more say into what our government spends and how much they can raise our taxes. We went to war against the British in 1775 over excessive taxes. We won that war and won the right to tax ourselves. Guess we showed them.

Here's a great quote from President Bush--and you can see and hear it on You Tube (I just checked right now and saw it). A question came asking about the possibility of $4/gallon gas this summer. The President actually said he hadn't heard about that. Hey, I'm not bashing any political party, but--come on, give us a break.

This is on top of Greenspan and other high officials saying they couldn't foresee problems in the mortgage industry----even tho the program was giving 100% loan mortgages and with nothing but stated incomes as proof that people could make the payments. That combination is an automatic disaster in the works and long time readers of our newsletter know that we have been saying this for over 2 years. Now we go right to the top man saying he hadn't heard about the possibility of gas hitting $4/gallon--which it already has in some areas of the country. Once again, I offer myself to be an advisor, consultant or any other name for it---at 1/2 the salary they are paying these "knowledgeable leaders". I
know I shouldn't hold my breath waiting for a call to take me up on this.

Today's Thought---
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There are two primary choices in life: to accept conditions as they exist,
or accept the responsibility for changing them......Denis Waitley...Author

Mike

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