SplitMaster.com:: Newsletter
Home :: Strategies :: Membership :: Past Results
Author: Mike Celeste Editor: Tony Ponzo January Circulation:

Stat Sheet Week Ending January 17th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-318.0-3.7%-495.0-5.6%
S&P-40.0-4.5%-53.0-5.9%
NAS-43.0-2.7%-48.0-3.0%

Highlight of this past week: It was a slow week but the Momentum Strategy pulls out another win!

In this Issue---
SplitMaster Basic System---
***********************************************
Good thing a couple of our other strategies are doing really well as there still has been no split announcement for the Basic strategy since last September that fits our criteria. With this economy, it may be awhile before we see one. They keep saying the market heads the recovery by six to nine months. If that is true, hopefully we'll see some companies splitting their stocks in the near future.

 Big Dipper System---
**************************************
No new Big Dippers here, either for the same reasons mentioned above.

 Momentum Plays---
************************************************
While the Basic and Big Dipper strategies are not producing much at this time, this Momentum strategy is certainly taking up the slack. Not only does it keep producing, but it keeps producing winning plays. We are very pleased with the results of this strategy and we have many members emailing us stating how much fun they are having trading the Momentum Picks

It was a little slow this first two weeks of the year --- true. But we did have plays and they were winning plays. The slowness is to be expected right after the first of the year and the action will begin to pick up in the coming weeks. Still, with only two weeks into the year this strategy is showing 4 wins and one loss and over a 48% profit rate. Where else can you find this kind of trading success?

Some members have emailed us asking how come we only trade 7 or 8 contracts with such a winning rate and here is our explanation for that. We post these number of trades to keep a consistency for result purposes. If we posted an inconsistent quantity of shares for each trade or a higher number of shares/contracts, we have found in the past that members try to follow us and often get confused or over their head trying to keep up with us. So we determined years ago that it was just best to post these consistent numbers. But the staff here at SplitMaster have their own individual accounts in which most of the time, the number of shares/contracts being traded are much more.

The bottom line is, the number of shares/contracts being traded is up to each individual and one should never trade more than what they are comfortable with. We have members that only trade 1 or 2 contracts for example because that fits their comfort level. Then we have other members who trade 50 contracts per trade because that is what they are comfortable with.

Anyway, we enjoy answering questions like this so if you have some questions for us, let us know.

Three Indicators---
****************************
This is another strategy of ours that is doing well during these volatile times. It too is a little slower than usual but we have had 3 plays since the beginning of the year and they were all winners. We almost had a fourth play yesterday (Friday) but it took so long to develop that we cancelled out. ---Too bad, as it would have ended up being another winner.

The Economy, The Markets & Commentary---
*************************************************
We got faked out, pure and simple. Because of the inauguration next week, we thought that maybe there would be some anticipation building in the markets before getting down to the hard facts of the real economy. No such luck. The normal expectation is that the markets head south after the good spirits generated by the Christmas season, and that usually takes place after the 10th of January. It seems the markets finally saw that bad news is bad news, no matter who is going to be President. It could be that good news is good news, too, but we haven't been having much of that lately. Sometimes, tho, when the momentum is strong to the downside, good news gets ignored and the market still goes down. OK, we haven't had that problem in a long time, but the point is that when the momentum is strong, the markets go that way no matter what the news is. We were able to take advantage of the momentum at least once this week and took our profits.

Also, there was another opportunity we thought we saw this past Friday, and also during the week. This deals with writing calls and puts on stocks and the SPY index. While we are holding some old splitters, we wrote calls and saw them expire worthless, so that was some added income. Then, on Friday, we wrote some SPY puts that had a strike price more than 2 full points below the current price at the time. We did it on two different occasions Friday, and both were nicely profitable. We did not send it to members, as we were using ourselves as the guinea pigs before putting the word out. We did learn some valuable lessons, like what strike price to shoot for and what minimum price to shoot for, so that when the price declines we don't have to wait until the option drops to 5 cents before making a decent profit. More will come to the team members for the next expiration week. Oh, we even wrote some puts naked on some leading stocks, like Intel and GE. If the stock price is relatively far away from the strike price with only a couple of days until expiration, it seems there is some small profit to be made. Income is income and we are willing to scratch and scrape to get some. To make sure you understand what we are talking about, we are selling an option to open. We are calculating that the premium will dwindle and then we can buy back the option at a lower price to close for a profit. For example, Tony had sold a 70 Put on BPT for .70 on Thursday when the stock was around $74. The stock held pretty good on Friday and as a result the price dropped, especially since Friday was expiration date and the premium dwindled fast. He was able to buy back the Put to close for .20 making a quick profit of .50. We have discussed the strategy in the past several times and it is a wonderful way to make income as the dwindling premium goes in ones favor. However, even though the odds are in a traders favor on this play, it can, at times. go against you and you have to be nimble enough to get out when that happens and mitigate your losses. So even though it is a great play, do not attempt to make this trade until you are thoroughly knowledgeable and comfortable with what you are doing. Like we said, we will instruct more on this play to members who may be interested in the coming weeks.

Moving on, it appears that Congress and the Bush administration are working with the Obama team and getting things set up for when the administration is turned over to the new group. The excitement is a bit overdone for the Inaugural Balls, as the experienced people say the President doesn't have time to spend even an hour in each one, there are so many. Also, the word is that they are extremely overcrowded and food is at a premium and women are especially uncomfortable with shoes and no place to sit down. But--it is exciting. We root for the new president and hope he can truly make a difference to turn the economy around.

One place the economy is sticking its nose up at us is in the gasoline field. Here in CA the more the price of oil goes down (and it has been continuing to go down), the more price increases we get for gasoline. We just get our heads handed to us on a platter when it comes to dealing with either the big oil companies or big government.

The bailout mess continues---Bank of America and Citi continue to have problems and need even more money. We keep stressing that the bailout package never gave us details and besides that, it was put together in a matter of days. Now they are screaming that the first half of the money was not handled properly, etc., etc. The new Congress hasn't been able to get much of anything done in 2 years, but in a relatively few days they could hand out hundreds of billions of dollars to companies and people who have been extremely reckless and helped cause the mess we are in. Now the states and local governments continue to line up for funds. Marc Haines on CNBC had a great thought. He said that he thinks the badly handled banks should be closed up and funds made available to the banks that didn't get into trouble. Makes sense to me. One of the worst parts of this is that most of the head people that got the financial sector into this either got golden parachutes or are still there, drawing down huge salaries. That would never be the case for the average worker. If we didn't do the job, out we would go.

We point out that the markets are closed on Monday for a holiday, so enjoy the 3 day weekend, and say some prayers for all of us.

Editors Note: We all witnessed a true miracle this week with the US Airways plane crash in the Hudson River. We want to give our cheers to Chesly Sullenberger, the pilot who brought everyone aboard to saftey. He is a true American hero. Here is a copy of a letter that Mike sent to the new president. I don't know if the new president will ever read it but I thought it said it all and wanted to share it with you.

Dear Mr. President---

You are going to have our nation's new hero, Chesly Sullenberger, the fantastic pilot of the US Airways flight, at the inauguration, aren't you?

All the people associated with the rescue, including the crew and the ferry people and all others are to be commended for saving all those lives. Isn't it ironic that Chesley, an expert in his field, was the pilot in the right place at the right time? A true miracle.

Many believe, including our family, that this miracle could be a divine sign that this year is going to be the year that the negativity in our economy and spirit is going to be changed to positive results. What a way to start out the new year.

Michael Celeste
January, 16, 2009

 Today's Thought---
*****************
The whole purpose of eductation is to turn mirrors into windows.....Sydney Harris, journalist.

Mike

Published by Splitmaster.com, LLC.
P.O. Box 960 San Dimas CA 91773
Copyright © 2006 All Rights Reserved.
Privacy Policy

To unsubscribe from our newsletter or edit you delivery address go to our Newsletter Page. To edit membership information login to the Splitmaster.com members page. For inquiries regarding this or any other Splitmaster.com Information Delivery System publication contact us at staff@splitmaster.com.