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Author: Mike Celeste Editor: Tony Ponzo February Circulation:

Stat Sheet Week Ending February 21st 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-484.0-6.2%-1,410.0-16.1%
S&P-57.0-6.9%-133.0-14.7%
NAS-93.0-6.1%-136.0-8.6%

Highlight of this past week: For the week of Feb. 17 we see the Indicator Strategy rack up more wins to keep the win rate still standing at 100%.

In this Issue---
Options---
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We finished up an expiration period on Friday, and boy, was it a wild day. We had written options on a number of stocks and all of the options expired worthless, but it was a fight all the way, with the market going all over the place. However, because we wrote at strike prices that were pretty far away from the current market at that time, we allowed for fluctuations and the stock never reached the strike price. We had done both Calls and Puts, looking for that 1% per month return. Let's take a look at some of them. We wrote the GE Feb. 9 Put when the stock was 12.22. This was the closest to being called, but it rallied and closed well above 9, so the Put did expire worthless. We had written them at 22 cents. Using our math, we were obligated to keep $900 in reserve for each contract (our own obligation, just in case). If we were looking for 1% for the whole month, that would be 9 cents, net. Our commission accounts for about 1 cent if there is no covering before expiration day. Therefore, we were looking for 10 cents net---and we received 22 cents, less 1 cent for commission. That means we netted 2%, or twice as much as our goal.. Another was an old splitter, CTSH. We wrote the 22.50 Calls for 90 cents. The 1% return would have been 23 cents, plus 1 cent commission. That expired worthless, too, so we kept all 90 cents per share or $90 per contract. That's a 4% return for the month. Looking ahead, while we were keeping our eye on GE, we noticed that the March 7.50 Put was selling for 50 cents, so we wrote some of those, too. That was also done on Friday and by the end of the day the Put was down to 40 cents---which gives us more than our 8.5 cents or 1%---and that was in 1 day. What we do is look to write a put when a stock is near a low point and write a call when it goes to a high point. We watch support and resistance points along with our W indicator for stocks as well as for the Spy plays, as we have mentioned before.

Another strategy for experienced option writers was done for the last 2 expiration months. We looked for a Spy strike price that was unlikely to be met if we sold/wrote options on expiration day itself. Friday we picked the 75 Put, and it opened at 45 cents, while the Spy opened at 76.72, already well below the previous day close of 78.18, approx. Within 5 minutes the Put was trading around 25 cents, giving an excellent profit of 20 cents. The real nice part was that the Put never traded over 40 cents the rest of the day, even tho the Spy went quite a bit lower for a while. The Put did expire worthless, of course, but the smart bet was to buy to close out the position, and could have been done in those few holding minutes. The thing to note about the writing of an option on the SPY on expiration day is the premium starts to dwindle fast especially in the last few hours of the day. If you have been following our discussions on this you know the advantage of this dwindling premium.

The options markets continue to be great opportunities---and--along with opportunity comes risk. If you play it right, tho, we think that on balance you can come out well ahead. Example--on Friday we saw the Spy Feb. 78 Put open at 1.67 and range during the day from 40 cents to $2.30. That's about a 6 fold range. If you can catch them right (and no, we didn't--but--) you can make some bombastic profits.
And that's during just 1 day when the markets are volatile. The Dow opened down, had a rally (making our W Indicator play a winner), then dropped over 200 points, rallied again to go positive and dropped 100 at the close. Now that makes for opportunity. We are constantly working on finding entry and exit times for those and our record indicates we are on the right track--but we want to make it better, so we continue to look to unlocking more secrets from the data and charts.

 Momentum Plays - Another winning week but less plays---
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Again we see this strategy move ahead this week. We only had three plays as the market traded in a very unpredictable manner and it was hard to get strong signals to make a play. One of three plays was a loss but the other two, especially one earnings play, was more than strong enough to give us an overall net profit for the week and bring our total profit, year to date, to over 157%.

This market keeps getting more and more elusive and of course, it keeps dropping. The Momentum Strategy, a day trading strategy, is the only kind of strategy that is working, (actually thriving) during these volatile times. If you have not already joined us on this strategy, check it out. Find out why we keep getting new Level III members every week and why this strategy is making them excited. We have a 30 day money back guarantee and one Free week with your initial trial subsciption. So you can watch the action and paper trade for a week which is more than enough to decide if the strategy is for you or not. That means you can check it out with absolutely nothing to lose. If within the first 30 days you decide it is not for you, just send us an email and your subscription and fee will be canceled with no questions asked. Splitmaster is well establshed and a well respected Internet service and has been publishing stock strategies since 1998. The results of this strategy are real and if you follow it for just one week, you will see for yourself just how real and excited it is. With this strategy giving out these kinds of results, and with our 30 day guarantee, if you have any interest at all, why not give it a try? Learn more

Indicators---
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I'm getting ready to push Tony and Pat for a raise in subscription fees for this strategy. We had said that I would push if we go thru February without a loss in this system. OK, watch out---we had 3 winning days in a row for this strategy, giving us 6 for 6 in February, along with 7 for 7 in January---or 13 wins and no losses since the first of the year. Is 13 going to be unlucky for us? We are going to ignore the superstition and go for more, if we get the signal. Besides that, Tony always says that the number 13 is a lucky number for him. How can we justify our lowest subscription rate of $19.95 for a program that has that many wins---and we know it can't last forever, but it sure is fun to get this far---fun, but we still have to be at the computer, watching for retractions, calculating our profit goal, etc. We call it a win when there is a 10% profit, allowing aggressive investors to find their own comfort level. That 10% for a day is a great return. Everything has its place and we are not putting all of our eggs in one basket. Learn more

Feedback---
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It is nice to hear from team members that are getting the hang of day trading with our programs. There is a rhythm that we are looking for, and it benefits all of us when we do get that rhythm. We are still tinkering with this, looking for standardized wording that we all understand. Every week we get dozens of members emailing us about there winning plays. Most write in because they are really getting the hang of how the strategy works and they making creative and successful plays on their own, based on the lessons we have given. Some are more aggressive members and trade larger amounts of contracts, some hold out for bigger profits, some go into plays, based on our support and resistance points that we post even when we missed getting in.

This week, our favorite email was from member Robert. We had just finished a small winning trade. Shortly after, based on our support and resistance points, we had another play but in the opposite direction. We at SplitMaster missed the play but member Robert jumped right into it and made a very nice profit. As always, congrats to all those creative members. We love hearing your stories.

The Economy, The Markets & Commentary---
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It sure was fun to watch CNBC this past week, with Rick Santelli in Chicago doing battle with Steve Leesman in the studio. Rick ended up on the Today show and more after exploding about the Stimulus package and what it really means to him and the boys in the Chicago pits. They were unanimous in believing that the package had some serious flaws. We happen to agree with Rick, as there seems to be some items that are going to haunt us. There supposedly is a tax cut, even if minimal. Oh, really? To compensate for that we see that the states are taking care of that benefit very quickly. Here in California, we are seeing what was signed for the new state budget. The sales tax is being raised 12 1/2% or more, depending on what area you live in. Auto registrations are going to be doubled. All utilities have requested hefty increases. Now there is going to be a constitutional challenge made for a number of fee increases. You see fees can be raised with a majority vote, but taxes require a 2/3 vote. These politicians are slick people, but we think the legal challenge will hold up so that they can't ram this stuff down our throats without doing it properly.

The markets didn't seem to like the stimulus package, as we saw multi year lows hit for the Dow, with the other indexes not far behind. We keep saying that bad news is bad news and eventually it can't be ignored. There has been a period when negative news was seemingly ignored, but now we are paying the piper, with the markets taking their hits and declilning.

Inflation took a spotlight this past week, too. We've been saying how oil drops and gasoline goes up---well, in January it hit us hard. There has been lots of inflation going on besides energy. Many of the costs that have gone up are not part of the system that calculates inflation. Food not only hasn't gone down for many basics even tho commodity prices collapsed. Airline surcharges for fuel, baggage, etc., have stayed on the books, even tho airline fuel and other costs have dropped considerabley. Car prices, of all things, were on the list of price rises in Jan. Here they can't sell many vehicles and try to tell us that prices are real bargains, but if the consumer prices are accurate, the price of autos went up. CNBC is starting to get some good guests on that are telling the story from the view of people on Main Street, not Wall Street. The middle class in this country is being destroyed. As tough as things are, we see that weekly we are getting news of billion dollar scams---and even the wealthy investors have been taken in. You know, that is hard for me to understand. These seem to be intelligent people that are getting scammed--famous names that we respect for their success. Do you mean to tell me that they fell for the pitch that they could receive 30% returns on CD's. Time and time again the old saying comes up---if it seems to be too good to be true, it is too good to be true. Truth seems to be a word that some of these scammers don't have in their vocabulary---and ethics is another one. How can you look a friend in the eye and tell him his investment is earning terrific returns when the money was not invested at all, but used to create an opulent lifestyle---at the expense of your friend. It seems unheard of to me, but police friends of ours told us long ago that people like this and those that commit violent acts don't have any conscience at all--NONE. One quick mention of someone that seems to have combined scamming and causing death. This guy that ran the peanut factory that was found to have salmonella continued to try to use those peanuts for profit, even after he knew about the danger. I don't know about you, but I consider that murder. Knowingly putting out a product that can cause people to die seems pure and simple to be murder. Call me crazy, but that's how I look at it. Gee, I wonder what story is going to break next week that shows another scam. And--while it used to be for thousands and then millions, these people are not pikers---they are scamming billions. And in a sense we let it happen---but that's a story for another time.

Stay tuned...............

 Today's Thought---
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In the past year and half or so, because of the terrible downturn in the economy - worldwide, we all have had to either alter are plans and dreams or put them on hold. Most of us are making changes to our lifestyle just to get by. We all do what we have to do and we will prevail in the end.

No one has said it better than the legendary John Lennon when he once said - "Life is what happens when you're busy making other plans". Let's hope life happens for the good in the not too distant future.

Mike

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