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Author: Mike Celeste Editor: Tony Ponzo March Circulation:

Stat Sheet Week Ending March 1st 2009

ChangesWeeklyFebruaryYear to Date
IndexesPointsPercentPointsPercentPointsPercent
Dow-303.0-4.1%-938.0-11.7%-1,713.0-19.5%
S&P-35.0-4.5%-91.0-11.0%-168.0-18.6%
NAS-63.0-4.4%-98.0-6.6%-199.0-12.6%

Highlight of this past week: Again, for the week of Feb. 23 through 27, 2009, while the market keeps getting worse, the SplitMaster Momentum and Indicator strategies keep getting better. The Momentums Strategy now sits on a 211% profit margin and the Indicator Strategy finished the month of February with a 100% win rate.

In This Issue
  • SplitMaster Big Dipper System--We finally got one--

  • Options--Writing, writing, writing--

  • Momentum Plays - The Wins Keep Coming--

  • Indicators--Perfection is still a goal

  • Feedback--Keeping up the good work--

  • The Economy, The Markets & Commentary--Uncertainty rules the markets--

  • Today's Thought

    • Big Dipper System---
    **************************************
    Will wonders never cease! We had a new splitter added to our list of potential buys by going on the Big Dipper list. MYGN is the new one and team members can look on the Big Dipper page and see what the target buy price is.

    Options---
    *******************************
    Writing options continues to be a revenue producer. We wrote the GE March 7.50 Put last week and covered the play this week, getting our goal of 1% per month (12% a year--try and beat that with a CD).
    GE dropped 2/3 of its dividend on this Friday, so we won't be getting back into that strike price, even tho the option price is higher than where we covered. However, we might take a look at the 5.00 Put for March if the stock continues down and the option price goes up. CTSH is our other one and it has dropped from the written price of 75 cents to a last sale price of 50 cents. Another 5 or 10 cents and we will cover that one too, by buying it back to close the position. On our list for potential additions is the Big Dipper candidate, MYGN. We are keeping a close eye on it and if it gets to a certain price, we will write options on it.

     Momentum Plays - The Wins Keep Coming---
    ****************************************************************
    What more can we say about this win producing strategy? While the markets keep getting disgustingly worse, this strategy keeps getting better. We now sit on a 211% profit margin and this strategy is gaining a lot of attention. The number of new members is increasing each week and we welcome them all to the team. While we had three days of easy wins, we did have two days that were tougher going and the profits were less than expected. Still we had six plays this week and all were winners -- no losses!     Learn more

    We had an interesting email from one of our members this week that I would like to relay to you as I think it brings home a point. The member said that while he was happy with all the wins he was making, that because of the smaller amount of contracts he is playing at this time, that some of his trades, after commissions were only giving him a couple of hundred dollars in profit. I want to discuss both the smaller profits per trade and the commission structure.

    Concerning the smaller profits, yes it is true that these plays, when trading smaller amount of contracts, are not going to make you thousands of dollars on one trade. The system is designed to make small but steady profits so that at the end of the month, it adds up to very decent dollars. See our Pat Results For example, for the month of February, we had 21 plays with only 4 losses and the losses were all small. Based on 7 or 8 contracts (what we use for reporting purposes) the profit for the month was $2,634. Not bad for extra income but also, that represents 161% profit on the amount invested. Where are you going to find that any other place? Now, if you were trading 16 contracts on each play, that dollar figure would have been $5,264. That's more than extra income for the month, that is a good living. With 24 contracts on each trade, (still a reasonable amount) you are looking at $7,902. That gets down right exciting.

    The strategy is also designed to minimize your losses. Many services give bigger profits but when you have a loss, and they always eventually come, it can wipe out a lot of hard work. With the Momentum strategy, the wins may only be in the hundreds of dollars per trade but the losses are limited to only a few hundred as well. We make use of stop losses and support points etc,. to make sure the losses are small.

    Concerning commissions,our member is solving his commission issue by moving to a lower commission broker which will help improve his dollar profits. In these times, there are many reputable brokerage houses that are technically advanced and set for fast trading of stock and options and offer a very low commission structure. Depending on the size of your account and your negotiation skills, (yes you can negotiate you commissions down) we've seen commissions as low as .75 a contract for options and $8.50 for stocks no matter what the number of shares you trade. So don't settle for large commissions, shop around and find the right broker for you. Some good firms are ThinkorSwim, TDAmeritrade, OptionsXpress and Trade Monster and there are others.

    Indicators---
    ****************************
    Two months down and what lies ahead? We don't know, but we do have 15 wins and no losses for the first two months of this year. As I have been saying, if we go thru Feb. with no losses, along with January, I was going to push for a raise in the very low subscription fee for this strategy. Now that we have done it, the price is going to go up. Maybe Pat will let a few more in at the original rate, and those that are already in will continue to be able to receive it at the low rate as long as they are continuous members. As it is, the rate is still amazingly low, even tho we go from $19.95 per month to only $29.95 per month. Many of our team members start out on this strategy and work their way up to the much more active Momentum strategy.     Learn more

    Feedback---
    ***********************************
    Here is an email that we particulary enjoyed from member Brian --

    Hi, FYI, I was in at 1.99, and out at 2.18 on the SR SPY play this morning. As a returning member, I am impressed by how much you have improved the momentum system. There is a better way to limit losses now, and I have a better understanding of the strategy behind the plays.--Brian

    Congrats to Bian--our job is to educate and we keep trying.

     The Economy, The Markets & Commentary---
    *************************************************
    The one thing that the markets do not like is uncertainty, Well, let me tell you, we have nothing but uncertainty these days. The President has been magnificent with the oratory that states we are going to win the economic battle. The only drawback is we don't know how the details will be applied (as usual, details are scant) and we don't know when we are going to start seeing some light at the end of the tunnel. There is much comparison to the Great Depression. That lasted 10 years and was only bailed out by World War II. The voters wanted change, and we sure are getting change. With change comes strongly debated voices from all forms of speakers. We have said for a long time that this is going to be painful, and that the middle class is being whittled away and nothing we have seen in the new administration changes our thoughts. The word "nationalization" of private industry, mostly banks, is said to be non-existent, but if it walks like a duck and sounds like a duck--you know the saying. With the government taking over such large portions of the finance world and calling the shots on what has to be done with bailout money, it looks to us like that is the definition of "nationalization" and on the road to socialism. When we add in the programs for health insurance and education we get closer and closer to socialism. Now that is not to say it is bad, but it can become bad if it stays and expands. The markets are headed lower, we think, until this is much clearer, more details are known, and we see some positive results. Earnings are taking hits at many companies and it appears that the road is going to be long and twisted. I keep telling myself to get a far out Put on the Spy and a far lower strike price and just sit on it as insurance. I would be way ahead if I had done it when it was first thought of. In the meantime our Splitmaster strategies are continuing to show profitable results by our trading in both up and down moves in the markets. Our timing is not absolutely perfect, but we are winning a large percentage of the time. On Friday for example, we started out with a win on a Call on the Spy and then made a profit on a Put on the Spy. The markets are volatile in uncertain times, as we all know, and those are opportunities for us.

    Some notes of this and that---A report came out that said "analysts" are missing estimates by the highest margins in a long time and as a result they have lost their credibility. Is that breaking news? We have been pointing that out for years. The worst part is the high pay they receive for missing the point.--------Change is happening all right. Lots of people are not going to like the changes, too. Doctors, hospitals, health insurance companies, and the whole health care sector have taken big hits because of these proposed changes. They are going to be getting less money and less money means less profit and less profit means lower earnings and a lower standard of living for those individuals in the field--at least for the time being. One stock, HUM, went from about 43 to under 23 in 6 days. Be happy you didn't own that stock. There are many others, tho, that have been hit hard, and the list will continue to grow. On the other hand, some are going to benefit with all the stimulus money that is going to be thrown out there. Wouldn't it be nice to be on the receiving end of a few million out of the billions?----------Wall St. continues to be run out of Washington. It's very difficult to consider investments for any length of time past hours when you don't know when some announcement is going to come out of Washington that will quickly swing market direction one way or the other. ----Criticism is still being given to the lending business. It makes me wonder. How does a lending institution make money? I thought it was by lending. If you don't lend, you don't make money, do you? Look at it from the banks' angle, tho. The financial problems were caused by loose lending practices--no proof of income. Now they have normal lending standards and there aren't many people or businesses that can qualify--they have debt up to their eyeballs, and some even higher. ----A report came out from Asia that Japan has a stimulus package, too---and it is for more than ours. The problem there is that Japan has 1/2 the population of the United States, so think of the burden on those taxpayers.---There is a confusing thought to me in the education sector. The President said that the stimulus bill will allow teachers to be kept that were going to be laid off. Here in California we just got a report that pink slips are getting ready to be issued to our educators. What gives? Its sort of like hearing that there is going to be a tax cut for 95% of the people, but the states and local governments are raising taxes and our bet is that the cost of these taxes and "fees" (really taxes and we all know it) will outweigh any federal tax cut. Uncertainty again--un certainty all over the place.

    Last week we wondered what new scandal would surface this week. We have two candidates. A report came out that the Merrill Lynch cost is $500 million worse than originally reported. On top of that, the Bank of America CEO, Lewis, refused to give the names and amounts of bonuses that were paid to ML people just before being taken over by BofA. Now there is a subpoena issued by NYState to produce the records. Don't be surprised if that is refused, also--and back to court we go.

    Another scandal issue came up--again--this week, and that is more on the story of how Indy Mac lost so many billions in the mortgage crash. It was stated that warning signals were given in 2006 to overseeing government regulators, and they were ignored. The warnings were that loose lending standards were going to result in violations of the guidelines, etc---and those loose standards were what we have been harping about for many years before these warnings were issued. No proof of income was needed to get these loans and appraisals were made at greatly inflated values. (Tony C. is still working on one of those cases of an appraiser buying properties for himself, appraising them falsely high and then the properties went into foreclosure.) Credit cards fall into that same category. In mortgages, 100% loans with no proof of income is simply inviting disaster. We are not rocket scientists, but we know you can't do that without expecting massive failure. As a side note, we still do not have anyone from the government calling us to work for them---maybe half-intelligence is a black mark that will not allow employment in the government.

    Tough times, but with tough people we can come thru this. The cure treatment will be painful and time tested, but there will be sunshine again.

     Today's Thought---
    *****************
    Lord, the money we do spend on government and it's not one bit better than the government we got for one-third the money twenty years ago.......Will Rogers --(We changed it this time--we hope)

    Mike

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