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Author: Mike Celeste Editor: Tony Ponzo May Circulation:

Stat Sheet Week Ending May 2nd 2009

ChangesWeeklyAprilYear to Date
IndexesPointsPercentPointsPercentPointsPercent
Dow+137.0+1.7%+564.0+7.4%-564.0-6.4%
S&P+14.0+1.6%+76.0+9.5%-25.0-2.8%
NAS+28.0+1.7%+191.0+12.5%+142.0+9.0%

Highlight of this past week: For the week ending May 01, 2009, the Momentum Strategy moves up and now sits on a 273% profit for the year. Also, beta testing results go exceptionally well for new cirteria on the W play.

In this Issue---
Options---
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This was a slow week in options outside of Momentum plays in earnings or the Spy options. We did write another Call on a Basic splitter and it worked out well on the same stock when we did it for April options. So this is bringing in income for two months in a row on the same stock as we have been discussing. The stock is ILMN and we wrote the May 40 Call for .50. It will either get called out on expiration Friday which is on May 15th or it will stay below the strike. If that happens we keep the .50 per share and the stock. Then we can cover it again for June. Out of all the option writing we have talked about, covered calls are considered the most conservative option play a trader can make. Still, as we always say, do not attempt trading options of any kind unless you have a good understanding of the risks involved.

 Momentum Plays---
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It was a slow week with only three plays - two winners and one loss. When added together, we had a pretty good net win for the week and we are now looking at a 273.33% profit for 2009 year to date. Past Results We did have one play that caused some confusion for a number of our members. The play was FSLR. There were two things that made the play a little tough even though it was a winner for us. The option had a bid/ask spread that was large. Not only that but it would close up making us feel confident to go in, but then it would open up again. That threw some of our members off as they were not sure what to do with it. At one time it had a .60 spread or more in it and we are talking an option that was trading in the $3.00 range. However, it was executing trades some place in the middle. Add to that the stock was trading with big swings and you can see that it was a little nerve wracking to be in. When it came time to get out, we at SplitMaster, got out with a .30 profit or out at 3.50. But by the time some of the members read our posting, and put in the order the stock started to drop making it hard to get the price we posted. So some member got out with less profit and some got out at even trying to catch a price. However, those more aggressive members that held out for more made an amazing profit. As I said the stock moved down fast from the 3.50 that we got out at but it did not move too far. After a few minutes it turned back up (it was a Call Play) and took off to the moon. Some members reported getting a $2 plus profit.

It was a bit of a wild ride and next quarter when it announces again we'll remember to watch that bid/ask spread on the options and if it is like it was this week, we'll just pass on the play. FSLR moves big and therefore has great potential but our strategy is too conservative to enter options that move like that. Learn more

Indicators---
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We have a new play coming up Monday, so team members pay attention to the Indicator page on the web site. We want to get back on track after a loss this week---but we still have won 28 out of 32 plays this year, so far and that is still an 88% win rate.
Learn more

Feedback---
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I am a new member and have been paper trading the plays for about two weeks. I am getting confident in following your trades and look foward to trading for real in the near future. Bobbie

 The Economy, The Markets & Commentary---
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All the big boys on financial TV have been saying that we are overbought and a pullback is due--and they have been saying it for the last 2 weeks. We keep pointing out that this is a powerful up move in the market and one shouldn't fight the tape, the momentum, or the swing of the pendulum. All 3 major indexes were up again this week, making the Nasdaq up for 8 straight weeks. What an incredible run. With our strategies for day trading, we do see swings in the market where a down play is profitable, so there are definitely moves in both directions during the trading day. We have been conducting Beta testing for a better way to take advantage of this market. The results have been exceptionally good thus far and it is our hope that we can begin officially trading very soon. On the Beta test, every play this past week was a winner, outside of 1 that broke even. That was out of 8 picks.

One fear we continue to have is that we are not being given enough details by the administration of what is happening. It was stated that we were going to get transparency, but it hasn't happened to the extent that we can make an intelligent decision on whether these government programs are working to any degree. We do know that there will be a day of reckoning when the cost of the programs is going to have to be paid back.
The amounts are mind-boggling, and we can just hope that our participation as taxpayer/owners will return enough to cover the costs. Just the interest on these debts is tremendous and if you run a business you know you have to add in the interest costs to determine if there is a profit. Already the Stress Test results have been delayed from Monday, May 4 to Thursday, May 7.

Earnings are another matter that is suspect to us, as we have said before. They ran a report on the percent of companies in the SP 500 that beat the estimates, or missed. The percent that beat was tremendously more than the ones that missed. I keep saying that I get suspicious that maybe there were intentionally low estimates given---for a couple of reasons. One--actual earnings look real good compared to the estimates, which gives a type of hope that a recession is fading. Of course, when compared to last year's same quarter they are down, but it still looks good, and CNBC keeps reporting more about how the earnings did compared to the estimates rather than how they compare to the same quarter last year. Being old and cranky, it makes me feel that a second reason could be part of this earnings story. That would be that it was an intentional missing of estimates so that prices would fall and the big boys could pick up stocks at real cheap prices. I've never believed in "experts" and "analysts" because they are so often so wrong. Even if the estimates were legitimately given, it just shows how worthless the estimates were---and those people make big money to give those estimates. It is a lot of the same financial story--we just can't believe the info that is fed to us--and that is what got us into this horrible financial mess--around the world, not just in the US.

Another comment was made this week that we found interesting. It was stated that many companies have cut costs to the bone, and that is what is making earnings look so good. Sales haven't increased much, if at all, but if costs are cut, it makes the bottom line look good. The point of the story was that costs have been cut as low as they could, so future earnings will not be able to show more cost cuttings in most cases. If sales don't pick up, that will work out to be less earnings. Let's see what happens.

Stay tuned---exciting times---
Finally, a big welcome to our new team members that have joined our group.

Today's Thought---
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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


Mike

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