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Author: Mike Celeste Editor: Tony Ponzo May Circulation:

Stat Sheet Week Ending May 9th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+350.0+4.3%-214.0-2.4%
S&P+50.0+5.7%+25.0+2.3%
NAS+17.0+1.0%+159.0+10.0%

Highlight of this past week: For the week ending May 08, 2009, the Momentum Strategy has a great week with all wins and no losses. It now has an amazing 313% profit for 2009 year to date.

In this Issue---
Options---
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We are coming up on expiration week and that is usually when there are lots of opportunities for option playing. One problem is that they move quickly as there isn't much time value to work with. This is the shortest month, since expiration day is the 3rd Friday of the month, and May 1 was a Friday. At any rate, we look forward to the coming week. Also, the covered calls we wrote and talked about in the previous newsletters will also be expiring and we will see if we are above or below the strike price. In addition, there will most likely be opportunities for using straddles or strangles. For those interested in these, and are not familiar with them, you can go to CBOE.com and use their dictionary of terms. Since last week we did not enter into any new positions so to get a look at what we are in, check last weeks newsletter. If you do not have a copy but are interested go to this link Past Archive

Momentum Plays---
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We had a great week! We had four trades, which is not a lot of trades, but they were all winners and all but one were good size profits. Plus, all but that one trade on Thursday were fast and easy. That's what we like to see along with the 313% profit year to date. Past Results

Thursday, we had a little bit of difficulty as when we first entered the play, it went against us. It was just at the point where we were about to stop it out when it turned back in the right direction. But then when it was showing us a little bit of profit it stalled, and we got out with a smaller profit. Of course shortly after that it took off and would have given us our original goal. But it was still a win and we'll take it. The bad news is that some of our members reported getting stopped out on that play. The good news is we also had reports from members who not only held on to make the original target profit, but some went on to make more. We are getting these kind of good reports from members more and more as they gain experience with the strategy and we love to see it. We even received reports from several members this week that went into plays we said to have passed on. And --- they made a profit!. Again, great going to those members and keep up the good work:-) Learn more

Indicators---
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We believe we had a record week with Indicator plays this past week. The first 4 days of the week showed signals for the Indicator play. Unfortunately, and fortunately both, we cancelled out on some of them. However, we did play one and it was a win and that always feels good. The other cancellations sort of were a wash, with there being a saving play that avoided a loss and missed plays that did eventually win. However, mixed among those were the Momentum plays that had an outstanding week for most of us. Our problem with deciding whether or not to go into the Indicator play is based on the action in the first 15 minutes of trading. Two of the plays that were cancelled went right up to the 15 minute mark and the Spy action was just about flat, which meant that we avoided the play, especially when the futures point to a strong up market. One day the action shifted 2 minutes later and went the way we expected (down) and we missed out. The other one we missed was flat for exactly the first 15 minutes and in the very next minute, the 16th minute, it headed the way it was supposed to. The 3rd cancel was done because the action went against us all the 15 minutes and as it turned out, kept going in that wrong direction, so we would have been stopped out with a loss if we went in. That was a good decision--and it was a much easier decision to make. When the initial market action is flat we don't get any indication which way we are headed and our criteria is stuck, too. We were especially frustrated on the one that changed on the 16th minute, as it more than doubled the option price after that. Of course, our normal goal is at least 10%, with aggressive members going for more. Those team players did very well on that day. We didn't used to give specific options and times, other than saying it is acted on in the first 15 minutes. Now we are pointing out a specific time and strike price, so that is a help to our team members. It appears that we had better wait about another 5 minutes, or a trade within the first 20 minutes, before cutting off without making the play. At any rate, it was a week where the strategies did very well overall, and our net results are what we are looking at. Learn more

Feedback---
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We talked about some of our more aggressive members who hang onto a play and successfully make great profits. Here is a report we received from member Ron. It is a Put play on the stock LM that we made on Tuesday May 5th. Most members made .30 on the play but here is the exact report from Ron. I believe that out of all the reports we received this week, this one was the big winner.

Tony, Bought 10 lmqr @ 1.20 Out at 2.30 GREAT TRADE

Think of this. That is a $1.10 profit which was made in less than 30 minutes - probably less than 20 nimutes. Now that is what we call FUN!

The Economy, The Markets & Commentary---
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Nasdaq did it again. It extended its record to 9 straight weeks of gains !!! That is absolutely incredible. The Dow and S&P are up 8 of the 9 weeks, with the one losing week being a small loss for each. We keep repeating---don't try to fight the momentum, and this momentum is extremely strong. There has been improving economic news and there has been negative news. The naysayers just can't break these markets. Now the "experts" are saying that the recession is over---depression has long gone out the window. Larry Kudlow on CNBC is raving about the recession being over. Others say it is hard to believe, but they believe it is over (Mark Haines, esp.) He is the only one that I see give any of these people some difficult questions. My own position is that you can't go from the finances of the world on the verge of total collapse to everything being OK in a matter of a few months. The stock market is being controlled by Washington, and the degree of that just grows all the time. President Obama, Bernanke, or some other top government official is on TV every day with special announcements. Sometimes more than one of them is on the same day. Are they believable? Not to me they aren't. The reason is that so much money is being printed and thrown out there that the cost to us is more than tremendous. It is mind-boggling, and I really mean that. These trillions are beyond our comprehension. You don't have to go back too far in our history to find a total federal budget of 100 billion being hit. That was in the 1960's and it seems like yesterday to me. Now one bank or financial institution gets more than that in bail out money. Just think of that--100 billion paid for everything at the federal level. Now, that's just a drop in the bucket to the debt California alone is in. The California mess though, is another discussion.

The government report on the Stress Tests went just as we predicted. It turned out to be a non-event, as there was a nice leaking of certain info on certain banks and nothing was a shock. We feel that the government is not going to come out with strong negative news about their programs. The real story is yet to be told; it is down the line, when we see what happens because of all that money going to aid all these programs. We are then going to see if it really gets repaid. That would include interest, too, don't forget. As one astute person said on TV, the government has stated---The big banks are too big to fail--we are not going to let them fail. How can they not make money if they work along knowing that the fed is going to keep them going, no matter what they do. It's sort of like the mortgage disaster---we'll give you all the money you need to buy a house, and you don't have to prove that you can afford it. To me, it is scary. There is no way that this economy can be in good shape. They are ALL saying that less bad is good. As long as things aren't worse, then it is good. Many are pointing out all the great money that has been made in stocks by people that bought lately---up 10, 20, 30% in a day. Not a one of them is pointing out all the money that was lost on the way down. A stock that was 90 and fell to 3 is a huge loss---and all the while the "experts" were telling people to hold on for the long run. No, if you got out with a stop loss, you are so far ahead that it would astound those "experts". Now the stock doubles, or even triples and "they" are making a big deal out of the huge profits that were available. That's for people that had money left---or the doubling and tripling still leave a $3 stock going to $9 being an $81 loser if you paid $90 for it to begin with. You can always play games with numbers and boy, they are playing games now. Sure, it is better to see a stock go from 3 to 9 than to see it go to 1 or bankruptcy, but it is not the rosy picture they are portraying. But, we will take what we can get, as the alternative is a whole lot worse.

Why don't we believe all that we are told? For instance, Ken Lewis, while heading Bank of America, said he was told by the fed not to give out all the details of the Merrill Lynch deal. Bernanke said that wasn't true. So, who do we believe? I don't know, that's for sure. Of course, I don't believe most of what they spew out. That's from experience, folks. The results will tell the story, and I continue to hope that these programs are going to work--eventually. What I can say with a very reasonable sense of being correct, is that there is going to be a humongous (not a word, is it? but understood) profit made by certain select people in companies that will receive stimulus money. TRILLIONS spent is a super whale of a lot of money to spend (paying back comes later---like a credit card, with its instant gratification before the bill has to be paid down the road.) and it will go to a select group---as it mostly always has. Yes, there will be smaller people benefitting, and that is the best part of our US system. We will get benefits, but they will be expensive. In other countries, little or no benefits are given, compared to the money made by that select group, and it is a relatively small group. I'll accept that tho--as long as it works. The scams are already in the works and also more Ponzi schemes turn up, seemingly one a week. We had 2 or 3 this past week here in CA. The amounts are getting smaller--only hundreds of millions instead of that rash of billions we saw since Madoff started them off.

While talking about not believing what we are told by our government leaders and corrupt company officials, I would like to say that we put our money and reputation where our mouth is. Here at Splitmaster we pride ourselves on being totally honest. We give out every play we make and post it on the site. There are losses, no question about it. We look and listen to what competitors say and find very few that provide the details that we give. SERVICE is a big part of our company. We not only answer emails, and quickly, but we welcome and encourage emails. We are mostly an education company, trying to spread our experience and knowledge to our team members, and also those that are not subscribers, but readers of our newsletter. There are times when I feel that Tony gives too detailed an explanation to some email--and then he points out the times that I do the same thing. We are firm believers that questions help both sides to learn more. Then, the more you learn, the better an investor you will be---or should be. We know that emotion plays such a big part in the picture that you don't always do what the system says to do--and we fall into that category, too, every once in a while. But, overall, the more you know, the better you will be, all of us. We are here to serve and feel strongly that what goes around, comes around. Our guarantees are hard to beat, and it ends up where it doesn't cost anything to try us out. Admittedly, our day trading strategies take some paper trading and they don't always work exactly the same for every member. Sometimes the action is so fast that there is a few cents difference, both up or down, from the price we state---or some members set different stop losses or no stop losses, and thus get some different results. Then there are the more adventurous traders that are aggressive and go for the bigger profits at times--winning more often than not, as we hear it from them. We try to be on the conservative side, as being conservative gives us very nice results. The feedback that we get tells us that we seem to be on the right track, as the far greater majority of members are doing well. It is very reassuring to us to get notes from them. We also keep trying to improve or adjust strategies to changing environments. Nothing stays the same, and we work a ton of hours experimenting with tweaks in our criteria. You can't tell if something works or doesn't work if you don't do your research and with us, it is mostly a 7 days a week job---not 12 hrs. each day, but doing something almost every day to try to improve. We enjoy our work--I think that is evident--and we see our team members enjoying learning, too. Being a former teacher, that's what its about--turning on the light bulb in someone's mind.

Stay tuned.................lots and lots more to come in this financial world of ours.

Today's Thought---
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Ask yourself the easy questions and you'll have a hard life.
Ask yourself the hard questions and you will have an easier life..............Peter Thomson, UK strategist on business and personal growth.

Mike

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