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Author: Mike Celeste Editor: Tony Ponzo August Circulation: 6734

Stat Sheet Week Ending August 15th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow-49.0-0.5%+545.0+6.2%
S&P-8.0-0.8%+100.0+11.1%
NAS-14.0-0.7%+409.0+25.9%

Highlight of this past week: The Momentum Strategy kicks in with a very nice net profit for the week.

In this Issue---
Options---
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This week we concentrated on options for the earnings plays and covered options. We did well on the covered options and closed some out before expiration week. By writing the strike price well above the current price at the time, we allowed for the strong market, and the stocks did go up, but not quite there, so it was a good opportunity to close out some Calls when the time value wore them down. More extra "dividends".

Momentum Plays---
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The Momentum Strategy started to pick up. We still only got off three plays but that is more than we've traded for a week. Out of the three plays we had two wins and one small loss. The profits from wins far outpaced the one loss leaving the week with a very nice net profit. And we had at least two more plays that we just missed getting into. We were too conservative with the price on our entry orders. However, the really good news is, more and more members are being a little more aggressvie and are not only getting into the plays we at SplitMaster miss, they are going for bigger profits and getting them. We love to see it. Learn more

Indicators---
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For a change, we had a quiet week for the Indicator plays, after the hectic daily dose we had in the prior weeks. We want the market to get back to more normal moves, and thus normail Indicator plays. There were no plays at all during this past week, and we remain winning over 81% of the plays for the year.

Feedback---
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In the Momentum Strategy we talked about members either getting into plays that we at SplitMaster missed and/or stayed in a play longer to make bigger profits. On Friday we had a nice earnings play in the Momentum Strategy that made a quick .30 profit on the option in about 10 minutes. That particular play continued in the expected direction after we made our .30, giving opportunity for even more profit. We had quite a few members email us that they held in for a bigger profit. But one particular member reported the best profit of all. That was member Barney who got into Friday's play at 1.10 and sold for 1.80. That is a .70 profit in less than 30 minutes and that was very impressive. Congrats Barney!!

The Economy, The Markets & Commentary---
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This past week we ran the gamut from being told the recession is over, to fears that the consumer is not going to be able to get back to normal spending any time soon. Are we dreaming that the recession is over "already"? I say "already" as the depth of the crash and the reasons for it would normally dictate years before recovery is made. Of course, if we hit bottom, it could still take some years to get back to the highs of earlier markets. We were just about even going into Friday, with the Dow losing Mon. and Tues., but recovering it all plus a little bit more on Wed. and Thursday. The momentum was strong all week, with buying coming in on any small dip, and even on Friday, the market went down over 100 points fairly quickly, then fought the rest of the day in a pretty tight range before doing its usual thing, rallying in the last hour to be down only 77 on the Dow.

A report came across on CNBC that 2 countries in Asia have declared the recession over, and they were expecting Japan to soon announce the same thing. Believe it or not, that is up to you. We hope your economic situation is on the upswing and that the improved reports are really true.

Thursday was a particularly interesting day to me. The economic news was flat out negative. Retail sales were less than expected and the unemployment report was worse than expected. The market just brushed that off and ended up for the day. If ever there was a definite reason for the market to take a down day breather, it was Thursday. Again, is it a dream that we are starting our way up, or is the market fooling us?
All I know is that it is very difficult to fight the momentum of the pendulum swinging. We are already quite a ways higher than expected, but so far we have managed to fight off the bears and eventually move higher.

The employment reports are a like a splinter in my finger. It hurts me to know that back in time we used to keep track of all the unemployed. The wily politicians came up with a lulu of a change. They decided that at a certain point, people give up trying to get a job, so they don't count them as unemployed any more. That number is very large at this point. I guess people also give up eating and having a place to live as they give up looking for a job. The same sort of reasoning has been applied to the cost of living. They want to exclude core items of food and energy from inflation. Again, it seems they (our super-intelligent government leaders) feel we don't have to eat, drive or heat and power our homes. Friday, while the market was down, there actually was a report that there is a big fear developing that we are going to have declining prices and that is bad. When I read these things, certain people are lucky that I am far, far away from them, as I would like to have them put in straight jackets and hauled away to the nuthouse. Our very real cost of living has been increasing at an alarming rate--and again it seems that there is a move to make the middle class fade away.

Another report that seems misleading to us is in regards to gasoline prices. The inventory continues to be huge, and yet the gas prices have returned to yearly highs--BUT--all we hear is the comparison to last year's prices and how much lower they are now. Speculators are driving the price up and if you don't express yourself in a strong and consistent way, we will continue to be under the thumb of the speculators---Change the margin rules, plain and simple.

Ah, but the people are speaking up--and in a big way. The protests now are probably the most since the protests over the Viet Nam War. And of course, we are talking about the health care issue. I am told that the subject title has been changed from health care to the health insurance issue. There are 3 proposals in Congress now, so it is impossible to determine exactly what they want to shove at us, but the people are lining up around the block to tell the politicians what they think of this issue. We have seen the bailout pushed thru in an incredibly short time and it seems there is another attempt to push this thru quickly--but the people are up in arms about it. The cost is going to be sky high, and where does the money come from to fund it? Borrowing, both new money and money from other sources. We currently have Medicare as a separately funded health item, and we have state Medicaid being funded and we have private insurance being funded by individual payments---and we are told that we need to take away from those already funded services to help pay for this new service. The vast debt load we are taking on is really pretty mind boggling, when you stop to think about all the money being tossed out to "improve" this country. If you have ever had to pay for your own health insurance you probably agree that we need to reform the health insurance in this country. I had to pay my own and thus carried the highest deductible and saw services being cut even from that level--and the cost with the high deductible was a real burden to us. Yes, we think we need reform, but we don't hear alternate plans being proposed. It seems to us that there has got to be a better way than what we have heard so far. Another thought comes to mind--how can our government people put together thousands of pages of a bill in such a short time? Just think of how long it takes you to plan out anything involving just your own family. That continues to baffle me--or maybe there have been an awful lot of people added to the government labor force just to do this work.

A final word about the Clunker Car Program. It is so successful that many dealers are running out of cars---altho they are not being paid the rebate money that was promised in "x" period of time. Also, along with the shortage of new cars we hear that the auto companies are reluctant to increase production and add overtime costs. Their reason is that they expect that when the Clunker program ends, car sales will again take a pretty good dip. How is the program doing with regard to helping the economy? Let's see, the taxpayers are funding a rebate program to help sell cars. The manufacturer is owned mostly by the taxpayers, too. So the taxpayers are funding the program to help the taxpayers---and that is good? I do know tho, that for once, the consumer is benefitting from something the government is doing---BUT--are they? We have heard that many dealers are not giving as much of a deal on the sticker price of the cars as they were doing before the Clunker program. Thus, we see that the vehicle price is higher and the consumer is paying for it, along with helping to pay for the Clunker rebate out of his taxes, and still funding the manufacturers thru the bail out program.

Very interesting times..........Stay tuned..............

Today's Thought---
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About the only problem with success is that it does not teach you how to deal with failure.......Tommy LaSorda
(Athletes and celebrities, mostly---but us common folk most likely get the failure lesson before the success--mc)

Mike

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