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Author: Mike Celeste Editor: Tony Ponzo October Circulation:

Stat Sheet Week Ending October 17th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+131.0+1.3%+1,220.0+13.9%
S&P+16.0+1.5%+184.0+20.1%
NAS+18.0+0.1%+580.0+36.8%

Highlight of this past week: The Momentum strategy comes back roaring this week. It had 6 plays and ALL were wins. The strategy now sits on an amazing 431% profit margin for 2009. Past Results

In this Issue---
Options---
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Since we just finished options expiration week, we thought we would remind you of something that can hurt big or help big. When earnings come out before expiration of an option it can change things dramatically--up or down. On Thursday we had 2 big earnings releases after the market closed. One was Google and one was IBM. Both reports were good, but there were dramatically different results. Google went up 17 points as a result and IBM dropped over 6 points. Yes, it's a crazy market. One reason given for the drop in IBM is that it was sold on the good news after having gone up so much in the prior days in anticipation of a good report. Google, of course, was bought on the news. If you had options in these stocks you either made a great profit or you had a great loss. It is generally felt that it is better NOT to be in an option when earnings will be released before the expiration date. In the cases above, the earnings release being after the close meant that there was only one day to react and see what your result would be. You could sell, buy or let the option expire, but you are playing with dynamite.

Reviewing a couple of strategies----

Another option strategy that was used this past week was on a splitter coming up---finally. We have one coming in December, a 3-1 ratio, and the stock is EBIX. There was a great opportunity to write any one of several October Puts during this week. Why write the Put? It is our firm belief that stocks that split do so because the company is doing well and it will be reflected in the stock price. Why is it that there have been only 4-5 splits of 2-1 or better in the past year? We had something called a crash, and that took most stocks down, and the economy is taking care of the rest. Now that it seems we have a bottom on the market, there will probably be more stocks splitting. EBIX is one of them.

On Friday the stock moved up almost 3 points, while the Dow was down 67 points. If you wrote a Put when the stock was under 60, you were able to buy it back at a very nice profit. We didn't have a chance to post it yet because the stock split date is too far down the road. However, there was an opportunity available---and it could come up again. On the options for EBIX though, you have to be careful and understand what you are dealing with as the volume is light and as a result, the bid/ask on the options are a bit ridiculous.

There is another possible opportunity in this stock---and we are telling everyone about it. Our theory is that when a company announces a stock split shortly before earnings are released, the earnings are going to be good. You can look up the details and see what happens. EBIX was 59.57 on the open after the split was announced, and that was the first trading opportunity.

Momentum Plays---
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Boy what a difference a week makes. Last week we were complaining about having the worst week we have had in a long time. We also said that these down cycles are usually short lived and we should be back in a winning mode soon. Well -- that winning mode came back big time. This week we had 6 plays and every play was a win and a couple of them were nice size wins to boot. So we are very pleased and now find ourselves on top of a 431.44% for 2009.

The other thing that is a happening is our SR SPY plays are starting to produce more plays again and give a high percentage of wins. These are usually smaller profits in dollars as active members are aware but they are great to go after when there are no other plays to make at the time. But even if they produce small profits in dollars, we might as well go after them and put the dollars in our pocket. And every now and then they move favorably so fast, as we have seen in the last couple of weeks, that they produce a nice size profit.

Once again we see members such as Brian, Brandon, Peter, Teri and many others emailing us to report great results. The number of happy members writing in is growing and we certainly love to see it.

Note of Interest: For those newsletter readers who have been following our results with interest, why not check us out a little closer. We have a full 30 day money back quarantee on our strategy and we give an extra free week for the first month for a total of 5 weeks. So you can paper trade along with us for that first 30 days and if you decide, for any reason, the strategy is not for you, simply send us an email within 30 days of your subscription and we'll credit your card within 48 hours of your email. In other words, you have nothing to lose to take a closer look. Check out our results at Past Results Then learn more about the strategy and how to sign up at The Strategy

Indicators---
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This week we saw 2 wins out of 2 plays. On Friday we had a 3rd possible play (down), but we cancelled because the market opened quite a ways down and it was obvious that the market action was centering around the 10,000 level. As it turned out the close was a bit higher than the open and since our play was going to be for a downside move, we feel we made a good choice. We like looking at our results so far this year---65 plays and 52 wins, or an 80% win rate. Every single play is posted, win or lose. And see the Feedback below.

Feedback---
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Recently we have been talking about the Feedback we get from our team members. The exciting point seems to be that some members are doing even better than we are. Some are more aggressive, while we like to remain conservative---and we point out that aggressive players often outdo us. Some team members are combining our signals with their own research and charting and squeeze more profits out than we report.
This past week it seems like we had even more reports of profitable trades that exceeded ours---and we love it. We can tell you that there are a lot of people going into this weekend feeling very good. For myself, I think it is a combination of all of us, team members and our staff, getting better all the time at what we are doing. Keep it up, folks, and thanks for letting us know how you did---We think all of this helps everyone.

The Economy, The Markets & Commentary---
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You can see from the stats above that we had another winning week in the market averages. The main attraction was the Dow and its attempt to hit 10,000. We have been saying for some weeks that we weren't going to be trapped into thinking that the 2 down weeks were the end of the rally, not without hitting 10,000. The market was too strong to ignore. It hit it and roared thru, backing off only on Friday, when it dropped 67 points to close just below 10,000--even with that 67 point drop.

Does the state of the economy make any difference? We think it does not make a difference. It is the perception of the economy that makes a difference. The perception now is that the recession is over. That has been enough to give this market a momentum that has been unstoppable. Personally, I feel we are years away from recovery, but that doesn't make any difference, either. That doesn't mean that some things aren't starting to get better now. But a full recovery will take years in my opinion. No, we made the mistake of thinking the market was overbought before, and we didn't make that mistake again when it took a 2 week breather. You could feel the strength, like a magnet pulling at the market.

That's about as far as we go in predicting. Now that 10,000 has been hit on the Dow, we have no idea what to expect in the upcoming weeks. For these next two weeks alot will depend on how the earnings are reported, and so far they have been mostly positive. All we do feel is that the economy has some tremendous problems and somewhere down the road they have to be faced. Employment has to recover before the consumer can buy--that's a simple fact. Credit card debt has to be accounted for. With job losses will come more foreclosures and that has to be dealt with. Inflation is with us, don't let anyone tell you different. Very, very soon, expect gas prices to go up as oil is on the rise. It is a wonder that they haven't yet, as oil hit a 2009 high this week. That will add to inflation. Let's hope oil comes down some however to keep gas in check.

But for right now---Enjoy the market's recovery to this point. It has been a great rally even if it ended here--but we don’t know if it has reached its peak. There is still a lot of money on the sidelines.

Stay tuned............Interesting times................

Today's Thought---
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You're getting old when you get the same sensation from a rocking chair that you once got from a roller coaster.

Mike

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