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Author: Mike Celeste Editor: Tony Ponzo November Circulation:

Stat Sheet Week Ending November 7th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+310.0+3.2%+1,247.0+14.2%
S&P+33.0+3.2%+166.0+18.4%
NAS+67.0+3.3%+535.0+34.0%

Highlight of this past week: The Momentum Strategy had a very nice week with 5 wins and no losses. The strategy now sits on a 471% for 2009. Check it out at Past Results

In this Issue---
Options---
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We continue to look at one particular stock, EBIX. They had good earnings, but for some reason the stock took a pretty good hit. Maybe it was selling on good news. At any rate, we still like writing the Puts, and the strike price could be the 45's or the 50's, with a conservative person taking the 45's. In addition, the stock splits on December 10. December option expiration day is Dec. 18. To get more option premium, an investor might want to write the Dec. Puts. We wrote the Nov. 50 Put on Thursday. On Friday, the stock went up 1.28, so there was some rebound. The low for that day was 52.37, which is the low since Oct. 2. For technicians, the stock is right about on the 50 day moving average. If you look at a chart going back a year, a very interesting thing pops out. Everytime the stock price touches or goes slightly below the 50 day moving average line, it bounces up. Well, we saw this happen again on Thursday and that is why we decided to sell the Put then. It went slightly below the 50 DMA and bounced right up on Friday going in the green as high as 2.17 up. Let's see if it continues up on Monday. Remember that writing Puts is for experienced investors and you need your broker's approval.

Momentum Plays---
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After an up and down performance last week, we see this week come back in great form with 5 wins and no losses. The first three wins were small but the last two turned out to be very nice wins. The strategy now sits on a 471.71% profit for the year. We have seen some of our plays behave differently than they usually do. For example, we have a play based on earnings announcement (explaining to those who are not yet following these plays). Usually the entry point to these plays comes fairly fast after the market open. In the last few weeks, the entry point seems to be coming much later. We had one play this week that the entry point did not come for 30 minutes. It wound up being a good play but this is certainly strange to us. We have been working with these plays for years and have never seen this before. Friday's earnings play occurred during the normal time. We'll see how they behave this coming week.

Update: We have some possible good news coming up but we can't say too much yet. The only reason we bring it up now is some of you members may have noticed that we have changed some of our wording to get in and out of a play. When we let members know that we are going into a play, we have been posting, "ordering a buy on the XXX at about xxx price". This week we have been saying "ordering a buy on the XXX at xxx or better". First, "about" means go in someplace around that price we posted but within certain parameters. Now the or "better" means the price we post would be at the high end on a buy and you should try to get that price or lower. And on a sell, or "better" means the price we post is the low end and you should try to get that price or higher. That means on a buy we are giving a price that is more the ask side and on a sell we are giving a price that is more the bid side which is opposite of what we have been doing. This doesn't mean that members should not make their own decision if they feel they need to. Remember, we are posting what we are doing and you should still use your decisions if you feel confident.

Now why did we make this change? Here is the possible good news. We have a broker who is considering auto trading the Momentum strategy. You more experienced members probably don't have an interest in auto trading as you are confident with your own action. But there are many members and potential members who are very interested. Now don't get your hopes up too high yet as this still all has to pass through compliance and auto trading day strategies is a tough job. But we wanted to give a heads up on the possibility. We are always trying to add beneficial tools to help our members, especially since we are seeing a 471% profit. Learn more

Indicators---
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We had a very slow week with this strategy, and no signals for a play were given, so we stand at the winning rate of 81%. Find out more about this very affordable strategy with our 30 day nothing to lose policy. Learn more

Feedback---
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Our team members keep sending in their results, and it is very gratifying to see that they are doing so well. Many continue to adapt our strategies with their own technical expertise. Investing at your own comfort level is always the best way to approach the markets. The email we particularly enjoyed this week was from member Brian you wrote FYI - on Hans I was in at 1, out at 1.4. I jumped the gun on the entry a bit (entered several minutes before SM did). It is always very frustrating to see the stock below your put entry point yet the put is now cheaper than what you got it for. But I can't complain about .4 profit. I also had some great trades yesterday. WFMI 30 put - in 1.6, out 2; ARO 34 put - in 1.7, out 2.3.

The Economy, The Markets & Commentary---
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As you can see by the stats above, it was a very good week for the markets. Actually, it was just 2 days that made up most of the move for the week, with the Dow rising 77 on Monday, and that huge 204 day on Thursday. The rest of the week showed minor changes. Washington stepped in and helped by extending the credit for 1st time buyers. In fact, the program was broadened to include some that had already bought a home. They can receive a smaller credit, but none-the-less, a credit is a credit.

Unemployment reared its ugly head and roared for all to hear. The results were worse than estimated, and job losses continued. First time unemployment claims were improving, though, and retail sales were strong---compared to last October, which was a very bad month.

I continue to believe that the recession is not over, not by a long shot and if it weren't for the astronomical sums coming out of Washington, we wouldn't be as healthy as we are. We can show you a very good example of that by pointing out what happened in the auto industry once the Clunker Program was stopped. Car sales dropped 45%. Having said all that, we want to stress that there are companies out there that are doing well. In fact, Ford had a pretty good quarter according to their earnings announcement. Many companies continue to report improved earnings based on cost cutting and it won't be until next year until we see if they can improve the bottom line some more, with the cost cutting hitting the maximum. After cost cutting, which would include refinancing debt to lower rates, we need to see increased sales. Inventories have continued to drop, which could be good news at some time down the road.

The strategies developed by SplitMaster are definitely short term, as we want to get in and get out as soon as we can. We go with the momentum and with support and resistance points. Momentum is built up by sector buying or selling, and it is also developed by earnings reports. The technical charts are very important and moving averages also play a big role in stock pricing. I used to be a long term investor, but that went out the window quite a while ago for me. With our results of over 400% for the year, we think that backs up what we say about playing short term, often time in minutes.

Another technical tool is volatility and that has gone up lately. I mean, the Dow going up over 200 points is a pretty volatile move, wouldn't you say? This is a day after the economic situation was said to be questionable, at best. Another reason the longer term doesn't seem to work, anymore - one day the "experts" are saying the economy seems to continue to struggle, and the very next day they are saying that good signals are coming. It drives us crazy, even tho we are short term traders. We know that you can't turn on a dime from one day to the other, and that's another reason we want to be in and out in the same day. On our swing strategies, based on splits, we would be considering holding a week or two if that's what it calls for but would certainly have our parameters -sell and stop points a little tighter. But on the topic of our swing strategies, we need to see more stock splits. We are hoping they start in soon if the market keeps improving. We definitely need more results showing overall improvement in the economy. The one thing that drives all of this and would show definitely that the economy is on the right track is employment. You just can't spend money if you are out of work. Unemployment benefits were also extended, thanks to Washington, but again, that can't go on forever. Jobs are what we need, and hiring increases just don't seem to be on the horizon right now. I repeat, not on the horizon--which means it will be a while before that happens. In order to make profits in these markets, we feel strongly that we are approaching investment planning in a proper way for these times---do it strictly for the short term. For you that are not on our team yet, it could be worth your while to give it a try, and our trial program makes it easy--and you have nothing to lose. Isn't that a nice term--"Nothing to lose" ? Keep in mind that November and December are historically good months in the market.

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

Today's Thought---
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If we all threw our problems in a pile and saw everyone else's, we'd grab ours back. (Think of those poor people--the dead, wounded and their families-- at the military base in Texas--what a tragedy)

Mike

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