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Author: Mike Celeste Editor: Tony Ponzo November Circulation:

Stat Sheet Week Ending November 21st 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+46.0+0.4%+1,540.0+17.5%
S&P-2.0-0.2%+189.0+20.9%
NAS-22.0-1.0%+569.0+36.1%

Highlight of this past week: We had another good week for the Momentum Strategy and now sit at a 533% year to day profit and a good week for The Indicators with a current 79% win rate.

Note: We will not publish a newsletter next week, Thanksgiving Week, so we can spend time with our families and be thankful for what we have received. We hope you do the same----and remember, all of us at SplitMaster, members and staff alike, have even more to be thankful for, as we have had a good year thus far.

REMINDER - AUTO TRADING IS HERE! For those who may have missed our promo on auto trading, we just want to remind you that auto trading for the Momentum Strategy and the Indicators is now available. Send us an email at contact@splitmaster.com and we'll give you all the information about it.

In this Issue---
Options---
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Here we go again taking a look at the stock, EBIX, and considering writing Puts on the stock. The stock has dropped to an attractive point and we would like to write a Put on the stock. Remember from previous newsletters we have made three prior winning plays using this kind of strategy. If we don't get the stock "put" to us, it is an extra "dividend". If we do get the stock put to us, it will be at a price that we think is a good support. Of course, a trader can avoid getting the stock put to them if they decide they don't want it. A trader would simply buy back the Put to close. That could create a loss depending on the circumstances but it is an option. We will be sending out a notice to team members as to which strike price, month, and price limit we like. As usual we have to state that this type of trading is for those who completely understand the nature and risks involved in such trades. Consider consulting with your financial advisor before making any such trade.

Momentum Plays---
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This strategy continues to prosper and to hit fantastic profit margins. After this week's action of 6 plays - 5 wins and 1 loss, the strategy now sits on a 533.69% profit . Like any strategy it has its ups and downs but the Past Results says it all. Members who follow the trades can easily verify the accuracy of each trade posted. We also are tracked by a tracking service that has us ranked in the top two or three of the highest percentage returns on a trade. If you look on our home page, you can see the banner with a link to the tracking company. So these profits are real. Now as a matter of standardizing our results, we post all trades using 8 contracts. We also show on the Past Results page what the dollar profits would be if you trade 16 contracts and 32 contracts. If you had traded this strategy using 32 contracts, you would have had over $55,000 in profit so far this year. Not bad for something that takes less than two hours a day. And we have members trading many more contracts than that. Needless to say, they are happy this year. Check out this strategy at Learn more

Here is something to really take note on: We have a copy of an email that member Brian sent us last week and we wanted to share it with you. See the email under the Feedback section. Basically what Brian is stating is that some of you may think that in order to day trade you need a big dollar account as there is a rule that says you have to have a $25K account or more to trade in and out the same day more than 3 times. But this is not true if you set up a non-margin account (cash account). With a cash account you can day trade as many times as you want as long as you trade within the dollars you have. So with the Momentum strategy, you could get involved with an account as little as $5k and probably even less. And since we trade options almost exclusively in the Momentum Strategy, when you close out a transaction, you are credited the proceeds that same day.

So this is a great point that Brian brings up. And in fact, we are going to bring this point up from time to time because it is worth noting for those who would like to start trading the Momentum Strategy but did not think they had enough funds to do so. (Make sure you read Brian's email to us below.)

Indicators---
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There were 4 Indicator play signals given to us this week. We played 2 of them, and won on both. Another was cancelled and it ended up saving us a loss, so that was a good move. The 4th one didn't get a play because the Spy never fit our criteria after the market opened. However 2 more wins with no losses convinces us that this is one of our best strategies. The Past Results on our SplitMaster site show 57 wins out of 72 plays, thus far this year. Learn more

Feedback---
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One of our very active--and successful--team members is Brian. Here is a suggestion he emailed us and we think it can be very useful.........

"Mike and Tony,
This is great news about the possibility of auto trading the momentum
strategy! I hope you can figure out a way to make it work. I might
be able to convince a few friends to join if you get this worked out.

Here is a suggestion for a topic you might write about in an
upcoming newsletter (you might even want to insert it periodically
for new subscribers). I think day trading options has some great
advantages. Options settle the next day rather than after 3 days for
stocks. The way day trading regulations work, this means that you
can open a small non-margin account (i.e. under 25K) and basically
trade options as much as you want in it. If you have a 10K account,
you can buy and sell 10K worth of options in 1 day, and then do the
same the very next day. If you bought and sold 10K of stock in this
account in one day, you would have to wait 3 days before you could
do any more day trading. Anyway, you might want to write up this
point and include it in the newsletter some time. You may have
newsletter subscribers who are interested in getting on board with
the momentum strategy, but thinking they need a large 25K+ account
to day trade. With options this simply isn't so. I think someone
could easily get started with a 5K account in your system. They
might have to bargain with their broker to get lower commissions on
the options so they could get a good price on 4 or 5 contracts, but
this shouldn't be too hard. Anyway, I think this would be a good
point to mention. If you get the auto trading going, you might
mention it at that point since people will probably have to set up
a special account with this broker, and it might really help to
know that they don't have to start with all that much money.
Brian"

Thank you, Brian, we really appreciate your comments. Brian works with the Fibonacci system in combination with our strategies and has been doing very well. Like us, he doesn't win on all of his plays, but his net is well worth a few losses here and there. Congrats, Brian.

The Economy, The Markets & Commentary---
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An investor might wonder what, exactly, is going on????? The stocks have been making new highs and there are lots of negative news reports out there. However, it is true that companies are doing better than expected, and the momentum in stocks is very difficult to challenge. We think the government infusion of money has created a sense of recovery in the works. Personally, I believe that is only partly true. The reports that I believe in, indicate that we are in for quite a long stretch before full recovery takes place. But you are putting your money in danger if you try to bet that the market is going to make money if you short stocks. We believe in stop losses, and you can put those stops in and raise them as the stock prices advance. That way, in case there is a large selloff you can lock in profits, not at the top, but not when the profits are all gone, either.

The Dow managed to squeeze in another winning week, with most of that coming on Monday. A very interesting note on stock prices came to me as I was observing the chart on the Dow. In both Sept. and Oct., we had a great first 1/2 of the month, followed by a drop the 2nd half of the month. Are we going to see that same pattern here in November? We have had a very good first 1/2 of the month, and we see weakness starting in the 2nd half of the month. We still have 1/3 of the month to go, so pay attention to those results and see if that trend continues.

Comments on the economy start out with a report on gasoline. Why are prices so high, when demand remains at a long time low? The reason is simple. The refiners have stopped refining, so they can keep prices up. Some refineries have closed down entirely. On top of that, inventory is very high, so if there was more refining, they would need a place to store the product. At some point we hope that the lack of demand will cause the speculators to give in and if that happens, their small margin requirement will be wiped out if there is even a small drop in gas prices. Oh, we certainly will cry for them if that happens, won't we?

Consumers are losing confidence and that isn't a good sign. Employment has to pick up and there is no sign that such is going to happen any time soon. We think it won't be soon, but a pretty good length of time. While it is true that first time unemployment claims have been dropping, we must remember that those are claims for the first time--and there are a lot of them. In the near term we are reminded that many layoffs come during the time between Thanksgiving and New Years Day. AOL announced this week that they are going to lay off 1/3 of their work force. Personal friends of ours have received layoff notices lately, and some have been working at companies for 25 years. For many others, the layoffs are for the whole company, which means companies are shutting down completely.

Retailers are reluctant to make predictions about shopping volume over the big Thanksgiving to Christmas period. We hope that is at least decent when the totals come in.

Construction, which seemed on the verge of edging up, instead turned the other way, and last month the report said that activity plunged to its lowest level since April. It could be that people held off because last month it was unknowon whether the tax credit would be renewed. It was renewed in November, so that could be a stimulus.

Lighting up the fire underneath me----The continued statements coming out of Washington stating that there continues to be no inflation. What a joke and we ask these people what planet are they living on? There was another increase in energy prices. Then, there was the biggest jump in new car prices in 28 years. I guess the car companies want to pay back all those billions we gave--oh, scratch that--the billions we "loaned" them and do it quicker than we thought. Let's see if that happens. There was also a jump in used car prices. The reason given for that goes back to Washington's action, also. The Clunker Program was a big hit with new car sales. It also meant that the clunkers were junked, and that means that the normal process of car trade-ins was not done, resulting in a shortage of used cars available for sale.

An interesting editorial---"You have to admire the cunning of the pharmaceutical industry. Only weeks ago, President Obama was hailing a White House deal with drug makers to "save" the nation $8 billion a year in prescriptions drug costs. Now it turns out that Big Pharma has been quietly hiking wholesale prices of prescrion drugs. Industry analysts will increase taxpayers' prescription bills by $10 billion....." Yep, what a deal our government got us---and yep, there is no inflation. Rising costs are just a figment of our imagination.

We are always being told that we need to make sure our children get a better education. OK, we'll go along with that. Wait a minute, tho--hold your horses. Here in California we see that the University of California system is recommending a 32% increase in tuition. Now read that carefully, and don't be confused, thinking that is a 3.2% increase---it is a 32% increase, just about 1/3 more than it was. Just how do our reps define inflation, anyway? Staying with California for just a bit more----We just had a tremendous deficit to overcome before we could get a budget in 2009. Many fees were raised and many cutbacks were made. Now we are being told that there is another deficit facing us for 2010, about $21 Billion worth. Oh, we're not done yet---If solutions are not found (more taxes, fees, and cutbacks), then the state will face a $20 Billion deficit for the next five years, even without cost of living increases for state employees. Is it really any wonder that companies are fleeing the state and even the country? Our leaders had better write a new dictionary to include new meanings for words dealing with the economy.

In the meantime, companies are leaving and they are finding other ways to try to make the bottom line improve. The stock market has been buying into their solutions and we hope they continue to be successful.

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

Today's Thought---
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The most powerful weapon on earth is the human soul on fire........Ferdinand Foch: was Commander in Chief of Allied armies during WWI.

Mike

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