The Index Trading Weekly Newsletter Is now accessible directly from an RSS Feed. If you have a My Yahoo account or an My Msn account go to the Weekly newsletter page to register and you will be advised immediately when changes occur on the site either with trading signals, weekly newsletter or any other changes on the site. You can also create a new entry in an RSS reader. Click Here to register for RSS Feed Markets brief Year end rally is finally underway. All markets had a solid week breaking their respective downtrend. SP500 finally broke above 1200 resistance. New cycle started. SP500 is not overbought yet leaving space for the rally to continue. ND100 had a very strong week way into the profit zone now. ND100 not overbought yet. ND100 is now right at year high resistance level. DOW had a good week too. New cycle officially started. DOW will meet resistance at 10650. Year end rally now underway Last trades update Index Market Last signal Entry date Entry Price Current Price Win / Loss Weekly Change # cycles completed SP500 Buy August 26th 2005 1205.10 1220.14 20.04 21.73 3 ND100 Buy October 6 2005 1552.94 1628.03 75.09 80.92 3 Dow Buy August 24 2005 10435 10531 96 127.99 3 SP500 Last Signal Comment Our last buy signal is now ahead 15 points. SP500 finally broke above the resistance level 1200 to finish above the upper band. The downtrend we were in is now broken. SP500 is not overbought yet and should be able to challenge year high of 1245 in the next couple of weeks before we can see a short term set back. Our 1170-1180 support level is now an official support level. A new cycle is now underway that could carry us up to 1300. Our first support is now at 1180 and our next support is at 1140 and the next one is between 1080 and 1100. We are now starting our fourth cycle this year. ND100 Last Signal Comment Our last buy signal is now ahead 75 points. ND100 had a good week and is now way above the upper band without being overbought. The mild downtrend lasting for 5-6 weeks is now broken. ND100 is right at year end resistance level (1625). Considering we are now in the best period of the year we can expect this market to go higher till the end of the year. We can consider that our first support is now at 1530, our next support at 1500 and the next one is at 1410. DOW Last Signal Comment We had our last buy signal on august 24. So far we are ahead 95 points with the latest buy signal. DOW is now at the upper band and should continue it's year end rally. A new cycle is now started. DOW is not overbought yet and should continue up to 10650 where it will meet solid resistance. We had so far already 3 completed cycles this year. Our first support is now at 10200 and our next support is at 10000. Special Option Strategy Update Our SPX naked PUT for November now worth 0.40$. I have no doubt now that this will produce another nice profit. We have 2 weeks left before expiration. Always remember that you need between 11,000 and 15,000 USD margin for each contract. Economic Current Conditions Table of Economic Numbers Economic Info October 2005 September 2005 August 2005 July 2005 June 2005 May 2005 Apr 2005 PPI +1.9% +0.6% +1.0% Unchanged -0.06% Core PPI +0.3% +0.2% +0.4% +0.1% + 0.01% Retail Sales +0.2% -2.1% +0.3% +1.0% 0.3% + 1.5% CPI +1.2% +0.5% +0.5% +0.1% - 0.01% + 0.5% Core CPI +0.3% +0.1% +0.1% +0.1% + 0.01% Unchanged Housing Starts 2.11M 2.04M 2.042M 2.045M + 0.02% Building Permits 2.19M 2.14 Millions 2.167 Millions 2.132 Millions 2.11 Millions 2.15 Millions Employment 56,000 -35,000 211,000 242,000 166,000 104,000(revised) 275,000 Durable Goods Orders -2.1% +3.8 -5.3% +1.5% + 6.4%(revised) Durable Goods Excluding Transportation +4.2 -3.7% +2.6% +0.9%(revised) New Homes Sales +2.1% -1% +6% + 2.1% Existing Homes Sales 7.28 Millions 7.29 Millions 7.15 Millions 7.35 Millions ISM Index(Manufacturing) 59.4% 53.6% 56.6% 53.8% 51.4% ISM Services 60.0% 53.3% 65.0% 60.5% 62.2% Factory Orders -1.7% +2.5% -1.9% +0.9% +0.7% GDP(Gross Domestic Product) Numbers 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 4th Quarter 2004 3.8% 3.3% 3.8%(revised) 3.5% Inflation Numbers 2nd Quarter 2005 1st Quarter 2005 2.4% 3.1% This week we had 3 major Economic numbers. You can find latest numbers in the table above. The ISM services for september came out at +60 better than expected and the factory orders were down 1.7%. The october employment report came out at +56,000 new jobs lower than expected. The crude is still near 61$. If the crude can stabilize around 60 for a long time it will create more stability for prices and keep the inflation under control. The prime is now at 4.00. Mr. Greenspan continue to fear inflation and foresee probably 2 other rate hikes (one in december and another one early in 2006). We are now in the best period of the year. Financial results we got so far were inline with expectations and inflation fears remain a preoccupation for investors. Our yearly rally is now started. This strong kind of market happen very often in the last quarter. So we should get prepared for that. The SP500 PE ratio is at 20 which is still considered low. Remember that when the last major economic cycle that started in march 2003 the PE ratio was at around 16. So we are at the low end. The markets are way from being overbought and we should not expect any major bear market for the time being.