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 continues. SP500 and DOW near resistance level. SP500 is approaching year high of 1245. Might meet resistance at that level. SP500 is near to be overbought. ND100 continued up breaking above year high of 1625. ND100 near to be overbought. DOW had another good week. DOW is now right at resistance of 10650. Year end rally continues 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 1234.72 29.62 14.58 3 ND100 Buy October 6 2005 1552.94 1653.36 100.40 25.33 3 Dow Buy August 24 2005 10435 10686 251 155.28 3 SP500 Last Signal Comment Our last buy signal is now ahead 30 points. SP500 is now way above the upper band. SP500 is approaching year high of 1245 where it might meet little resistance. SP500 is near to be overbought with an RSI reading of 69. We can expect short term an attempt to break above 1245 with a possible short set back. Since ND100 broke above year high already we can hope for SP500 to do the same. 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 100 points. ND100 had another good week and is now way above the upper band. ND100 is near to be overbought with an RSI reading of 69. ND100 broked above 1625 resistance level. We can expect a short term set back soon but I do believe the up trend will stay for 3-4 more weeks. 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 251 points with the latest buy signal. DOW is now right at resistance level of 10650 and trying to break above it. This resistence level was first set in June. DOW is near to be overbought also with an RSI reading of 69. We can expect a short term set back soon. We can also expect this market to break above the 10650 level and continue the current rally. 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 0.15$. I have no doubt now that this will produce another nice profit. We have 1 weeks left before expiration. I suggest here something different than usual. We can do a rollover immediately by buying back the november contract at 0.15$ and sell a December 1170 PUT contract at around 2.60$ for a net credit of 2.45$. This can be done in one trade called a spread. Ask your broker about it. Always remember that you need between 11,000 and 15,000 USD margin for each contract. Economic Current Conditions Table of Economic Numbers Economic Info October 2005 September 2005 August 2005 July 2005 June 2005 May 2005 Apr 2005 PPI +1.9% +0.6% +1.0% Unchanged -0.06% Core PPI +0.3% +0.2% +0.4% +0.1% + 0.01% Retail Sales +0.2% -2.1% +0.3% +1.0% 0.3% + 1.5% CPI +1.2% +0.5% +0.5% +0.1% - 0.01% + 0.5% Core CPI +0.3% +0.1% +0.1% +0.1% + 0.01% Unchanged Housing Starts 2.11M 2.04M 2.042M 2.045M + 0.02% Building Permits 2.19M 2.14 Millions 2.167 Millions 2.132 Millions 2.11 Millions 2.15 Millions Employment 56,000 -35,000 211,000 242,000 166,000 104,000(revised) 275,000 Durable Goods Orders -2.1% +3.8 -5.3% +1.5% + 6.4%(revised) Durable Goods Excluding Transportation +4.2 -3.7% +2.6% +0.9%(revised) New Homes Sales +2.1% -1% +6% + 2.1% Existing Homes Sales 7.28 Millions 7.29 Millions 7.15 Millions 7.35 Millions ISM Index(Manufacturing) 59.4% 53.6% 56.6% 53.8% 51.4% ISM Services 60.0% 53.3% 65.0% 60.5% 62.2% Factory Orders -1.7% +2.5% -1.9% +0.9% +0.7% GDP(Gross Domestic Product) Numbers 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 4th Quarter 2004 3.8% 3.3% 3.8%(revised) 3.5% Inflation Numbers 2nd Quarter 2005 1st Quarter 2005 2.4% 3.1% This week we had no major Economic numbers. You can find latest numbers in the table above. The crude is now under 58$ and continues to slide. If the crude can stabilize under 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 20.2 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.