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 All markets remain overbought. SP500 and DOW breaking out above year high level. SP500 is now way above previous year high of 1245. SP500 remains overbought. ND100 now at 1700. ND100 remains overbought. DOW broke out above 10750 and is now challenging year high 11000. DOW remains overbought. Markets breaking out above resistance 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 1268.25 63.15 19.98 3 ND100 Buy October 6 2005 1552.94 1701.05 148.11 21.20 3 Dow Buy August 24 2005 10435 10932 497 165 3 SP500 Last Signal Comment Our last buy signal is now ahead 63 points(5%). SP500 is still way above the upper band and not showing any sign of negative divergence. This means that despite a possible short term set back we should see a push to 1300 before year end. SP500 broked above previous year high of 1245. SP500 is still overbought with an RSI reading of 85. We can now expect short term set back but nothing significant. I do expect this market to continue up slowly for almost the rest of the year and possibly reach 1300 before year end. Our 1170-1180 support level is now an official support level. 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 148 points (near 10%). ND100 had another good week and is still way above the upper band. ND100 remains overbought with an RSI reading of 87. We can expect a short term set back soon but I do believe the up trend will stay for almost the rest of the year. It is possible we may reach 1750 before year end. 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 497(near 5%) points with the latest buy signal. DOW broked above resistance level of 10650 and is now challenging year high of 11000. DOW should break 11000 before year end and establish higher marks. DOW is still overbought also with an RSI reading of 87. We can expect a short term set back soon. We can also expect this market to continue the current rally almost for the rest of the year. Year high of 11000 is being challenging and should be broken before year end. 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 December 1170 PUT contract sold at 2.60$ now worth 0.45$. This trade is on solid ground and should yield another good profit. Always remember that you need between 11,000 and 15,000 USD margin for each contract. Economic Current Conditions Table of Economic Numbers Economic Info October 2005 September 2005 August 2005 July 2005 June 2005 May 2005 Apr 2005 PPI +0.7% +1.9% +0.6% +1.0% Unchanged -0.06% Core PPI -0.3% +0.3% +0.2% +0.4% +0.1% + 0.01% Retail Sales -0.1% +0.2% -2.1% +0.3% +1.0% 0.3% + 1.5% CPI +0.2% +1.2% +0.5% +0.5% +0.1% - 0.01% + 0.5% Core CPI +0.2% +0.3% +0.1% +0.1% +0.1% + 0.01% Unchanged Housing Starts 2.01M 2.13M 2.04M 2.042M 2.045M + 0.02% Building Permits 2.07M 2.22M 2.14 Millions 2.167 Millions 2.132 Millions 2.11 Millions 2.15 Millions Employment 56,000 -35,000 211,000 242,000 166,000 104,000(revised) 275,000 Durable Goods Orders -2.1% +3.8 -5.3% +1.5% + 6.4%(revised) Durable Goods Excluding Transportation +4.2 -3.7% +2.6% +0.9%(revised) New Homes Sales +2.1% -1% +6% + 2.1% Existing Homes Sales 7.28 Millions 7.29 Millions 7.15 Millions 7.35 Millions ISM Index(Manufacturing) 59.4% 53.6% 56.6% 53.8% 51.4% ISM Services 60.0% 53.3% 65.0% 60.5% 62.2% Factory Orders -1.7% +2.5% -1.9% +0.9% +0.7% GDP(Gross Domestic Product) Numbers 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 4th Quarter 2004 3.8% 3.3% 3.8%(revised) 3.5% Inflation Numbers 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 4.3% 2.4% 3.1% This week we no major Economic numbers. You can find latest numbers in the table above. The crude is near 59$ up about 2$ from previous week. 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. Tone about rate hikes changed this week which contributed to push all markets up. It has been quite clear on statements that the end of rate hikes is near. We continue in the best period of the year. Financial results we got so far were inline with expectations and inflation fears seem to ease a little. Our yearly rally is now in good shape. The SP500 PE ratio is at 19 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.