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 are building a resistance line near recent year high. SP500 continues to pull back slowly but remains above latest break out point of 1245 and is building resistance around 1270. SP500 is now out of the overbought zone. ND100 finally had a negative week. ND100 is building resistance around 1700. ND100 is now out of the overbought zone. DOW pulled back again and is now at the previous break out point of 10700. DOW is also out of overbought zone. Markets building 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 1259.37 54.27 -5.71 3 ND100 Buy October 6 2005 1552.94 1692.62 139.68 -16.48 3 Dow Buy August 24 2005 10435 10779 334 -98.93 3 SP500 Last Signal Comment Our last buy signal is now ahead 54 points. SP500 pulled back a little more for the second week in a row. The 1245 breakout point remains solid at this time. SP500 is now building a resistance line between 1260-1270. If it continues for 2 more weeks it might be the highest point in this cycle. Reaching 1300 before year end remains a possibility but is becoming a bit uncertain now. We will have to wait and see if it could resolve this short term resistance. SP500 is now out of overbought zone with an RSI reading of 58 which leaves the possibility of a short term rally. 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 140 points. ND100 finally had a negative week. ND100 is now building a resistance around 1700. ND100 is now out of overbought zone with an RSI reading of 55 giving itself a chance to start a short term rally. Reaching 1750 before year end remains a possibility but is becoming uncertain if it cannot resolve this resistance level of 1700 by the next 2 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 334 points with the latest buy signal. DOW could not break above year high of 11000 and continues to set back for the second week. DOW is now at the previous break out point of 10700. If it goes through this level we could see a longer correction for this market. DOW is now out of the overbought zone with an RSI reading of 51 which leaves a possibility for a short term rally. Year high of 11000 now appears to be a very difficult level to get over. 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 1200 january PUT now worth about 3.60$ just about the same as last week. We have 6 weeks before expiration. Our strike price level of 1200 is now one full band size (25) under the lower band which should be more than enough to protect us against a possible set back. I have never seen a major bear market starting in january in the past 17 years. 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 November 2005 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 +3.7% -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 215,000 44,000 -35,000 211,000 242,000 166,000 104,000(revised) 275,000 Durable Goods Orders +3.4% -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 +12.9 +2.1% -1% +6% + 2.1% Existing Homes Sales 7.09 Millions 7.29 Millions 7.29 Millions 7.15 Millions 7.35 Millions ISM Index(Manufacturing) 58.1% 59.1% 59.4% 53.6% 56.6% 53.8% 51.4% ISM Services 58.9% 60.0% 53.3% 65.0% 60.5% 62.2% Factory Orders +2.2% -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 4.3% 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 2 Economic numbers. You can find latest numbers in the table above. ISM services came out at 58.9% lower than previous month (60). Factory orders were up 2.2% compared to -1.7% for the previous month. Again inflation seems to be under control and the economy is in good shape if we look at a better than expected factory orders. The crude stayed above 59$ after climbing up to 61 for a short while. 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. There will be an FOMC meeting soon and everybody will watch closely the statement to find out when the rates hike will stop. We continue in the best period of the year with december which is considered to be the best month of the year historicly. 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 18.7 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.