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 attempted to break out above recent resistance line but failed. SP500 made a fair attempt to break out above resistance level of 1270 but failed. ND100 also tried to break out above 1700 resistance but failed as well. ND100 is now going towards an oversold level. DOW rallied near 11000 but pulled back. Resistance 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 1267.32 62.12 7.95 3 ND100 Buy October 6 2005 1552.94 1688.68 135.74 -3.94 3 Dow Buy August 24 2005 10435 10876 441 97.01 3 SP500 Last Signal Comment Our last buy signal is now ahead 62 points. SP500 had 2 closes above 1270 reaching 1275 intraday but pulled back friday under 1270. 1270 resistance continues. We can expect however other breakout attempts above 1270. Reaching 1300 before year end remains a possibility considering good economic news we had this week. SP500 is still 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 136 points. ND100 had a second negative week in a row. ND100 attempted a breakout above 1700 resistance but failed and pulled back under 1700 friday. ND100 is still out of overbought zone with an RSI reading of 51. We can expect a short term rally may be this week to 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 441 points with the latest buy signal. DOW made a nice rally close to year high of 11000 but pulled back to post some gain for the week. 10700 level acted well as a support to start the short term rally we had this week with DOW. DOW is still out of the overbought zone with an RSI reading of 48 which leaves a possibility for a short term rally possibly for the last 2 weeks of the year. Year high of 11000 still 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 sold at 3.60$ now worth about 2.00$. This is going nicely again. We have 5 weeks before expiration. Our strike price level of 1200 is now more than one full band size (25) under the lower band which should be more than enough to protect us against a possible set back. For those who did not enter yet it is sill time to get in. We can even choose to sell a SPX 1205 january PUT at around 2.40$ 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 +0.3% +0.3% +0.2% -2.1% +0.3% +1.0% 0.3% + 1.5% CPI -0.6% +0.2% +1.2% +0.5% +0.5% +0.1% - 0.01% + 0.5% Core CPI +0.2% +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 major Economic numbers. You can find latest numbers in the table above. Retail sales were up 0.3% for november. CPI was down 0.6% the biggest one month drop in 45 years which was more than expected. Core CPI was up 0.2% as expected. We now have a 12 months CPI of +3.5% and a 12 months core CPI of +2.1%. Those are comfortable numbers regarding inflations so we can expect an end to interest rate hikes quite early in 2006. The crude is back at 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 4.25. Statement from officals were accomodating and we can expect an end to rate hikes somewhere in the next 2 meetings. The best period of the year is coming to an end in 2 weeks from now. Financial results we got so far were inline with expectations and inflation fears seem to ease a little. Our yearly rally is facing more and more solid resistance but we should be able to get one last swing higher before year end. 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.