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 Watch next week 2005 performance results Markets brief All markets continue to trade around recent year high. Getting ready for a usually positive lucky last week of the year. SP500 continues to trade between 1260 and 1270. ND100 now below moving average but seems to operate a short term rally. DOW continues to trade between 10750 and 10900. Lucky last week 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 1268.66 63.55 1.34 3 ND100 Buy October 6 2005 1552.94 1682.92 129.98 -5.76 3 Dow Buy August 24 2005 10435 10883 448 7 3 SP500 Last Signal Comment Our last buy signal is now ahead 64 points. SP500 continues to trade in a very tight range between 1260 and 1270. I noticed in the past several years that the last week of the year is positive most of the time. We can then expect a hike up to 1280. Reaching 1300 before year end is now almost impossibile. We should get prepared to get a sell signal possibly in early january like last 2 years. SP500 is still out of overbought zone with an RSI reading of 55 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 130 points. ND100 had a third negative week in a row. ND100 after a sharp decline seems to operate a short term rally that could take it back above 1700. However we could easily get a sell signal in early january like last 2 years. ND100 is still out of overbought zone with an RSI reading of 45 near oversold level. We can expect a short term rally may above 1700 this week. 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 448 points with the latest buy signal. DOW continues to trade in a very narrow range between 10750 and 10900. 11000 level should be challenged again next week but it will be very difficult to get over it across new year. We can expect a sell signal in early january like last 2 years. 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 0.95$. This is going nicely again. We have 4 weeks before expiration. Our strike price level of 1200 is now more than one full band size (25) under the lower band which should be more than enough to protect us against a possible set back. For those who entered SPX 1205 january PUT at around 2.40$ now worth 1.20$. 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% +0.7% +1.9% +0.6% +1.0% Unchanged -0.06% Core PPI +0.1% -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 2.12M 2.02M 2.13M 2.04M 2.042M 2.045M + 0.02% Building Permits 2.16M 2.10M 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 had 3 major Economic numbers. You can find latest numbers in the table above. PPI was down 0.7% much more than expected while the core PPI was up 0.1% less than expected. Housing starts were up sharply from previous month. Same thing with building permits. All those economic numbers were excellent concerning inflation as well as for economic health. Those are comfortable numbers regarding inflations so we can expect an end to interest rate hikes quite early in 2006. The crude is now under 59$. Crude seems to stabilize under 60 and should contribute to keep 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 a week from now. Financial results we got so far were inline with expectations and inflation fears seem to ease a little. Our year end rally is facing more and more solid resistance but we should be able to get one last good week 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.