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 2005 performance results review Market Signals Nb. Signals Win Signals Loss Signals Net Points Net % Year to Year Variation SP500 Buy Only 4 3 1 88.51 7.51 3.00 Buy & Sell 8 5 3 110.65 9.35 ND100 Buy Only 4 3 1 187.81 12.63 1.49 Buy & Sell 9 8 1 302.25 20.09 DOW Buy Only 5 4 1 642 6.14 -0.61 Buy & Sell 10 9 1 1111 10.68 2005 was a very narrow traded year. For the first time in 17 years we did not have a 10% gain cycle on SP500 market. We had our best cycle as usual in the last quarter of the year. Once again our trading method outperformed the markets year to year results (see table above). SP500 Index was up 3% for the year and we had 7.51% buy only gain and 9.35% buy & sell gain. ND100 Index was up 1.49% for the year and we had 12.63% buy only gain and 20.09% buy & sell gain. DOW Index was down -0.61% for the year but we had 6.14% buy only gain and 10.68% buy & sell gain. Overall on all markets for buy & sell signals we had 22 winning signals and only 5 losing signals. Once again we managed to maintain our 80% success rate. 2006 will probably be a very tough year. We have been through 3.5 years without a major bear market. In the past 20 years we always had a major bear market in 4 years or less. Our last bear market was on july 2002. So we should have one either in next march or on next fall season. We will do of our best to provide the best possile signals on our 3 markets. Please note we will provide shortly an extended service to take advantage of short term swings we often have at the beginning of a new cycle. Simulated results for 2004 and 2005 were extraordinary and will be published soon. This will be perfect for Index Options traders as well as for Eminis traders. Markets brief All markets failed to give us a strong last week of the year. All markets gave us sell signals. SP500 got a sell signal and is now approaching previous 1245 resistance level. ND100 continued on it's recent weakness and issued a sell signal. However this is the only market that reissued a new buy signal. DOW also issued a sell signal and is back to 10700. Losing last week Last trades update Index Market Last signal Entry date Entry Price Current Price Win / Loss Weekly Change # cycles completed SP500 Sell December 29th 2005 1254.42 1248.29 6.13 -20.37 0 ND100 Buy December 31 2005 1545.20 1545.20 -37.72 0 Dow Sell December 29 2005 10785 10718 67 -166 0 SP500 Last Signal Comment Our last sell signal given this week is now ahead 6 points. Our previous buy signal rewarded us 49 points. SP500 is now challenging to go through the previous 1245 resistance. I think it will probably do it and at least touch the lower band around 1235 where we could receive a new buy signal. We can then expect the down pressure to continue for a little while. The RSI is at 40 coming close to oversold level. Our 1170-1180 support level is our first support level. 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 just occured on the last day of the year. We had a sell signal on December 29 yielding us a 102 points profit followed by another 10 points profit on that one day sell signal. ND100 had a fourth negative week in a row. ND100 just touched the lower band to give us a buy signal. It is possible that this market could fall lower considering that our 2 other markets did not reach their respective lower band yet. ND100 is now overbought with an RSI reading below 30. 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 sell signal on December 29. So far we are ahead 67 points with the latest sell signal. We had a fair 350 points profit on our previous buy signal. DOW is about to break under 10750. We can expect this market to hit the lower band any time soon and give us a new buy signal probably under 10600. 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 1.55$. This is going nicely again. We have 3 weeks before expiration. Our strike price level of 1200 is now more than one full band size (25) under the lower band which should be more than enough to protect us against a possible set back. For those who entered SPX 1205 january PUT at around 2.40$ now worth 1.90$. 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 +4.4% +3.0% -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 -10.71% +12.9 +2.1% -1% +6% + 2.1% Existing Homes Sales 6.97 Millions 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. New home sales took a hit (-10.71%) more than expected. Existing home sales also were down sharply for november. Durable good orders were up 4.4% which was a bit of a surprise. If we take a look at the latest housing numbers we can say that this is good news for inflation. However it is very possible that this could be the beginning of an economic slowdown if that trend persists. We can almost say that we don't have more than one rate hike left. The crude is now back above 60$ (61) and is threatening again econimic growth. 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 now over. We did not get our 10% gain on the last cycle for SP500 as it always does once per year. The SP500 PE ratio is at 18.3 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. Despite the fact the PE is not too high we will have to watch for a possible bear market this spring or later in the fall for the coming year. Our last major bear market was on july 2002.