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 Please note we will start next week 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 Strong week on all markets despite inflationary economic numbers. SP500 reversing it's downtrend to sideways pattern. ND100 remains weak and tries to consolidate around last buy signal point. DOW is breaking out above 11000 at last. From downtrend to sideways 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 1287.24 -31.88 20.25 0 ND100 Buy February 3 2006 1664.53 1675.21 10.68 -0.78 1 Dow Sell December 29 2005 10785 11115 -330 196 0 SP500 Last Signal Comment Our last sell signal is now behind 32 points. This week was quite choppy. We came 1 point away 2 weeks ago to get a buy signal like it did with nasdaq last august. Short term downtrend is now changed to a sideways pattern. If we would be long we would have to look for a possible double top in the near future. SP500 market ignored inflationary numbers from PPI and housing sector. 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. ND100 Last Signal Comment Our last buy signal is now ahead 11 points after a week. This market is still struggling to hold on around the last buy signal level. Bad financial results and lower guidances continue to flow in tech sector. This is the weakest of our 3 markets covered. We might have a consolidation around 1660 which could be a base to follow other 2 markets. But lower guidances from several firms may get in the way for higher levels. This market will get into a sideways pattern like SP500. We can consider that our first support is now at 1640 followed by another one 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 now behind 330 points with the latest sell signal. I must apologize for not mentionning we had a delayed buy signal on january 25th as shown on the graphic below. Dow is the strongest market of all 3. We now have a serious breakout attempt above 11000. The financial sector remains strong which is helping DOW a lot. It is definitely out of downtrend pattern ans is even now in an uptrend pattern. However the break out won't be official if it does not hold above 11000 in the next week. Our first support is now at 10200 and our next support is at 10000. Special Option Strategy Update Our SPX February 1175 PUT sold around 2.30$ is now an official profit. We won't play march as this month is one of the most dangerous one in the year. We will be looking for an opportunity to enter early for April to get a better premium. Always remember that you need between 11,000 and 15,000 USD margin for each contract. Short term Options and Eminis trading We will start using this space next week to resume the current trades with this new service regarding short term options and eminis trading. It This will involve at the beginning options and eminis on SP500(SPX) and DOW(DIA). Other markets will follow during the year. Economic Current Conditions Table of Economic Numbers Economic Info January 2006 December 2005 November 2005 October 2005 September 2005 August 2005 July 2005 June 2005 May 2005 Apr 2005 PPI +0.3% +0.6% -0.7% +0.7% +1.9% +0.6% +1.0% Unchanged -0.06% Core PPI +0.4% +0.1%- +0.1% -0.3% +0.3% +0.2% +0.4% +0.1% + 0.01% Retail Sales +0.7% +0.8% +0.3% +0.2% -2.1% +0.3% +1.0% 0.3% + 1.5% CPI -0.1% -0.6% +0.2% +1.2% +0.5% +0.5% +0.1% - 0.01% + 0.5% Core CPI +0.2% +0.2% +0.2% +0.3% +0.1% +0.1% +0.1% + 0.01% Unchanged Housing Starts 2.28M 1.933M 2.12M 2.02M 2.13M 2.04M 2.042M 2.045M + 0.02% Building Permits 2.22M 2.08M 2.16M 2.10M 2.22M 2.14 Millions 2.167 Millions 2.132 Millions 2.11 Millions 2.15 Millions Employment 198,000 140,000 305,000 44,000 -35,000 211,000 242,000 166,000 104,000(revised) 275,000 Durable Goods Orders +1.8% +3.3% +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 +2.9% -10.71% +12.9 +2.1% -1% +6% + 2.1% Existing Homes Sales 6.6 Millions 6.97 Millions 7.09 Millions 7.29 Millions 7.29 Millions 7.15 Millions 7.35 Millions ISM Index(Manufacturing) 54.2% 56.6% 59.1% 59.4% 53.6% 56.6% 53.8% 51.4% ISM Services 56.8% 61.0% 58.9% 60.0% 53.3% 65.0% 60.5% 62.2% Factory Orders +1.1% +2.2% -1.7% +2.5% -1.9% +0.9% +0.7% GDP(Gross Domestic Product) Numbers 4th Quarter 2005 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 4th Quarter 2004 1.1% 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. Housing starts was up strong to 2.28M as well as building permits up 2.22M. For both numbers we were up more than 10%. The PPI was up 0.3% while the core PPI was up 0.4%. For the PPI it was much more than expected reviving again inflation fears after cooling off in the past 2 months. But the investors ignored those alarming numbers for this week to push the market higher. If we have another month with similar numbers that might take the market down. The crude is now at 61$ after going under 59$ for a few days. It is still high and threatening econimic growth. The prime is now at 4.50. Contrary to what we were expecting the FED said it might raise rates again soon. Mr Bernanke made it's first speech this week and did not change the tone Mr. Grrenspan had earlier regarding the economy and inflation. He said more rate hikes might be necessary. The SP500 PE ratio is at 19.75 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.