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 officially start our new short term options trading service this week. This will be perfect for Index Options traders as well as for Eminis traders. Markets brief All markets pausing this past week. SP500 in a double top situation and near overbought level. ND100 remains weak and continues to consolidate around last buy signal point. DOW remains above 11000 but lost a little this week and near overbought level. Markets near overbought level 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 1289.43 -35.01 2.19 0 ND100 Buy February 3 2006 1664.53 1676.50 11.97 1.29 1 Dow Sell December 29 2005 10785 11069 -284 -55 0 SP500 Last Signal Comment Our last sell signal is now behind 35 points. This week was dull like hell. Short term downtrend is now changed to a sideways pattern. SP500 is now in a double top position. If it falls a bit more we can consider this as a double top sell signal. SP500 is now near overbought level and a short term set back is more than possible. 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 12 points after 2 weeks. This market continues to struggle to hold on around the last buy signal level. Overall market strong upmove cannot happen without this market participation. This is the weakest of our 3 markets covered. It is hard to tell what is next with this market. We now have a downtrend pattern lasting 6 weeks and no immediate sign of reversal at this time. We might have a consolidation around 1660 which could be a base to follow other 2 markets. 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 284 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 remains the strongest market of all 3. DOW is now threatening to come back inside 11000 so this last breakout above 11000 is not official yet. This market lost around 50 points this week more than our other 2 markets. DOW is not overbought and we might see more correction in the coming week. Our first support is now at 10200 and our next support is at 10000. Special Option Strategy Update We don't have a position for March because this is a dangerous month. We will enter April as soon as we have a set back on SP500. Always remember that you need between 11,000 and 15,000 USD margin for each contract. Short term Options and Eminis trading Welcome to this new trading service. You can find this new page at http://www.besttradingsystems.com/options-trading.html. There you will find the simulation for 2004 and 2005 for DOW(DIA) and SP500(SPX) options trading. Take a look at this page and please let me know if you have any questions about something you don't understand. For now we have only one entry in the signals table. This is a pending signal for SPX. We would buy an SPX Call option for March 1255 if the SP500 index hits 1254 during the day. The estimated entry price would be at around 13$. Check every day on the page to see if the numbers are changed. Of course we are far from a possible entry for now but we never know. Others markets will be covered as soon as possible with this service. The next one will be the Energy Index. We will use options on XLE etf to trade this market. Gold index fill follow after. 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 +0.7% -0.1% -0.6% +0.2% +1.2% +0.5% +0.5% +0.1% - 0.01% + 0.5% Core CPI +0.2% +0.1% +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 -10.2% +2.5% +3.3% +3.0% -2.1% +3.8 -5.3% +1.5% + 6.4%(revised) Durable Goods Excluding Transportation +0.6% +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 4th Quarter 2005 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 4.07% 4.3% 2.4% 3.1% This week we had 2 major Economic numbers. You can find latest numbers in the table above. The much followed CPI was released for january at +0.7% and the core CPI at 0.2%. The CPI number was higher than expected but the CORE was inline with expectations. The durable good orders were down 10.2% much higher than expected. The 12 months CPI is now at 4.1% and the core 12 months CPI is at 2.1%. We must remember that the FED wants to keep core CPI below 2% otherwise rate hiking will continue. The crude is now near 63$ and is on an upswing again. 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. It is widely expected we will have another .25 rate hike at the end of march. 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.