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 Inflation concerns All markets having a bad week about inflation concerns. SP500 retesting 1250 support but also shows a short term double bottom with divergence. ND100 continue to weaken and is close to test 1530 support line. DOW finally weakened and is now oversold. It is approaching the stop trigger point of about 10865. Special Comments Investors community are expressing high concerns about inflation fearing new rate hikes in the near future with an obvious economic slowdown. Pessimism is all over the place. However this kind of period is always perfect to prepare a new market advance. Never forget that we always have 3 cycles a year and we had just one so far. We should have a new one somewhere in july. This should not be a big one. It looks like we will have again an excellent fall season starting somewhere in october. Note that october - december time frames gives the best market advance in history. 4 times out of 5 we have a solid market advance in that period of the year. This is even more true if the rest of the year was a losing year or a sideways year. So don't panic with what is happening now, stay cool and be patient. Inflation Concerns Last trades update Index Market Last signal Entry date Entry Price Current Price Win / Loss Weekly Change # cycles completed SP500 Buy May 15th 2006 1294.50 1252.30 -42.20 -35.92 1 ND100 Buy June 1 2006 1616.57 1550.97 -65.60 -61.93 2 Dow Buy May 25 2006 11211 10892 -319 -356 1 SP500 Last Signal Comment Our lat buy signal is now 42 points behind. SP500 sanked hard the whole week. Tensions about inflation rised again with world leading banks increasing their rates weakening US dollar and increasing import prices. SP500 is retesting 1250-1260 support line. This time however we have a double bottom with positive divergence. This is only a short term pattern. With such a bad week we are near again oversold levels and we have to expect a short term rebound this week which may not last very long however. We are in the 5th week of this market slowdown. A prolonged market slowdown last between 8 and 14 weeks. My guess is that this one will be around the low end of that range. We should have a new cycle starting somewhere in july. So far our 1250 support is being tested. 1250 is now our first support. 1170-1180 support level is our second support level. Our next support is at 1140. ND100 Last Signal Comment Our last buy signal is now 65 points behind. ND100 continued to weaken and is now close to test 1530 support. ND100 had a real bad week and is now due to rebound short term like all other markets. A retest to the recent low of 1569 occured as expected and got even lower. 1530 should hold for a little while. This market is hit quite hard this year which means we could have a very strong fall season with this market. 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 a new buy signal on May 25. We are now behind 350 points with this buy signal. Dow finally weakened like other markets and is now close to reach a stop trigger point. DOW should have a short term rebound next week considering a near oversold condition. Our first support is now at 10650 and our next support is at 10200. Special Option Strategy Update Our JUNE PUT 1235 sold at around 2.00$ now worth 6.00$ with only 1 week to go before expiration. Considering a short term rebound is expected we will keep the position for now. We might decide to close the position after such a rebound if it may occur during the week. Stay tuned for any change with this trade. 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. With this service we should have every month good opportunities. Click here to find the options trading signals page. We had 2 trades with XAU(GOLD) this week with 1 loss and 1 win for a net profit of 170$. DOW came closed to be exited but will now be a complete loss. Trades with Nasdaq are in bad shape and will be losers. Same with SMH. We now have new position for DOW and SPX as well as new target number for BBH. See full instructions on options signals page for more details. Please use the link mentionned above to see the target numbers. 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. Economic Current Conditions Table of Economic Numbers Economic Info May 2006 April 2006 Mars 2006 February 2006 January 2006 December 2005 November 2005 October 2005 September 2005 August 2005 July 2005 June 2005 May 2005 PPI +0.9% +0.5% -1.4% +0.3% +0.6% -0.7% +0.7% +1.9% +0.6% +1.0% Unchanged Core PPI +0.1% +0.1 +0.3% +0.4% +0.1%- +0.1% -0.3% +0.3% +0.2% +0.4% +0.1% Retail Sales +0.5% +0.6% -1.4% +0.7% +0.7% +0.8% +0.3% +0.2% -2.1% +0.3% +1.0% 0.3% CPI +0.6% +0.4 +0.1% +0.7% -0.1% -0.6% +0.2% +1.2% +0.5% +0.5% +0.1% - 0.01% Core CPI +0.3% +0.2 +0.1% +0.2% +0.1% +0.2% +0.2% +0.3% +0.1% +0.1% +0.1% + 0.01% Housing Starts 1.85M 1.96M 2.12M 2.28M 1.933M 2.12M 2.02M 2.13M 2.04M 2.042M 2.045M + 0.02% Building Permits 1.98M 2.06M 2.15M 2.22M 2.08M 2.16M 2.10M 2.22M 2.14 Millions 2.167 Millions 2.132 Millions 2.11 Millions Employment 75,000 126,000 200,000 225,000 170,000 140,000 305,000 44,000 -35,000 211,000 242,000 166,000 104,000(revised) Durable Goods Orders -4.8% +6.1% +3.4% -10.2% +2.5% +3.3% +3.0% -2.1% +3.8 -5.3% +1.5% Durable Goods Excluding Transportation -1.1% +0.6% +4.2 -3.7% +2.6% New Homes Sales -4.9% +18.0% -5.5% +2.9% -10.71% +12.9 +2.1% -1% +6% Existing Homes Sales 6.76 Millions 6.92 Millions 6.91 Millions 6.56 Millions 6.75 Millions 6.97 Millions 7.09 Millions 7.29 Millions 7.29 Millions 7.15 Millions 7.35 Millions ISM Index(Manufacturing) 54.4 58.9 55.2% 57.2% 54.8% 55.6% 56.6% 59.1% 59.4% 53.6% 56.6% 53.8% ISM Services 60.1 63.0 56.8% 61.0% 58.9% 60.0% 53.3% 65.0% 60.5% 62.2% Factory Orders -4.5% +1.1% +2.2% -1.7% +2.5% -1.9% +0.9% GDP(Gross Domestic Product) Numbers 1st Quarter 2006 4th Quarter 2005 3rd Quarter 2005 2nd Quarter 2005 1st Quarter 2005 5.3% 1.7% 4.3% 3.3% 3.8%(revised) 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 1 major economic news. See the table above for all numbers. ISM services came in at 60.1 lower than expected and much lower than previous month (63). This confirms once more the economic slowdown. Fed past 2 years actions seems to take effect now. Last week speculation that there might not be more rate hikes was wrong. Mr Bernanke stipulated he was very concern with inflation despite the economic slowdown and will probably raise rates again. The crude is still above 70$. It continues to stay high but seems not being a concern. The prime is now at 5.00. Fed statement was that considering such a strong economy other rate hikes might be needed despite economic slowdown. Last friday import prices were up 1.5% from last month creating new worries about inflation. So many expect new rate hikes to preserve US dollar. The SP500 PE ratio is at 17.51 according to december results. We can almost say that for march estimates we are at near 17.0 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 later in the fall for the coming year. Our last major bear market was on july 2002.