INDEX TRADING WEEKLY UPDATE

SP500 had a set back from recent high of 1420 as expected. SP500 continue to show negative divergences in a 40 days old cycle. It is now near the moving average. DOW also had a set back now near the moving average. ND100 had a set back too but much less than DOW and SP500. It is now just under the upper band.

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Index Market	Current Price	2 weeks Change	# cycles completed
SP500	1388.28	-9.56	0
ND100	1960.29	+41.71	0
Dow	12746	-146	0

SP500 Last Comment

SP500 had a setback as expected after touching 1420. SP500 retreated near the moving average as the most important set back in this cycle since end of march. SP500 is now retesting the previous break out point of 1380 which now acts as a temporary support. Current RSI is now at 50 after being at 80 earlier last week. More negative divergences continue to show as new high at 1420 was registered. It is no doubt that this current upcycle is now more and more in trouble. Despite that fact we might see a reattempt to new high if 1380 temporary support holds but it is also possible we might see a further decline to the lower band at around 1345. 1270 remains a very important support since it was the bear market intraday lowest point.

1270 is our first support 1220 is our next support.

ND100 has a short set back as well but did not decline to the same extent as SP500. We can observe less negative divergences with this market which is a good sign and may help our other 2 markets to hold on for a while. I don't think this is the end of this uptrend but we can expect brief set backs before we see other attempts to new cycle high. ND100 regain strength this past 2 weeks and I don't see any significant set back soon.

We can consider that our first support is now at 1710, our next support at 1450.

DOW is in the same situation as SP500 and is now near the moving average. We observe as for SP500 more negative divergences in this current up cycle. This last set back was the most important one in this current upcycle. This market seems more vulnerable than our other 2 markets. RSI is at 46 not so far from oversold level. It is hard to tell if DOW will resume uptrend and attemp to new high or if it will continue to decline towards the lower band at around 12430. So let's wait and see.

Our first support is now at 12000 and our next support is at 10800.

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Date	Market	Trade Type	Description	Symbol	Strike Price	Month	Margin	Amount	Current	Profit
2008/05/07	SPX	PUT Uncovered	Sell PUT uncovered July SPX	SPT		July	12000	400$	450$	-50$
2008/05/07	RUT	PUT Uncovered	Sell PUT RUT July	RUT		July	7000	235$	260$	-25$

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Click here to find the options trading signals page. Economic Current Conditions

Table of Economic Numbers

Economic Info

April 2008

March 2008

February 2008

January 2008

December 2007

November 2007

October 2007

September 2007

August 2007

July 2007

June 2007

May 2007

PPI

+1,1%

+0.3%

+1.0%

-01.%

+3.2%

+0.1%

+1.1%

-1.4%

+0.6%

-0.2%

+0.9%

Core PPI

+0.2%

+0.5%

+0.4%

+0.2%

+0.4%

+0.0%

+0.1%

+0.2%

+0.1%

+0.3%

+0.2%

Retail Sales

+0.2%

-0.4%

+0.4%

-0.4%

+1.2%

+0.2%

+0.6%

+0.3%

+0.5%

-0.9%

+1.5%

CPI

+0.3%

+0.0%

+0.4%

+0.3%

+0.8%

+0.3%

+0.3%

-0.1%

+0.1%

+0.2%

+0.7%

Core CPI

+0.2%

+0.0%

+0.3%

+0.2%

+0.3%

+0.2%

+0.2%

+0.2%

+0.2%

+0.2%

+0.1%

Housing Starts

0.947M

1.065M

1.012M

1.004M

1.173M

1.232M

1.193M

1.33M

1.367M

1.47M

1.474M

Building Permits

0.927M

0.978M

1.048M

1.080M

1.152M

1.170M

1.126M

1.326M

1.389M

1.41M

1.501M

Employment

-20,000

-81,000

-63,000

-22,000

+82,000

+135,000

+170,000

+96,000

89,000

+68,000

132,000

+190,000

Durable Goods Orders

-0.3%

-0.9%

-4.7%

+4.4%

+0.5%

-0.4%

-1.7%

-5.3%

+6.1%

+1.9%

-2.8%

New Homes Sales

-8.5%

-1.83%

-2.81%

-4.7%

-9.00%

+1.68%

-4.8%

-8.0%

+3.7%

-6.5%

Existing Homes Sales

4.93 Millions

5.03 Millions

4.89 Millions

4.91 Millions

5.00 MIllions

4.98 Millions

5.04 Millions

5.48 Millions

5.75 Millions

5.76 Millions

5.99 Millions

ISM Index(Manufacturing)

48.6

48.6

48.3

50.7

48.4

50.8

50.9

52.0

52.9

53.8

56.0

55.0

ISM Services

52.0

49.6

49.3

44.6

53.9

54.1

55.8

54.8

55.8

55.8

60.7

59.7

Factory Orders

+1.4%

-0.9%

-2.3%

+2.3%

+1.5%

+0.7%

+0.30%

-3.5%

+3.4%

+1.0%

-0.5%

GDP(Gross Domestic Product) Numbers

1st Quarter 2008	4th Quarter 2007	3rd Quarter 2007	2nd Quarter 2007	1st Quarter 2007	4th Quarter 2006	3rd Quarter 2006	2nd Quarter 2006	1st Quarter 2006	4th Quarter 2005	3rd Quarter 2005
+0.6%	+0.6%	+4.9%	+3.8%	+0.7%	2.5%	2.0%	2.6%	5.6%	1.7%	4.3%

Inflation Numbers

Year to year inflation according to core CPI is now at 2.5% and CPI at 4.5%.

In the last 2 weeks we had several major economic news. See the table above for all numbers.

For march factory orders were up 1.4% much better than expected. For april employment came in at -20,000 much better than expected. ISM manufacturing index came in at 48.6 again better than expected. ISM services index came in at 52.0 far better than expected. GDP for first quarter was up a small 0.6% but at least is positive while we were expecting it to be negative.

Economic slowdown seems to come to an halt. But that is not enough to party. Those surprising good results shown above might be temporary. We are not out of the woods yet. Financial jitters are still far from being over in the mortgage business. The FED lowered again interest rates by .25 and clearly stated it might be over for a while which is OK. FED will have to stop lowering rates or will have to face inflation for real. So for mid term it does not look so well for stock market.

The SP500 PE ratio is at 17.63 according to September results. It is probably higher as for december results. Remember that when the last major economic cycle that started in march 2003 the PE ratio was at around 16. So we are in the middle of the range (16-20).