May 24, 2008
INDEX TRADING WEEKLY UPDATE
May 23rd 2008 Issue # 107
Written By Richard Bastien
Author of Index Trading System
© copywright besttradingsystems.com
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Please note that the next number will be June 7th 2008. This is based on regular monthly revenu. In fact you will see my own real trades plus other possibilities to generate 20 - 25% growth every year no matter where the market is heading. More soon.
End of 1st cycle |
SP500 after making new high at 1440 finally retreated to 1375 near the lower band. Negative divergences mentionned several times in the past weeks took their toll on the market. DOW is now at the lower band and is the first market to complete it's first cycle of the year. ND100 remains the strongest of all markets and is just under the moving average. Last trades update
SP500 Last Comment SP500 had a new high as expected but finally retreated much stronger this time to 1375. Negative divergences mentionned several times those past weeks finally took their toll on SP500. SP500 is now near the lower band with an RSI at 39 near oversold level. SP500 is now testing again previous breakout point of 1380. We now have a negative momentum for the first time since end of march. For sure this is the end of our first cycle of the year. We can now expect SP500 to touch the lower band soon if not next week it will be the week after. We can expect also temporary rebound here and there and it could get into sideways movement for 2-4 weeks from now. 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 Last Signal Comment ND100 remains the strongest markets of all. It had a small retreat to lower band and remains in an uptrend pattern. However with general market deterioration we might see ND100 follow SP500 and DOW and decline to the lower band. At this point it is now just under the moving average with an RSI at 46 much stronger then SP500 and DOW. We can observe more negative divergences now with this market which could mean the end of present up cycle. So we can expect ND100 to continue in a slow downhill fashion and hit lower band in the couple of weeks. We can consider that our first support is now at 1710, our next support at 1450.
DOW Last Signal Comment DOW is the only market to complete it's first cycle by touching the lower band since end of march. This means that probably our other 2 markets might do the same soon. Here again negavite divergences observed those past weeks took their toll on that market by driving it down to the lower band. RSI is at 32 almost at oversold level. We can now expect rebound attempts from that point and also sideways movement in the next 2-4 weeks before any chance to get into a new up cycle. Our first support is now at 12000 and our next support is at 10800. 
Special Option Strategy Update Please note that the email service to signal new trades update will be now available to subscribers only. The service is no longer free. It yielded so far 30% in 14 months. So Order now Our July trades are about break even for now or in slight profit. Our selected strike prices are still very secure and we can expect a good profit again near mid june. You now need to subscribe to our trading service to see the specifications. All our portfolio shows a 22% plus value since beginning of march so far.
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Always remember that you need between 12,000 and 15,000 USD margin for each contract. Click here to find the options trading signals page. Economic Current Conditions Table of Economic Numbers
GDP(Gross Domestic Product) Numbers
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 april CPI was up 0.2% and core CPI was up 0.1% inline with expectations. PPI was up 0.2% and core PPI was up 0.4% higher than expected. Retail sales was down 0.2% worst than expected. Building permits came in at 978,000 and housing starts came in at 1,032,000 a bit better than expected. Existing home sales came in a 4.89 millions inline with expectations. Economic slowdown resumes itself with those recent numbers. The one to take of is the core PPI which was up 0.4%. It does not show in the CPI yet but stronger inflation is around the corner with continued higher energy prices. Retail sales continue to be weak which is not good news. The FED made it clear this week the rate cuts are over and may have to start rising them earlier than previously forecasted. So for mid term it does not look so well for stock market. The SP500 PE ratio is at 17.47 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). |
This is it for this week and continue to monitor any signal change on the
Index Trading Signals page
Richard Bastien