June 07, 2008
INDEX TRADING WEEKLY UPDATE
June 6th 2008 Issue # 108
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 21st 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.
Slow downtrend |
SP500 traveled in a narrow range and finally collapsed last friday to the lower band. We can start to observe a slow downtrend now lasting for 3 weeks. DOW is also in a downtrend even more persistant than SP500 now lasting for 3 weeks and is quite highly oversold. ND100 remains the strongest of all markets and is just under the moving average. However several negative divergences will take it down soon. Last trades update
SP500 Last Comment SP500 got into a narrow range(1370-1400) for several days and finally collapsed to the lower band last friday. SP500 is now in a slow downtrend now lasting for 3 weeks. For sure it went back inside the previous breakout point of 1380. RSI is at 31 very near quite high oversold level. We can now expect SP500 to get a bit lower and then have a short rebound. We also have to face the possibility it might retest first level support at 1275 in the next 3-4 weeks. Next week will reveal a lot where we are heading for now. But for sure it will take like 5 weeks or so before we have a start for a new up cycle. 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. However it is near to collapse with a lot of negative divergences. We can expect ND100 to go from the moving average to the lower band soon and complete it's first cycle of the year. At this point it is now just under the moving average with an RSI at 44 much stronger then SP500 and DOW. 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 in a slow downtrend for now 3 weeks and is the weakest of our 3 markets. RSI reading is at 26 very oversold and a short term rebound is expected in the next couple of days. However we can expect DOW to set the tone for our other 2 markets. I have seen this pattern lasting up to 8 weeks before reversing in the past. So new lows are very possible in the weeks to come. 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 were one day away from profit taking but are now back at square one. Our selected strike prices are still very secure and we can expect a good profit again possibly in a couple of weeks. You now need to subscribe to our trading service to see the specifications. All our portfolio shows a 30% 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 new home sales were up 2.8% better than expectations. Durable good orders were down 0.5% and factory orders were up 1.1% just a bit better than expected. For May ISM manufacturing was at 49.6 a bit better than expected and ISM services was at 51.7 inline with expectations. Employment index lost 49,000 jobs about inline with expectations and GDP for ist quarter was revised up to 0.9%. Economic slowdown stays in our mind. But economic results are mixed and are not as bad as many were expecting. With 1st quarter GDP at 0.9% we can't say we are in a recession. When we look at ISM manuf near 50 and ISM services above 50 for 2 straight months we have to say it is better than anticipated. Energy prices are now a big concern however. The FED made it clear 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 17.28 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