July 05, 2008
INDEX TRADING WEEKLY UPDATE
July 4th 2008 Issue # 110
Written By Richard Bastien
Author of Index Trading System
© copywright besttradingsystems.com
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Please note that the next number will be July 19th 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.
Rebound expected |
SP500 continues in it's downtrend pattern to hit a very high oversold level with RSI at 15. SP500 is testing it's first level support of 11700. We now have a downtrend now lasting for 7 weeks. DOW is also in a downtrend even more persistant than SP500 now lasting for 7 weeks.It penetrated it's first level support of 11700 established last march. DOW is showing first sign of positive divergences. ND100 weakened a lot in the past 2 weeks and is now way under the lower band with an RSI of 29. Last trades update
SP500 Last Comment SP500 continued in a downtrend lasting 7 weeks now. It is highly oversold with RSI at 15. Expected rebound did not occur which drove the RSI very low. We can now expect SP500 to rebound next week with may be a 2% jump. First level support of 1270 is being tested now. If it does not hold the next support is at 1220. With no positive divergences present we will need an extra 3 weeks before we can see the beginning of a new up cycle. Since we had only 1 this year and we always have 3 we should have a new cycle starting by the end of july. 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 weakened a lot lately and is now way under the lower band. It is joining DOW and SP500 in this latest set back. It is still far however from it's first level support of 1710. RSI is at 29 oversold for the first time in months. ND100 might continue to slide to reach higher oversold level in the coming weeks while we might see recovery in DOW and SP500. We can consider that our first support is now at 1710, our next support at 1450.
DOW Last Signal Comment DOW continued in it's downtrend for now 7 weeks but seems to find support now and is showing it's first positive divergences even if it is very slim. RSI reading is at 11 highly oversold and a short term rebound is overdue for next week. DOW penetrated it's first level support of 11700 established last march. Expected rebound did not occur but with such high oversold level we should have one next week. But we will need another 3 weeks before we see a reversal and start a new upcycle. We had only 1 upcycle this year and I believe we are 3 weeks close to start a new one. Our first support is now at 11700 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 We took profit on our July trades and rolled over to september directly at very low strike prices and very high premium. If SP500 can hold above 1250 by the end of july we will have substantial profit waiting for us. 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 may durable orders were the same. Factory orders were up 0.6% inline with expectations. New home sales were down 2.3% and existing homes sales were up below 1% both inline with expectations. For June ISM manufacturing came in at 50.2 better than expected and ISM services came in at 48.2 much lower than expected. Finally employment posted another decrease of 62,000 jobs. Final GDP was at 1% for 1st quarter. Economic slowdown continues no surprise about that. Economic results continue to be mixed and are not so bad as many were expecting. We are not in a recession as many wanted us to believe. We may not be far from it but we are not there yet. Energy prices continued to climb higher and higher which puts a nad mood on the stock market. It is clear that 100$ is the right price reflecting supply and demand at this time and it looks more and more like tech bubble we had in 2001. 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 19.1 according to December results. We are close to the high end of the 16-20 range which means we could see lower levels. 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 high end 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