July 19, 2008
INDEX TRADING WEEKLY UPDATE
July 18th 2008 Issue # 111
Written By Richard Bastien
Author of Index Trading System
© copywright besttradingsystems.com
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Please note that the next number will be August 2nd 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.
New up cycle |
SP500 finally had a solid recovery in the last 2 days to suspend temporarly the current downtrend. We now have a downtrend now lasting for 9 weeks but could soon be over. DOW also had a solid recovery and acted on positive divergences. ND100 stand up pretty well but could be in danger with last bad financial results from last friday. Last trades update
SP500 Last Comment SP500 continued in a downtrend lasting 9 weeks now. However we finally had a solid recovery in the last 2 days having 2 solid up days. It was triggered by an extreme oversold in the financial sector which jumped more than 25% in 2 days and carried the rest of the market. We may have found our lowest low in the current downtrend. I mentionned a few weeks ago that the downtrend would last 8 weeks or so and it seems that this is where we are now. I do expect however a short set back before this new cycle could be official. There are still chances this downtrend could continue. If we don't have any new low (under 1213) in the next 2 weeks we should be OK. Previous support of 1270 will now act as a resistance and could be difficult to pass over for a while. 1220 support was tested but held well which is a good sign. This was a significant low from july 2006. I never saw a year in the past 20 years with second up cycle of the year not starting in july. It seems it will be true again. 1220 is our first support. 
ND100 Last Signal Comment ND100 help up pretty well in the past 2 weeks except for last friday where bad financial results from Google and Microsoft and a few others took ND100 lower. It is still far however from it's first level support of 1710. We will have to watch if this Index will suffer if we get more bad results. We can consider that our first support is now at 1710, our next support at 1450.
DOW Last Signal Comment DOW was the first index to show positive divergences and stop it's current downtrend. It had a solid rebound like SP500 up to the moving average. I believe we found our lowest low in this downtrend and a new up cycle is about to start. We had only 1 upcycle this year and I believe we are about to see our second one starting despite a possible short term set back next week. Our first support is now 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 september trades are solid in the profit zone. 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 June retail sales were up 0.1% lower than expected. PPI was up 1.8% and core PPI was up 0.2% much higher than expected. CPI was up 1.1% and core CPI was up 0.3% higher than expected. Building permits were up 2.5% and was the housing starts. Economic slowdown continues no surprise about that. Retail sales is weakening and inflation numbers are surging. This is not good news for interest rates in a quite near future. Authorities should rate hikes but they can't with such a weak economy. However they will have no choice but to increase rates by the end of the year or everything will be out of control. Energy prices finally set back a little but it could be temporary. 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