INDEX TRADING WEEKLY UPDATE

SP500 finally settled down to touch the lower band and end our 2nd up cycle of the year. As forecasted it was not a big up swing. Now first level support of 1200-1220 has been tested several times in the past 2 weeks and so far resisting. DOW remains in a trading range and is also testing first level support. ND100 is now weakest of all markets and is quite oversold.

2nd cycle over

Last trades update

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2nd cycle over

Index Market	Current Price	2 weeks Change	# cycles completed
SP500	1251.70	-31.12	2
ND100	1767.13	-105.41	2
Dow	11422	-122	1

SP500 Last Comment

SP500 finally had a set back to touch the lower band and end the second cycle of the year. SP500 is now testing first level support at 1200-1220. We are back to where we were at the end of july. Many times 1200-1220 was challenged this past week but eveyr time it was the base for accumulation. This is a good sign that we may not have a sharp down market from where we are. We may continue to see SP500 go sideways for the rest of the month. It is very possible that the current support will hold and be the base for the next up cycle which should be the best of the year. We have an RSI of 43 almost oversold. We can expect sideways market conditions over the next 2 weeks in this market.

1200 is our first support. 1180 is our second support

ND100 continued on the current downtrend and is still very oversold with an RSI at 24. ND100 completed also it's second up cycle of the year. ND100 is now highly oversold with an RSI at 24. We can expect a short term rebound in the week to come. However the downtrend should resume thereafter.

We can consider that our first support is now at 1670. Our second support is at 1450.

DOW remains in a trading range(11200-11700) now lasting for 9 weeks. First level support is being tested like SP500 and so far resisted nicely. RSI reading is at 40 near oversold. We can expect DOW to continue it's trading range. I looks like 11000 level might be the base for the next up cycle that could start in 3-4 weeks from now.

Our first support is now at 10800.

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Date	Market	Trade Type	Description	Symbol	Strike Price	Month	Margin	Amount	Current	Profit
2008/08/29	SPX	PUT Uncovered	Sell PUT uncovered december SPX	SPT		December	12000	800$	1000$	-200$
2008/08/29	OEX	PUT Uncovered	Sell PUT OEX december	OEX		December	7000	350$	500$	-150$

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

Table of Economic Numbers

Economic Info

August 2008

July 2008

June 2008

May 2008

April 2008

March 2008

February 2008

January 2008

December 2007

November 2007

October 2007

September 2007

PPI

-0.9%

+1.2%

+1.8%

+1.4

+0.2%

+1,1%

+0.3%

+1.0%

-01.%

+3.2%

+0.1%

+1.1%

Core PPI

+0.2%

+0.7%

+0.2%

+0.2%

+0.4%

+0.2%

+0.5%

+0.4%

+0.2%

+0.4%

+0.0%

+0.1%

Retail Sales

-0.3%

-0.5%

+0.1%

+0.8%

+0.4%

+0.2%

-0.4%

+0.4%

-0.4%

+1.2%

+0.2%

+0.6%

CPI

+0.8%

+1.1%

+0.6%

+0.2%

+0.3%

+0.0%

+0.4%

+0.3%

+0.8%

+0.3%

+0.3%

Core CPI

+0.3%

+0.3%

+0.2%

+0.1%

+0.2%

+0.0%

+0.3%

+0.2%

+0.3%

+0.2%

+0.2%

Housing Starts

0.965M

1.091M

0.975M

1.008M

0.954M

1.065M

1.012M

1.004M

1.173M

1.232M

1.193M

Building Permits

0.937M

1.066M

0.969M

0.982M

0.932M

0.978M

1.048M

1.080M

1.152M

1.170M

1.126M

Employment

-84,000

-51,000

-51,000

-62,000

-28,000

-81,000

-63,000

-22,000

+82,000

+135,000

+170,000

+96,000

Durable Goods Orders

+1.3%

+0.8%

+0.1%

-1.0%

-0.3%

-0.9%

-4.7%

+4.4%

+0.5%

-0.4%

-1.7%

New Homes Sales

+2.4%

-0.56%

-2.28%

+2.8%

-8.5%

-1.83%

-2.81%

-4.7%

-9.00%

+1.68%

Existing Homes Sales

5.00 Millions

4.86 Millions

4.99 Millions

4.89 Millions

4.93 Millions

5.03 Millions

4.89 Millions

4.91 Millions

5.00 MIllions

4.98 Millions

5.04 Millions

ISM Index(Manufacturing)

49.9

50.0

50.2

49.6

48.6

48.6

48.3

50.7

48.4

50.8

50.9

52.0

ISM Services

50.6

49.5

48.2

51.7

52.0

49.6

49.3

44.6

53.9

54.1

55.8

54.8

Factory Orders

+1.3%

+2.1%

+0.9%

+1.3%

+1.5%

-0.9%

-2.3%

+2.3%

+1.5%

+0.7%

+0.30%

GDP(Gross Domestic Product) Numbers

2nd Quarter 2008	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
+3.3%	+1.0%	+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 2.9% and CPI at 5.0%.

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

For July factory orders were up 1.3% better than expected. For August ISM manufacturing came in at 49.9 and ISM services came in at 50.6 a bit better than expected. Employment was down 84,000 worst than expected. PPI was down 0.9% and core PPI was up 0.2% a bit better than expected. Retails sales were down 0.3% worst than expected.

Economic slowdown continues but some consolidation are taking place. ISM manuf and services hang in there while retail sales is lagging. PPI was down sharply with lower oil prices. Crude continue to remain lower near 100. Now that PPI is lowering and oil is down with higher US dollar we have a slight chance to see the FED lower the rates even if it is remote. For sure now rates will stay where they are till spring time.

The SP500 PE ratio is at 20.5 according to March results. We are above 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).