Index Trading Weekly Update

Here is a sample of the last newsletter:

SP500 Last Signal Comment
We just had a new sell signal last friday on june 10th 2005. As expected we faced strong resistance at 1200 and it ended up with a double top as stated in previous issues. We made 36 points profit (3%)on that trade which was inline with forecast. A double top must always be taken very seriously since we had 90% success rate in the past. We still have a solid support between 1140 and 1160. We now expect the market to fall over the coming weeks to the lower band (see graphic below). We just completed our second cycle this year and we are now waiting for the next buy signal to start a new one.

ND100 Last Signal Comment
We had our last buy signal on April 21 2005. Since then this market tried to consolidate just above the 1400 mark which is now considered a good support point. We are ahead of 73 points so far. We just had a second down week now closed to the moving average and very close to get a sell signal. The 1460 resistance was more serious than antcipated. This market did not have any completed cycle so far and we are having our first cycle as we speak. So this last buy signal is ahead for some good profit.

DOW Last Signal Comment
We had our last buy signal on April 21 2005. Since then we had a good swing above 10400 but the DOW had a set back unable to break the downtrending line in effect since the beginning of march. We had a small up this week on this market. It was the only one posting a postive move. We are now ahead 294 points. We are not very far to get a sell signal. I don't expect a big profit out of this trade but we now know it will be a profitable one. The 10600 resistance continue to threat this market. We had so far 1 completed cycle this year and we are now in a second one. It seems that we have a good support at 10100 (see graphic below).

Special Option Strategy Update
We are now 3 weeks into our SP500 1100 PUT at around 1.45$. So far the value of this PUT is now at 0.35$. With just 1 more week to go we will certainly cash in again with this trade. Always remember that you need between 11,000 and 15,000 USD margin for each contract.

Economic Current Conditions
Inflation seems to be less concerning with the last economic numbers out in the past weeks. The manufacturing activity slowed down and the employment number was sharply down as well (see below). We can then expect at least 2 other rate hikes in the coming months. The experts are not so sure we will reach 4% before we can see a pause on rate hikes. The pause may now come earlier.

Mr Greenspan tried to reassure investors this week about the continuation of the current economic growth. Time will tell if he is right.

The employment situation in the US was weak in May with just 78,000 new jons created compared to 275,000 in april. The employment numbers keep coming in in some inconsistent way. In march we had only 140,000 jobs created which was considered weak.

The SP500 PE ratio is at 19.40 which is considered low. Remember that when the last major economic cycle that started in march 2003 the PE ratio was at around 16. So we are at the low end. The markets are way from being overbought and we should not expect any major bear market for the time being.

The last revised GDP for the first quarter of 2005 was at 3.5 just .1 away from expectations compared to the previous reading of 3.8. It starts to show a slight deceleration in the economic growth but nothing to worry at this point.

This is it for this week and continue to monitor any signal change on the Index Trading Signals page

Please follow this link to see the latest issue. Since there are graphics incorporated I am not able to paste the content into this box.

So please follow this link:
http://www.besttradingsystems.com/Index_Trading_Weekly_Update-index-trading-20050611.html

Thanks

Richard Bastien

My name is Richard Bastien. I have been a computer specialist for over 30 years. I researched and created an Index Trading System with 100% automated trading signals in the past 10 years.

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