The ULTRA Timer Report

Now as you can see in the chart above the SPX is nearing strong resistance R1 at ~1130. There is going to be massive selling at and below R1. If the SPX can overcome R1 it will be extremely bullish in our opinion. But it is going to be difficult for that to occur.

May End-of-month (EOM) Buy
May is not one of the best six EOM buys, but it isn't bad either. Historically, if one had bought the SPX on the second to last trading day of May and sold at the close on the third trading day of June (invested five days), they would have achieved:

Pre-Memorial Day
It has long been known that the day before the Memorial Day weekend is historically bullish. However, this phenomenon has not performed well in recent years.

Historical Results 1942-1990

Post-Memorial Day
The day after most holidays is considered historically bearish by most. However, for memorial day that has not been the case. Historically from 1942 to present the day after Memorial Day has produced:

In summary we are in a bullish seasonal period until the close on June 3rd based on the May EOM buy. There are some mixed results about the bullishness/bearishness for the day before and after Memorial day.

Even though the market should have a bullish tendency until Thursday June 3rd, the strong resistance at R1 is more important and should turn the SPX lower. So, how should one who looks to exit at R1 proceed? Here is a plan that makes sense:

We will be following the steps in "Looking for an exit". If the SPX overcomes R1 in an explosive upmove we will hold all non-mechanial SPX positions.

Nasdaq 100 Technical Price Analysis

NDX Head-and-Shoulders Top (HST) and Descending Right Triangle (DRT)?

The NDX is currently running into stiff resistance from R2. We are currently trading near the lows for the day which indicates how much selling there is and will be at R2.

NL marks the bottom boundary of a HST and a DRT. DRTs most often break out to the downside through horizontal support (NL). If NL fails a HST will also be confirmed and there should be massive selling in the NDX down to below 1250.

NDX Relative Strength (NDX-RS=NDX/SPX)

The NDX-RS broke down out of a yearlong uptrending channel (S3) and had been falling for the last few months supported by S4. In the past, I predicted that a channel was forming bound at the top by R4 that has obviously come true. As you can see the NDX has strengthened since late March forming uptrending support S5.

It now seems that the NDX has barely broken out above R4. However, We would like to see a more significant breakout before I consider this bullish for the NDX.

Summary

We expect R2 to turn the NDX back downward. If the future HST/DRT scenario develops, serious money could be made with QQQ put options purchased as the NDX touches R2 and hoping for a drop to NL initially and eventually then much lower if NL is overcome to the downside.

RUT Technical Price Analysis

Broadening Formation in the RUT

Last time while the RUT was exactly at R1 (near the 4/1/2004 dotted line) I said simply, "This is a bearish formation common at significant tops. Buying at the top of a broadening formation is not a wise choice." Hopefully some of you took my advice a little farther and bought some RUT put options which would be have made a quick fortune. I wish I had...

Now I will say that buying after the confirmation of a Broadening Formation is not a wise choice. I fully expect the RUT to rally back up to test S1, but this is a VERY bearish looking pattern that could spell the end of the amazing performance in the last few years of the small cap sector.

RUT Relative Strength (RUT-RS = RUT/SPX)

RUT-RS has broken down below horizontal support S2. This is bearish.

Summary

Considering the confirmed Broadening Formation, I will not consider non-mechanical positions in the RUT at this time.

XAU Technical Price Analysis

Is the Huge Head-and-Shoulders Bottom (HSB) still intact?

Technically no. The retest of NL that I've been predicting for months has now occurred. However, NL was unable to support the XAU on a monthly basis which technically makes the HSB implication of XAU 160 unreliable. Having said that, the XAU is noisy. It historically doesn't make perfect patterns. If the XAU were to skyrocket from here to 160, people would look back and call this a successful HSB fulfillment.

Secondly as you can see above, the XAU is testing a support line (S1) that has been in effect for four years. Support does not get much stronger than this.

Lastly, assume that S1 holds and the XAU begins rising again. What that means is that all this talk of drastically rising interest rates is overdone. If the stock market weakens (see NDX HST above) the Fed will likely put off rate hikes fearing a double dip recession. That will again cause inflation fear and gold will rise again.

Summary

I am buying the XAU at S1.

Interest Rate Analysis

Major Downtrend Resistance Break

As you can see in the weekly chart of the US 5-year Treasury Note Yield above (TN), TN was resisted by R1 since early 2000. This line was finally overcome in early Late 2003 or April 2004 depending on how you look at it. But as I type, R1 is overcome.

In the move off the bottom, TN formed a nice flag bound by R4 at the top. The upside implication of this flag is the pre-flag move projected above the break of R4. This makes the objective just about R2 which is the level of and old low. (Old lows are often points of resistance on the way back up).

There is also uptrending support setting up as S1. If you project a parallel line you end up with R5 and an uptrending channel. (Since all markets often setup channels it's wise to expect that one form.)

Having said all that, I expect TN to continue upward inside the channel formed by S1/R5 until the upside implication of the flag is met at R2. At that point we should see TN consolidate sideways and begin to fall back to S1.

The scenario of