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RUT Technical Price Analysis

RUT Uptrending Channel

Last time we said, "If S2 fails to support the RUT a drop to S1 becomes likely". That has now occurred exactly. The RUT should find support at S1. If the market is going to turn upward from here in the short-term, the RUT should bounce up off S1.

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

The RUT broke down below S4 on 01/03/05 which caused us to sell our RUT positions and move into the SPX. This break is relatively bearish for the RUT but most of the damage could already be done.

(The chart above can be produced with ULTRA via the "Graphs" menu item with RUT in the "Database Item or EDF Name:" field and SPX in the "Divided by:" field).

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Stock Market Summary

We remain bullish on the stock market in 2005 due to the Head-and-Shoulders Bottom in the monthly SPX chart. However, in the short-term there is probably more downside yet to come. We believe that the extent of the downside will be around 1150 in the SPX.

With capital not managed by ULTRA mechanical methods:

We are currently 50% invested all of which is in SPX funds. We are nearing the point (1180) where we had planned to invest the other 50% but since we now believe a drop to around 1150 is more likely than not, we'll wait until the retest of NL occurs to make that investment. If the SPX reaches 1150, we'll very likely buy NDX calls as well.

If the NDX can overcome R4 it will be a bullish sign for the more speculative sectors and we'll move back into thirds: SPX, NDX, RUT.

If we were more aggressive, we'd make that move now with the RUT and NDX at or near support.

 

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XAU Technical Price Analysis

US 5-year Treasury Note Yield (TN)

Uptrending Channel

We still believe the recent downtick in yields to be temporary and that yields should rise to R1 sometime in 2005. However if TN were to break down out of the S1/R1 channel we'd become worried about our bullish stock market opinion.

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ULTRA's Recommended Strategy Risk (no change)

We believe that 2005 is going to be a bullish year. Therefore high-risk strategies, (those that are invested over 60% of the time) can be used for investors willing to take on that risk.

We continue to believe that as your annual return goals increase, your odds of high drawdowns increase, and your overall odds of attaining those goals decrease. Investors should use great caution when following strategies that seek to return 30% (or more) annually. And NEVER risk all your money on ANY single system or strategy EVER.

ULTRA's RECOMMENDED STRATEGIES

Our "RECOMMENDED STRATEGIES" are at a 48% invested position which is nice considering the recent weakness. However, we expect this weakness to be temporary and the market indices should turn higher.

In 2004, the RECOMMENDED STRATEGIES returned 5.9% while their benchmark indexes returned 9.6%. The maximum drawdown was 5.1% while the indexes suffered an 11.5% drawdown.

2004 was an extremely low volatility year with the maximum drawdown in the SPX at only -8.2%. With volatility that low, it's almost impossible to outperform with timing. Since the RECOMMENDED STRATEGIES are all very low risk and are traded with leverage, we're pretty happy with the 2004 performance.

During 2004, the buy/hold investor did well but he was also at very high risk all year long. The timer did equally well but was at very low risk all year long. That is the advantage timing gives you. Even though you may not outperform in a given year, you are not putting yourself at the risk of debacle if the market so decides. And that is a very good thing for your long-term wealth accumulation goals.

Recommended Strategy Risk = LOW-MED-HIGH

URS Strategy Positions are HERE .
URS Strategy Descriptions are HERE.

ULTRA's EASY STRATEGIES

Our "EASY STRATEGIES" are at a 67% invested position. They would go 100% long if the COT1 system could get itself on a buy signal

In 2004, the EASY STRATEGIES returned 7.7% with a -5.0% maximum drawdown. Not bad for low-risk weekly strategies that literally take less than a minute a week to operate.

 

EASY Strategy Positions are HERE
EASY Strategy Descriptions are HERE.

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