| Issue #45 |
The
ULTRA Timer Report
|
Feb
21, 2005
|
SPX Technical Price Analysis
Downtrending Channel
We still believe there is more downside to come in the near future. The SPX looks to be setting up a slightly downtrending channel whose bottom boundary will eventually intersect with S1.
S3 is an uptrend line that ignores the strong move up off the bottom. We've found that these, more horizontal lines, are more reliable than steeper lines. If S3 cannot support the SPX, a drop to S2 becomes likely.
Tues
Morning update:
The SPX opened lower and is trading below S3. If the weakness continues
into the close, S3 will be violated.
.
We're Still Very Bullish in the Long-Term (no change)
As you can see the recent weakness in the SPX did not effect the long-term bullishness of the Huge Head-and-Shoulders Bottom (HSB) in the monthly chart. An intra-month drop to 1140 in February would not effect the bullishness of this chart either. We still expect an eventual move to 1500 possibly setting up the biggest double top in history.
NASDAQ 100 Technical Price Analysis
NDX Relatively weak
It doesn't make logical sense to expect a huge rally with the more speculative sectors of the market looking weak. As you can see the NDX has not even come close to its Dec04 top while the SPX was only a couple points away from matching the previous top.
If S1 fails, we'll expect a drop to around 1380 (S2). This is a drop replicating the drop before the consolidation supported by S1, was formed. It's also the level of many past tops and bottoms.
Tues
Morning update:
The NDX gapped down below S1 but must close obviously below S1 for the
breakout to be valid.
NDX Relative Strength (NDX-RS=NDX/SPX)
NDX-RS continues to be in a well-defined downtrend indicating NDX weakness. This is not the type of chart we'd expect to see if the NDX were ready to move strongly upward.
(The chart above can be produced with ULTRA via the "Graphs" menu item with NDX in the "Database Item or EDF Name:" field and SPX in the "Divided by:" field).
RUT Technical Price Analysis
RUT Well Above Support
The RUT has been gaining strength in the last couple months and remains well above its support. If the weakness we expect develops, S1 should be taken out and the RUT should move substantially lower.
RUT Relative Strength (RUT-RS = RUT/SPX)
RUT-RS is in a slight downtrend but is in much better shape than NDX-RS. If we are wrong and the stock market is going to move higher immmediately, the first clue will be an RUT-RS breakout above R4.
(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).
Stock Market Summary (No Change)
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 1140 in the SPX.
With capital not managed by ULTRA mechanical methods:
We are currently 50% invested all of which is in SPX funds. We'll wait until the SPX reaches S1 before considering new long positions.
If the NDX-RS can overcome R4 it will be a bullish sign for the more speculative sectors and we'll move back into thirds: SPX, NDX, RUT.
XAU Technical Price Analysis
XAU Breakout
The recent breakout of the XAU was impressive and we are now looking to buy the XAU around 90 as the XAU retests the breakout over the next couple weeks. We expect action similar to that of Jun04 (RT).
Tues
Morning update:
The XAU gapped up on today's open. Gaps in the XAU are almost always filled
and we expect this gap to be filled in the coming days.
The long term chart of the XAU shows that the XAU has not been able to drop down to its primary support (S1). A new line of support seems to be forming about five points above S1. We also have a corresponding resistance line above setting up a possible Triangle. The break out of this Triangle could be the launching pad for the XAU to 160.
Gold Market Summary
We are still
bullish for the XAU in the long-term and are looking to buy the XAU during
the next correction hopefully around 90.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel
TN remains in its uptrending channel. We do not expect TN to break down out of the channel. If TN were to break down out of the S1/R1 channel we'd become worried about our long-term bullish stock market opinion.
ULTRA's Recommended Strategy Risk (No change)
We still believe that 2005 is going to be a bullish year and that 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 outperforming their benchmarks by a couple points so far in 2005 and have kept drawdowns to -2.6% as compared to -6.0% for the benchmark indexes. We are currently 33% invested which will come in handy if the markets enter a weakness phase as we expect.
Recommended
Strategy Risk = LOW-MED-HIGH
Sincerely,
Steve Hunter, ULTRA Financial Systems Inc.
ULTRA
Financial Systems Inc.
P.O. Box 3938, Breckenridge CO 80424
Phone: 970-453-4956 Fax: 970-453-2467
© 2005 ULTRA Financial Systems, Inc.