| Issue #46 |
The
ULTRA Timer Report
|
Mar
17, 2005
|
SPX Technical Price Analysis
SPX Breaks Below Trendline (S2)
We still believe there is more downside to come in the near future. We believe that S1 will be tested in the next few weeks. We remain very bullish for the long-term but are waiting for a great buying opportunity near S1.
.
It Would not be Surprising to see the SPX rally back up to R1 Today or Friday.
The SPX is due for a short-term rally and it makes sense that 1200 would be the objective. 1200 is the level of R1 and also the level of the short-term support (R2) that failed at yesterday's open. As long as the rally doesn't run much over 1200, the scenario of further market weakness should remain likely. This rally is by no means guaranteed.
NASDAQ 100 Technical Price Analysis
More NDX Downside Likely
The NDX seems to have broken down below its recent consolidation area. We expect another leg down in the NDX to near 1400 which should be a great buying opportunity. We project this objective (OBJ) mainly because:
- we expect a replication of the move down off the January top
- the NDX should find support at the round number 1400
- S2 which lines up roughly with many past tops and bottoms.
NDX Relative Strength (NDX-RS=NDX/SPX) (No Change)
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 Breaks Uptrend Line (Slightly)
The RUT has broken down below S1, although the break is slight. If it were not for the break in the SPX, this RUT break wouldn't be signficant enough. If our market weakness scenario develops, we expect the RUT to find support at S2 (between 590 and 600).
RUT Relative Strength (RUT-RS = RUT/SPX) (No Change)
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 S1 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 Head-and-Shoulders Bottom (HSB)
It seems that the XAU has formed a HSB and this mornings open was a retest of NL. The HSB implies a move to 120. If this HSB is for real, then 100 should provide support.
Gold Market Summary
We are still bullish for the XAU in the long-term. We bought XAU calls options at today's open and will buy the XAU at today's close. XAU investments make up a small part of our overall portfolio so we are not too concerned about chasing this market. However, if 100 fails signficantly we'll probably take a loss and close the position.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel
TN remains in the uptrending channel that we predicted in early 2004. Rates have risen signficantly in the last couple weeks and we are therefore about in the middle of the R1/S1 channel.
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 3.5% so far in 2005 and have kept drawdowns to -2.6% as compared to -6.0% for the benchmark indexes. We are currently 19% 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.