| Issue #48 |
The
ULTRA Timer Report
|
Apr
18, 2005 (am)
|
SPX Technical Price Analysis
SPX Testing Support
We often draw support lines ignoring the explosive up-move off the bottom such as in S1 above. These lines are often better at predicting longer term moves. In the weekly chart above, the collapse last week landed directly on S1 where it should find support. If S1 is unable to support the SPX on a weekly closing basis, it would be a bearish indication for the market.
It's an interesting dilemma. S2 is the neckline of a small head-and-shoulders top which predicts a drop to just above 1100. But S1 will try to not allow that to occur.
We remain bullish in the long term because of the large Head-and-Shoulders Bottom (HSB) in the monthly chart. Currently, we are seeing a retest of the neckline (NL) which is very common. So far the weakness has not been anything unordinary and does not lessen the bullishness of the HSB for the long-term. However, if the SPX were to be near 1100 at the end of April, the HSB would definitely loose reliability.
NASDAQ 100 Technical Price Analysis
NDX Does Reach Objective
We previously thought the NDX would bottom around 1400. Then we changed that opinion on 03/30/05 which was obviously a bad decision.
The NDX has been in a pattern of steep drops followed by a few weeks of consolidation. We should now enter a similar period of consolidation that fills the gap at 1440.
NDX Relative Strength (NDX-RS=NDX/SPX) (No Change)
The NDX-RS break above R4 was obviously a bad signal. The NDX-RS is now at new lows which is a bearish sign.
(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 Support Fails
RUT fell out of its downtrending channel. The standard implications of such a break are a drop equal to the width of the channel which makes the downside objective around 560.
RUT Relative Strength (RUT-RS = RUT/SPX) (No Change)
RUT-RS did not make a false breakout but instead broke down below horizontal support S4.
(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
We remain bullish on the stock market in 2005 due to the Head-and-Shoulders Bottom (HSB) in the monthly SPX chart. The recent weakness was surprising but does not yet change the bullish long-term implication of the HSB.
With capital not managed by ULTRA mechanical methods:
We are currently 100% invested (as of the 3/29/05 close), 2/3 SPX related funds and 1/3 NDX funds.
As there is no good reason to be invested in NDX funds except a possible bounce, we'll be selling our NDX at the first close over 1430 (as the gap fills) and moving the proceeds back into SPX funds.
If the SPX violates S1 at the close of this week we may liquidate. We'll make this decision around 1:00pm (Mountain) on Friday. If we do make the decision to liquidate we'll post that information on the web page located here.
XAU Technical Price Analysis
XAU Nearing Very Important Support (S1)
We are at the point where the XAU should reverse to the upside. S1 has supported the XAU many times since 2000.
Gold Market Summary
We will buy the XAU at today's close as long as it's below 90 due the the support at S1.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel
Last time we said, "TN remains in the uptrending channel that we predicted in early 2004. Rates have risen significantly in the last few weeks and we are now nearing the top of the R1/S1 channel. We now expect rates to top out in the next few weeks."
It seems that rates could not make it up to R1 which is a bit worrisome for the stock market. If the market is truly going to go much higher we'd expect a constant rise in interest rates. If the TN drops out of the S1/R1 channel we'd consider that a bearish sign for the stock market.
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 7.1% so far in 2005 and have kept drawdowns to -2.7% as compared to -9.5% for the benchmark indexes. We are currently 0% invested. .
Last time we said, "If we are wrong about our bullish opinion, the strategies' defensive position will save our bacon." Which has definitely occurred.
We invest 75% of our capital with mechanical strategies and 25% with discretionary methods (technical analysis). Therefore, the discretionary NDX position we discuss in the Stock Market Summary section above is only 8.3% of our overall capital. Therefore, our foray into the NDX based on the false break in NDX-RS has cost us a total of 0.2%. This is why we stress "diversity of strategy" so much.
Recommended
Strategy Risk = LOW-MED-HIGH
Sincerely,
Steve Hunter, ULTRA Financial Systems Inc.
ULTRA
Financial Systems Inc.
PO Box 3938, Breckenridge CO 80424
Phone: 970-453-4956 Fax: 970-453-2467
© 2005 ULTRA Financial Systems, Inc.