The ULTRA Timer Report

The SPX has moved away from us a bit and we are looking to buy a dip. There are two types of support at 1460-1465. S1 is a well-defined uptrend line and S2 is the old bull market top. Both should provide support to a pullback. However, because S1 is so well-defined if it were to fail we'd expect a sharp drop to 1440 (S3) at least.

Our plan right now is to buy SPX related funds on the next day that the SPX is trading below 1470, but still above S1, at our fund cutoff time.

If we do get long and then S1 fails, we'll exit unless the SPX drops close to 1440 on the breakdown day.

The NDX appears to be forming a Broadening Pattern that may well eventually spell the end of this bull market. The good news is that these patterns can continue for quite some time, easily throughout the rest of 2007.

S1 probably cannot be sustained and upon its failure we'd expect a drop back to S2 where a bottom would set up launching the market to its final top of the bull possibly in early 2008. This scenario fits well with our long held opinion that the SPX would in 2007-2008 equal its 2000 top level possibly creating a historical Double Top.

Unlike the NDX and SPX, the RUT really has not made a bull market high. Since we believe the market in general is ready for a pause, the RUT will probably not overcome R1 before correcting a bit.

We also don't see anything to get excited about in the RUT-RS chart and its in the middle of a narrow, slightly uptrending channel indicating that there's really no good reason to take on RUT risk compared to the SPX.

We've made a lot of money over the years trading gold stocks and options but its not a sector that we worry much about missing moves. The XAU is a noisy index prone to false signals. We prefer to be selective and only take low-risk trades in which we are very confident.

S1 at 120 is incredibly well-defined for many years as it was the top of an old trading range we traded years ago and now its the bottom of another well defined range, 120-150.

It's hard to see on this chart but the XAU has formed a small Head-and-Shoulders Top (HST) that today is being confirmed with a close below NL. If this HST is confirmed the minimum downside objective is around 137 (O1). As always we assume symmetry until proven otherwise so we'd assume a sharp drop to 137 with a 5-10 day consolidation similar to what occurred in Mar2007. At that point the XAU would have the opportunity to form and confirm another larger HST whose downside objective would be S2 below 125.

ULTRA Recommended Strategy Risk

We still expect SPX gains in 2007 to approach 20% and therefore recommend that aggressive strategies designed to capture and improve upon those gains should be utilized by investors willing to take on 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.

As we've said before, the strategies below are examples of extremely conservative strategies. We believe most investors should be more aggressive considering the bullish long-term chart patterns that are dictating this market.

ULTRA URS STRATEGIES

Our URS STRATEGIES are on 6% invested and having a tough year so far. They are up +0.6% with a maximum drawdown of -3.4% compared to their benchmarks which are +4.7% with a -6.3% drawdown.

URS Strategy Descriptions are HERE.

ULTRA EASY STRATEGIES

Our EASY STRATEGIES are currently 67% invested and are up +3.5% for 2007 with a maximum drawdown of -3.9% compared to the SPX which is up 4.4% with a maximum drawdown of -5.9%.

EASY Strategy Descriptions are HERE.