| Issue #49 |
The
ULTRA Timer Report
|
May
16, 2005
|
SPX Technical Price Analysis
SPX Support Holding
As we said last time, "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, S1 is holding up just fine. As long as S1 continues to support the SPX on a weekly closing basis, we remain bullish for the long-term.
NASDAQ 100 Technical Price Analysis
NDX Breaks Out of Down-Trending Channel
Last time said the NDX would find support at 1400 (SL) and fill the gap at 1440 which happened exactly. The NDX then retested 1400 and has rallied up and out of the down-trending channel bound by S1/R1.
We strongly believe that for a significant rally to get underway the NDX must lead. This is obviously happening and is a very bullish sign for the stock market.
We would not be surprised to see this rally run to 1500 (R2) and then correct down to 1460 (S2) setting up a possible Head-and-Shoulders bottom. This is the scenario we'd like to see and we will move into the NDX if it were to develop.
NDX Relative Strength (NDX-RS=NDX/SPX) (No Change)
NDX-RS broke out above an important downtrend line R3 on 05/06/05 (NDX = 1456) which was a great buy signal (+1.7%) that many ULTRA clients who follow NDX-RS acted upon. We are very conservative in nature and (unfortunately) did not act. However, as we said above we still think we can get into the NDX around 1460 in the coming days.
(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
Finish... RUT Support Fails
Our downside objective of 560 due to the failure of S1 was nearly met. A break of R1 would indicate that the 570 is the bottom in the RUT. We expect this to occur.
RUT Relative Strength (RUT-RS = RUT/SPX) (No Change)
RUT-RS is contained in a downtrending channel bound by R2/S2. A break out of this channel would be a bullish sign for the RUT.
(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 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) in SPX related funds.
We'll move one-third into NDX related funds if the scenario detailed above develops and the NDX corrects to the 1460 area. We'll move one-third into RUT related funds if R1 is overtaken to the upside.
Updates will be posted here.
XAU Technical Price Analysis
XAU Very Important Support (S1) Failed
We were very surprised (and disappointed) that S1 did not support the XAU at the April monthly close. We expected the XAU to rally back up to retest S1 around 88 where we were going to exit but it just couldn't quite get there. So now were are sitting on some losses.
We do not believe that our bullish stock market scenario can remain intact with a plummeting XAU. Therefore we believe the XAU will find support at S2 around 76 which is not much lower than today's close..
XAU Relative Strength (XAU-RS = XAU/HHG)
The XAU divided by the price of gold (XAU-RS) is under 0.20 which has in recent past coincided with spectacular buying opportunities for the XAU. (1 = 11/26/01, 2 = 07/29/02, 3 = 10/21/02, 4 = 03/24/03, 5 = 05/10/04)
Gold Market Summary
We believe that the drop in the XAU is nearing its end and we will therefore hold our XAU positions.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel
TN is near the lower boundary of the uptrending channel where it should reverse. If TN breaks down out of the channel we'd become worried about our 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 3.2% so far in 2005 and have kept drawdowns to -2.7% as compared to -9.8% for the benchmark indexes. We are currently 0% invested. .
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.