| Issue #51 |
The
ULTRA Timer Report
|
July
7, 2005
|
SPX Technical Price Analysis
SPX About Halfway to Resistance
The SPX continues to be well supported by S1 and is about halfway to R1 where it should find strong resistance. As long as S1 supports the SPX, the likely long-term direction of the stock market remains upward.
We believe that the SPX will rally to near R1 before dropping back to S1. The fact that the SPX was able to close higher today in the face of the terrorist attack in London is a bullish indication.
NASDAQ 100 Technical Price Analysis
NDX Possibly Forming a Head-and-Shoulders Bottom (HSB).
If the market heads higher from here as we expect, and the NDX is able to overcome NL, a HSB will be confirmed that would predict a move above 1700.
NDX Relative Strength (NDX-RS=NDX/SPX)
NDX-RS has formed a triangle. If NDX-RS can break out above R2 it would be a very bullish sign for the stock market as a whole.
(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 out above R2
Last time we said, "Now the RUT is threatening to breakout above R2. This would be a very bullish sign which we think is likely as long as S1 remains intact." R2 was taken out and S1 has remained intact, which is a very bullish sign for the RUT.
RUT in Uptrending Channel
For the last year the RUT has been contained in an uptrending channel. If this rally continues, we expect the RUT to run into stiff resistance at R4 near 700.
RUT Relative Strength (RUT-RS = RUT/SPX)
Last time we said, "As long as S4 continues to support the RUT-RS we'll remain bullish on the RUT." That remains our opinion.
(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.
With
capital not managed by ULTRA mechanical methods:
We are currently
100% invested with:
33% in SPX related funds (entered on 3/29/05 at 1165.36),
33% in RUT funds (entered on 05/18/05 at 607.88),
33% in NDX funds (entered 06/13/05 at 1529.13).
Our
exit plans are as follows:
SPX: Sell at first close above 1250 (R1) or if S1 fails on a closing
basis.
NDX: Sell if our SPX sell criteria is met or if S2 in NDX-RS fails.
RUT: Sell if our SPX sell criteria is met or if the RUT closes
above 690 (near R4) or if S4 in RUT-RS fails.
Updates will be posted here.
XAU Technical Price Analysis
XAU hit Resistance
Last time we said, "We will sell our XAU position at any close above 95 hoping to reenter at a lower price. We will also sell upon any close below S1." Of course the highest close was 94.55 into which we did not sell. S1 was broken on 07/05/05 (albeit barely), and we sold at the close on the next day at 91.77.
We have very mixed feelings about this sale as we remain bullish on gold and expect the XAU to eventually move higher. However, with the resistance at R1 and with S1 arguably not providing the launch pad for a breakout above R1, we believe the odds are about 50/50 that we'll be able to buy back in at a significantly lower price.
Gold Market Summary
We'll repurchase our XAU positions at the first close below 86 near S2. (S2 is a line drawn through three lows, a high, and a gap in 2005.) It also represents about a 50% retracement of the recent rally which seems to be a logical downside objective if S1 were to fail more significantly.
If instead the XAU breaks out above R1 we will not chase it. Rather we will wait for the first correction. Hopefully that will be a retest back down to R1.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel Seems to have Failed (No Change)
Wow. The uptrending channel that we predicted would form in 2003 has now seemed to fail. In the past we've said, "TN breaks down out of the channel we'd become worried about our bullish stock market opinion": which we must admit is concerning. However, technical analysis is imperfect and we are not terribly worried yet.
ULTRA's Recommended Strategy Risk
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 about 3% ahead of their benchmarks so far in 2005 and have kept drawdowns to -3.2% as compared to -9.8% for the benchmark indexes. We are currently only 14% invested all of which is in the SPX.
Our mechanical strategy positions are in opposition of our bullish discretionary opinion. But we follow the strategies mechanically so as to benefit from the diversity of differing logical techniques.
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.