| Issue #53 |
The
ULTRA Timer Report
|
Sep
20, 2005
|
SPX Technical Price Analysis
The SPX Fails at New High Attempt
We believe the recent rally is over and that the SPX will move lower. The SPX should find support at S2 and possibly rally back up to R2. However, we still believe that during the seasonally bearish month of October that the SPX will test S1 around 1180.
We believe that S1 will hold and that low will launch a powerful year-end rally to R1 around 1300.
NASDAQ 100 Technical Price Analysis
NDX Close to Breaking Support
The NDX is trading slightly under S1. Another down day and S1 will definitely have failed implying further downside. Considering the season, NDX risk becomes very high if S1 were to fail.
NDX Relative Strength (NDX-RS=NDX/SPX)
NDX-RS remains above S2 but we believe that this will soon change. We expect S2 to fail and that will be a very bearish signal for the NDX..
(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
Last time we said, "RUT broke down below a very well-defined uptrend line (S1) which is a bearish sign for the RUT. " In spite of the recent rally we have not changed our opinion.
RUT in Uptrending Channel (NO CHANGE)
For the two years the RUT has been contained in an uptrending channel. Last time we said, "If this rally continues, we expect the RUT to run into stiff resistance at R2 near 700". The RUT was turned back by 700 at the top of its uptrending channel. We now expect the RUT to drop back to S2 at around 600.
RUT Relative Strength (RUT-RS = RUT/SPX)
RUT-RS broke down below the uptrend line S3 which is a bearish sign for the RUT. The next phase in the fail of the RUT should be accompanied by a break of 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. We believe that there will be a significant year-end rally.
With
capital not managed by ULTRA mechanical methods:
As of 08/03/05
we are currently 0% invested selling our:
SPX related funds at 1245.04
RUT related funds at 683.38
NDX related funds at 1627.19
Caution pays in Late September. We are looking to position ourselves for the year-end hoping to buy the SPX around 1180, the NDX around 1500, and the RUT around 600. We are hoping that these prices occur during the late October, early November timeframe.
As we said last time there is no way we'll chase the market during AUG/SEP/OCT no matter how high it moves without us.
Any changes to that plan will be posted on the updates page that is here.
XAU Technical Price Analysis
XAU At Major Resistance
Last time we said,
"For the last couple years the XAU has been trading between 80 and 110 and we are about in the middle of that range. We remain bullish on the XAU as long as S2 remains intact on a weekly basis. Our plan is to buy back into the XAU the next time it closes below 91. However, we'll exit that position if S2 fails on a weekly closing basis."
After tremendous success in 2004, we've had some bad luck with our non-mechanical analysis of the XAU in 2005. We were correctly bullish and planned to go long at the first close under 91. However, the XAU only closed as low as 93 and then left us behind.
Luckily, our mechancial system DUALB continues to be amazing in 2005 buying the XAU at 85. This is a fantastic illustration of the importance of "diversity of strategy".
We believe that the XAU has now peaked and will enter a down phase possibly dropping as low as 80 (S1) where we will be huge buyers.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel Remains Intact (NO CHANGE)
We expect resistance at R2 which should turn interest rates back down. However, if TN can overcome R2 we'd expect a move up to R1.
ULTRA's Recommended Strategy Risk
We still believe that 2005 is going to be a bullish year with a year-end rally very likely. However, the months of AUG, SEP, and OCT tend to be negative and therefore investors should become more cautious until late October.
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 even with our benchmarks so far in 2005 and have kept drawdowns to -3.2% as compared to -9.8% for the benchmark indexes. We are currently 19% invested most of which is in the NDX.
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.