| Issue #54 |
The
ULTRA Timer Report
|
Oct
5, 2005
|
SPX Technical Price Analysis
SPX Symmetrical Triangle (ST) Nearing Failure
We are currently trading on the lower boundary of an ST.
Last time we said that, "The SPX should find support at S2 and possibly rally back up to R2", which is exactly what happened. But now, considering that we are in the bearish month of October and that the previous rally could not quite reach the top of the ST (R2), we believe the ST will fail soon. This will make a drop down to S1 very likely. It looks like a close around 1205 or lower will be an obvious break out of the ST.
We still 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 Trading Range
The NDX has formed a parallel trading range (S2/R2). As the SPX breaks down we expect this trading range to fail and for the NDX to accelerate to the downside. A break down out of the trading range would imply an NDX drop to around 1500.
NDX Relative Strength (NDX-RS=NDX/SPX)
NDX-RS broke out above horizontal resistance R3 which is relatively bullish for the NDX. However, we expect this strength to be temporary.
(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 Downtrending Channel
The RUT is in a downtrending channel (S2/R2). The bottom of this channel is currently at 640. If this channel could remain intact while the SPX and the NDX make their expected lows in later October, this could be a very bullish flag that would make the RUT a very attractive vehicle for the expected year-end rally to SPX 1300. We'll have to watch this situation very closely.
RUT Relative Strength (RUT-RS = RUT/SPX)
RUT-RS is being supported by S4. We are hoping S4 remains intact while the SPX falls to 1180 setting up a fantastic opportunity in the RUT into year-end.
(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. We believe there will be some weakness in October but no crash. We are looking to buy aggressively at lower levels.
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 October. We are looking to position ourselves for the year-end hoping to buy the SPX around 1180, the NDX around 1500, and the RUT at the bottom of its flag. If the RUT flag falls we'll look to buy the RUT around 600. We are hoping that these prices occur in late October.
As we've said for months 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
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. The first drop should be to S2 at around 100 where the XAU could rally back up to R1
If we are wrong and the XAU breaks out of this channel we'll allow it to rise a bit and then drop back to retest R1 before we chase it..
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 slightly ahead of 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 33% 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.