| Issue #39 |
The
ULTRA Timer Report
|
Dec
2, 2004 AM
|
SPX Technical Price Analysis
SPX Uptrending Channel
The SPX has shown extreme strength with any temporary weakness confined to a narrow trading range bound by R1 and S1. We still think it's very unlikely that S3 will be reached in December and any correction will remain above 1160.
NASDAQ 100 Technical Price Analysis
NDX Remains Strong (no change)
The NDX has also broken out and will most likely go much higher. If the NDX is ready to correct, a drop to 1500 is about all we're going to get.
NDX Relative Strength (NDX-RS=NDX/SPX)
The NDX-RS remains bullishly above S4. If S4 fails we will sell our NDX positions and move the proceeds into SPX based funds.
This 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 Soars to a new High !
In a past issue we said: "The RUT broke out of its downtrending channel and should move much higher over the coming months." Wow, has that ever become true. However, this extreme strength in the RUT is not sustainable and it is becoming tempting to take profits and move into less risky assets.
RUT Relative Strength (RUT-RS = RUT/SPX)
As long as S4 remains intact we will remain relatively bullish for the RUT. If S4 fails we will sell our RUT positions and move the proceeds into SPX funds.
Stock Market Summary
We remain invested with our non-mechanical capital 50% long split into thirds into the NDX, RUT, and SPX. We are now still looking to move to 100% long at the first sign of weakness. We think the market is going to move much higher for the rest of 2004. Since keeping risk low is very high priority for us, we will not chase this market and risk buying at a significant high.
However, we will be easing our buy requirements a bit. With our capital managed by non-mechanical methods we will move to 100% long at any close of the SPX near S1. Again we'll split that investment into the SPX, NDX, and RUT as long as those indices' relative strength charts remain above their uptrend lines.
We'll almost certainly be holding these positions into early January at least.
XAU Technical Price Analysis
XAU to 150 (Eventually)
As I write Thursday morning, the XAU is trading below S1 and therefore we still have hope to get back our long positions in the XAU significantly below our October sell price of 105.65. We are still bullish for the XAU in the long term but with the likely break of S1 today, it looks like the XAU is going to pause for a while. We think that the XAU will find support around S2 or as low as 95 but that should be about the extent of the correction.
XAU Relative Strength (XAU-RS = XAU/SPX)
As you can see XAU-RS is flirting with breaking S2 (in the XAU-RS chart) to the downside. If the break occurs it would indicate that the gold segment is becoming relatively weak compared to the soaring stock market. We think this break is likely but we will remain bullish for the long-term in gold regardless of what occurs in XAU-RS..
Gold Market Summary
We are still looking to repurchase our long positions. We now believe
that we'll get that opportunity below 100 and therefore we'll buy the
XAU at the next close below 97 (S2). If we get the opportunity to make
this purchase we will have repurchased 8% below our October sell price.
Interest Rate Analysis
US 5-year Treasury Note Yield (TN)
Uptrending Channel
As expected yields have turned higher. We expect this trend to continue for a number of weeks. We expect TN to reach R1 in early 2005 which should correspond with a significant top in the stock market.
ULTRA's Recommended Strategy Risk
Since we believe that the next month (at least) is going to be to the upside with low downside volatility we are recommending high risk strategies (those that are invested over 60% of the time) for investors willing to take on that risk. Personally we are still only using low and medium risk strategies in order to keep drawdowns low.
ULTRA's RECOMMENDED Strategies
Our "RECOMMENDED STRATEGIES" are at a 62% invested position which is about as long as they are likely to get because they are extremely low-risk in nature. However, since we trade leveraged funds, our actual position is near 100%.
It's going to be tough to outperform our benchmark indexes in 2004 (not considering our leverage) because we expect the remainder of 2004 to be up with low downside volatility. That is not a scenario where timing can outperform buy/hold. However, on a risk-adjusted basis we should far outperform the indexes. And that is what matters most to us, decent yearly gains with low-risk.
Recommended
Strategy Risk = LOW-MED-HIGH
Sincerely,
Steve Hunter, ULTRA Financial Systems Inc.
ULTRA
Financial Systems Inc.
P.O. Box 3938, Breckenridge CO 80424
Phone: 970-453-4956 Fax: 970-453-2467
© 2004 ULTRA Financial Systems, Inc.