The ULTRA Timer Report

"I suspect the probability is high that that we'll re-test R2 in the next few days."

"I still think that S2 will fail and S1 will be tested. Hopefully, that test will occur around March 13 when another very bullish seasonal period begins. The SPX at S1 in mid-March looks to be a good buying opportunity."

It's impossible to know for sure at this point but I think one should assume that support as important as S1 will hold until proven otherwise. Short-term bottoms often occur around March 13th. If one bought the SPX at the close on March 13th (or the next close if that date is not a trading day) and held for three days, the trade is a winner 71% of the time. During that time invested the SPX historically appreciates at a 66% annual return.

Therefore, I think it is very likely that we will see a bounce off S1. How long that bounce lasts is anybody's guess. If there is a close obviously below S1 then I would expect a further drop to 1000-1020 which is the width of R1 minus S1 projected downward. This is also the level of the Jun03/Jul03 tops that were overcome in early Sep03.

The SPX has corrected and is due for a bounce to the upside. However, my gut feeling is that the bounce is going to be short-lived and S1 will fail. All non-mechanical positions should be sold into any close that is obviously below S1.

Nasdaq 100 Technical Price Analysis

NDX Major Support Failure (S1)

Last time I said,

"If S1 fails on a weekly closing basis, there should be significant selling in the NDX. I wouldn't be surprised to see symmetry eventually take the NDX down to major support at S2 which is 27% lower."

S1 has now failed and there has been some selling. The NDX should bounce in the next few days possibly in a rather spectacular way.

However, If the SPX support failure scenario develops then S2 becomes likely for the NDX.

NDX Relative Strength

The NDX-RS broke down out of a yearlong uptrending channel and has been falling ever since. The downtrend has found support on S4 and may be forming a channel. If we do see a short-term bounce in the NDX, I wouldn't be surprised to see NDX-RS test R4.

Summary

I think its wise to continue to avoid the NDX with non-mechanical accounts.

RUT Technical Price Analysis

RUT Continues to Have Trouble Getting Through 600

The RUT has formed a horizontal trading range. The direction of the break out of this trading range will likely determine the next significant move in the RUT.

RUT Relative Strength

RUT-RS has formed a well defined support line S2 and is relatively strong compared to the SPX. RUT-RS is near the top of its trading range while the RUT itself is near the bottom of its trading range.

Summary

A breakout above R2 will be a bullish sign for the RUT. If the general market is going to bounce to the upside in the next few days, RUT-RS should breakout and the RUT should be relatively strong compared to the SPX making another attempt at 600.

XAU Technical Price Analysis

Huge Head-and-Shoulders Bottom (HSB) (No change)

The HSB still calls for an eventual move in the XAU up to 160. The neckline (NL) is currently at around 90. As you can see we are getting closer to the re-test of 90 which should be a great buying opportunity.

Summary (No Change)

I will be buying the XAU with non-mechanical capital upon a re-test of NL at 90.

ULTRA's Recommended Strategies

Recommended Strategy Risk = LOW-MEDIUM

Recommended Index = SP500, RUT.
Strategy Positions are HERE .
Strategy Descriptions are HERE.

Last Report

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