Current USERX price = 12.85, Down 26 cents (2%) since the last report 3 weeks ago.
Introduction (repeated from prior Reports):
I have been using my unique SKI indices to predict price changes in the precious metals' market for more than two decades. And my indices continue to mark the critical points. I have initiated a subscription website since 1/13/06 (yes, Friday the 13th) after having posted free updates for years at www.321gold.com. SKI is a timing service; although almost everyone seems to believe that market timing is impossible, that IS what the SKI indices have done for 36 years.
The SKI indices contain short-term (16-20 trading days), intermediate-term (35-39 trading days), and long-term (92-96 trading days) indices. A more comprehensive description of these mathematical indices and their history is found here. Basically, the indices compare today's price to prices from a specified prior time period. The name of the index specifies the time period (e.g., 92-96 index = compare today's price to prices from 96, 95, 94, 93, and 92 trading days earlier). Although I use the oldest gold mutual fund, USERX, for analyses, the predictions are applicable to the broad precious metals' market. I do not recommend or analyze specific stocks, but my subscribers from around the world regularly discuss individual issues on our Forum. In addition to the truly unique SKI indices, I also use "run patterns" to guesstimate turning points in the precious metals' market. A "run" refers to a pattern of daily up and down market closing prices. If the market has 3 consecutive days of higher closing prices, the run is "3 up". If prices then decline for 2 consecutive days, the run becomes "3 up and 2 down". If prices then close higher the next day, the run changes to "2 down and 1 up". Some people have referred to run patterns as "worms". A run pattern is only completed after the direction of closing prices has changed. I have compiled a listing of every run pattern that has ever occurred and generated probabilities that the end of the run marks a high or a low, moderated by the indices themselves.
The last SKI Report, written on 1/24/21 and titled “Down to a Low?”, was bearish for the gold stocks, reporting that the historical probabilities favored a continuing decline into a potential low. The low would be marked a 35-39 index (as USERX fell below the prices from 35-39 trading days earlier) AND a special run pattern (a “Life Run” low). In the interest of subscribers, I didn’t specify the expected date or provide the definition of a “Life Run”.
That was exactly correct. USERX dropped on 1/25/21 to 12.94, was unchanged on 1/26/21 (unchanged counts as a decline if the prior day was down), and then plunged on 1/27/21 to 12.39. The decline generated the 35-39 index’s sell signal and formed the special run pattern. A “sell” signal sounds bearish but index signals mark the technical spots and such declines can mark lows. The decline to 12.39 did not go below the 11/24/20 low of 11.98.
Here’s information that should never be forgotten. A Life Run low is 2 days Up and 5 or more consecutive daily declines. It often begins with a 1 Down and 2 Up run pattern for a high. The strength of the run down is definitively important: The stronger the decline, the greater the significance of the low (weak = less than a 1% average daily decline; moderate = 1.1-1.9% average daily decline; strong = 2% or more average daily decline). This run down was 7.5% over 5 trading days. The 1.5% average daily decline was “moderate”. “Moderate” means that it was not a major low and usually yields a short-term rise.
Only apply the run patterns to USERX. USERX, since 1974, is unique. It is primarily composed of Canadian, Australian, U.S., and South African gold stocks (with tiny amounts in other countries). Most importantly, since those stocks are listed in U.S. AND foreign exchanges, it is meaningfully affected by currency movements. It combines the stocks and the currencies.
The subsequent rise eventually generated a new and buyable 35-39 index buy signal on 2/05/21. That was the day after gold plunged $43+ and then rose. Such buy signals had a 90+% historical probability of being profitable. And the set-up was “excellent” because it included an objective RISING sell-stop (as the prices from 35-39 trading days earlier were about to rise). NOTE: This 35-39 index buy signal was absolutely historically supposed to yield a rise to a QUICK 92-96 index buy signal and then a quick 16-20 index sell signal. USERX should just keep rising through the 16-20 index’s sell signal.
And so, the gold stocks rose on 2/08/21 to USERX 13.17. But then, USERX dropped 1-penny last Tuesday (2/09/21). The 1-penny may seem to be meaningless, but SKI and USERX are usually “exact” and Jeff immediately began to reduce the long position. It just was not “historically-right”. The decline completed another bearish 1 Down and 2 Up run pattern (that has stopped most the rises since the August 2020 top). But the 92-96 index continued to move towards its historically-required buy signal because USERX remained above 13.14. That index signal generated the next day despite USERX’s small decline to 13.08. The objective sell-stop now changed to EITHER a 35-39 index sell signal OR a 92-96 index sell signal. The sell-stop 92-96 index sell signal generated on 2/11/21. And the 35-39 index’s sell-stop generated on Friday (2/12/21) for execution on this coming Tuesday (2/16/21). It is a “Double Sell” index pattern.
NOW, that was a classic (perfect) losing investment/trade. It had a 90% probability of yielding an immediate plus large multi-month gain AND also provided the quick objective rising sell-stop for a small loss. The buy failed. Yes, it was disappointing but “excellent” if performed with Jeff’s and YOUR most important human characteristic: SKI-DISCIPLINE provided via objective (simple mathematical) indices and run patterns.
If you really have read this public Update, what is the USERX run pattern? That’s your quiz question (smile). The run pattern is 1 Down, 2 Up, and 4 Down. Tuesday is marked with a final index signal. Given the information in this report, can you figure out Jeff’s expectation/prediction? It’s down into 2/16/21. The larger the decline, the greater the probability of some type of low. The run down has, so far, been “weak”. The current Double Sell index pattern is likely to be the most important and potentially bearish since the August 2020 top. An UNexpectedly large rise on Tuesday would generate a potential bull market buy signal. Jeff must refrain from specifying the exact needed size of such a rise.
The gold stocks have been particularly disheartening while other market sectors have been in manic rises during the past few months. The time to join SKI will be when you do not care about gold stocks. Be wise and don’t wait until after a 50-100% rise. People herded into SKI last August as Jeff was writing “Don’t buy”. USERX is still just a few percentage points lower than 4 days after the August 2020 top of 14.76. At that time, USERX was at 13.04. This likely is NOT “the” time, but it is better to be early to start learning than to wait until after a large rise. You do NOT have to buy/sell USERX, but anyone who does not track USERX IS missing valuable information. USERX is restricted to U.S. citizens. The largest percentage of SKIers are, in descending order: Canadian, U.S., Australian, South African, European, and Asian. SKI does NOT recommend individual stocks, it is the global group. It may be hard to believe, but I have not been doing these public reports since 2000 to make large amounts of money from subscribers. I’m a retired professor and clinical psychologist that lives modestly and doesn’t “need” your money…. I have OUR best interests at heart.
If you are interested in following and learning more about the SKI indices, I'll write another Report in three weeks or you can shell out the big bucks for a SKI subscription. Weekly Updates are available by subscribing for a month (or longer if you're wise and cheap enough to want to save money) at my website www.skigoldstocks.com for the princely sum of $30 (for a one month subscription) or more ($240 for an annual subscription). I also provide more frequent intra-week daily messages/alerts at a slightly higher price along with access to our informative Forum.