Special SKI Report #288
New SKI-Phase Begins
Jeffrey M. Kern, Ph.D.
USERX | historicals
Written Sunday May 28, 2023
Published May 29, 2023
Current USERX price = 9.61, Down $1.24 cents (11.4%) 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 5/07/23, reported that the long-term USERX 221 index had just generated its first buy signal since it bought on 3/27/2020 at 7.08 and then sold on 6/21/2021 at 13.34. The index’s back prices were declining strongly from June 2022, making it more difficult/UNlikely that the 221 index would quickly sell to negate the new buy signal. Importantly, the bullish master USERX 92-96 index buy signal remained intact, but its objective sell-stop would be rising in 2-3 weeks to the USERX 10.21-10.45 level.
On 5/08/23, as the 221 index executed its buy signal, USERX remained unchanged at 10.85. The unchanged day counted as an up-day because USERX had risen on the prior trading day (5/05/23). Therefore, USERX completed a very meaningful 2 Down and 5 Up run pattern when USERX declined the next day (5/09/23). Such run patterns mark a low or a high 90+% of the time since 1974. The bullish scenario was that USERX would soon rise to above the top of the run higher (i.e., to above 10.85). If that occurred, there was the 90% probability that the run pattern had marked a low. On the other hand, the bearish short-term scenario was that USERX would decline to below the start of the run higher (the 2 Down) at 10.30.
The gold stocks continued to decline. USERX declined for 4 consecutive days to from 10.85 to 10.25. Therefore, the 221 index buy signal had the 90% probability of having marked a high. The declined formed an even more meaningful (and unusual) 5 Up and 4 Down run pattern. Such run patterns have always (100%) marked a high AND/OR a low. Therefore, the bullish scenario still needed a rise to above USERX 10.85, whereas the bearish scenario would be confirmed (100%) if USERX declined to below 10.25.
The bears “won” when USERX declined to 10.16 on 5/16/23. Therefore, the decline was supposed to (100% historical probability) continue. And a continuing decline would generate a 35-39 index sell signal AND the master 92-96 index’s sell signal (as noted in the 5/07/23 SKI Update; occurring 2-3 weeks after the 5/07/23 Update).
Of-course the decline DID continue. USERX executed its 35-39 index sell signal last Monday (5/22/23) and its 92-96 index sell signal last Wednesday (5/24/23). Although Jeff had already recommended selling based upon the USERX run pattern, the 92-96 index’s sell signal was Mechanical SKI’s safety sell-stop. USERX has been relatively weak, especially relative to having 18% of its assets in the strongest gold sector (the Australian gold stocks). Its weakness has primarily been due to the weakness in its largest single stock holding (K92 Mining; KNT.to or KNTNF in the U.S.) that is all the way back down to its September 2022 low! Nonetheless, the HUI (which doesn’t hold any K92 Mining) also executed its 35-39 and 92-96 index sell signals last week. Therefore, the index signals weren’t an “aberration” limited to USERX. And the HUI’s 442 index (that had bought simultaneously with USERX’s 221 index at a high) has also generated its sell signal.
SKI index signals regularly mark rather exact lows and highs. The mean accuracy is exact with a standard deviation of 1 trading day. During 2023, the gold stocks have ping-ponged up and down between USERX’s long-term index signals. The 663 index (a contrarian index that buys on declines and sells on rises) executed its rather rare sell signal at an exact high on 1/13/23 at USERX 10.71. The subsequent decline into March yielded an even rarer 884 index buy signal (that index is also contrarian). And then the rise into the 221 index’s buy signal on (NOT a contrarian index) marked an exact high on 5/08/23.
Conclusions: The regular SKI indices have signaled that the gold stocks have just entered a new SKI-phase via last week’s 35-39 and 92-96 index signals. It’s not a coincidence that the master 92-96 index sold last week at exactly 96 trading days from its last buy signal on 1/05/23. The sell signal was Mechanical SKI’s safety sell-stop, but since index signals mark technical points, it IS absolutely possible that the signal marked a LOW. Essentially, this past Thursday needs to have been a low and the gold stocks need to rise during this coming week (the stronger, the better). It would take a rise to above about USERX 10.43 to generate a renewed 92-96 index buy signal during the next 4-5 trading days, but the exact price (as always) depends upon the day (the Time) when the rise occurs. Cash Gold (symbol $Gold) is at its chart uptrend support line that connects the 2022 low with the March 2023 low. The gold stocks are oversold with a daily Relative Strength Index (RSI) at an oversold 30 level.
The long-term SKI indices remain on the 221 index’s buy signal. At this time, the index won’t sell without a decline to below USERX $9.00. The contrarian 884 index would only generate a new buy signal if USERX declined to well below USERX $9. Such a second 2023 884 index buy signal is NOT required to occur again here (or for years).
This coming week is “critical”.
Best wishes, Jeff
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.
Jeffrey M. Kern,Ph.D., is an academic psychologist with a specialty in the measurement and prediction of human behavior. The communications provided are for informational purposes only and are not intended to be investment advice or recommendations for specific investment decisions. Dr. Kern is not a registered investment advisor, but is registered as a commodity trading advisor (CTA). The information provided is considered accurate, but cannot be guaranteed. Investments/trading in narrow market segments or gold futures is for individuals willing to accept a higher level of risk for the opportunity of greater returns. Past performance is no guarantee of future performance. His website is www.skigoldstocks.com.
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