Current USERX price = 10.08, Up $1.05 (11.6%) since the last report 4 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 Sunday, 12/08/19, described how the gold stocks’ bull market from June 2019 had been maintained on an exact day-to-day basis from 11/26/19-12/03/19 as USERX rose as needed to avoid a master 92-96 index sell signal. Furthermore, the 16-20 and 35-39 indices had generated simultaneous buy signals on 11/25/19 at USERX 8.48 (1-cent above the prior low of 8.47 on 11/11/19). Although there can never be a guarantee that a bull market will continue, I’ve repeatedly written how 10/15/19 was supposed to be THE corrective low (from the 9/04/19 high) and that had been maintained (despite “crappy” silver and somewhat “crappy” gold; plus non-bullish COT Reports).
The expectation was that the next wave higher had begun to accelerate. But that was NOT exactly correct. The gold stocks meandered sideways during the week of 12/16/19-12/20/19. They had needed to continue to rise to avoid a master 92-96 index sell signal that would end June’s bull market.
The master 92-96 index generated its sell signal on 12/19/19. The index signals were empirically designed (in 1984-1985) to generate one day before they executed (so as to allow us to be given a 1-day notice for action the next day). Therefore, Mechanical SKI sold its June 2019 buy on 12/20/19.
Remember, the index signals reliably mark rather exact technical points (usually to the exact day but with a standard deviation of one trading day). In this case, a decline of another 2% would also generate a 35-39 index sell signal. That would yield a very bearish Triple Sell index pattern (last seen in March 2004) to portend a 1.5 year bear market. But a rise to over USERX 9.30 for a few days would generate a renewed bull market 92-96 index signal. This was clearly being marked as a major technical point!
On Friday (12/20/19), as the master 92-96 index executed/marked that day, the gold stocks meandered lower to USERX 9.09. People don’t really believe that empirical SKI indices can continue to mark the technical spots since 1974, but that decline exactly (to the penny) hit/touched the secondary 35-39 index. And the auxiliary HUI’s 92-96 AND 35-39 indices were exactly hit/touched on the 12/20/19 decline (for the first time since June) while maintaining the June bull market buy signal.
The SKI Update on the next day (12/21/19) emphasized that “Friday’s (12/20/19) decline to USERX 9.09 exactly (to-the-penny, again) hit/touched the 35-39 index to move it a little towards a sell signal. That augmented and sets up the potential Triple Sell index pattern (very bearish if it occurs), but the decline to exactly 9.09 also means that the 92-96 index’s sell signal may have marked an exact low (seriously)… Therefore, the only immediate way that Mechanical SKI can resume bullishness is if the 92-96 index buys back rather soon (usually on a rise; at a higher price than the sell; the sell signal needs to have marked a low). Frankly, this is what Jeff subjectively wants and expects based upon the bullish factors listed in Thursday’s Intra-Week Update.” All SKI Updates (on Saturdays) and daily SKI Messages (on Mondays-Thursdays) since 2006 are available for subscribers to check what SKI/Jeff “said”/wrote for any point in time.
And so, if you were/are wondering “why” the gold stocks surged higher the following day (12/23/19), the answer is that 12/20/19 SKI-marked the major technical point with its master 92-96 index signal. Seriously, and repeatedly, for 45+ years (smile).
The rise to over USERX 9.30 generated the new master 92-96 index buy signal and Jeff sent a Christmas holiday (12/25/19) Buy Update.
Now, in the short-term, the continuing rise has become historically “stretched/overextended” to the upside. Cash Gold has risen for an over-extended 8 consecutive days with a large open GLD up-gap on this past Friday (1/03/20). The past 2 trading days have had “negative divergences” with gold rising and USERX declining a little. During bull markets, the overbought situation “can” extend, but the normal/typical behavior is for at least a short-term pull-back.
What Jeff/SKI “knows” is that the sell-stop is a new 92-96 index sell signal. The index’s back prices will now rise to the September high at USERX 9.53-9.88. But even if there is a decline to sell the 92-96 index’s buy signal in 1.5 weeks, it can easily and quickly re-buy again because the index’s back prices will immediately be declining from that September top. PLUS, the longest index, the 884 index is RIGHT HERE. This index is “contrarian”. That means that it buys on declines. The index “just happens to be” (smile) approaching the Summer 2016 major high at USERX 10.28. Do not use the internet charts showing a different 2016 top. They adjust USERX for dividends and Jeff has empirically shown for decades that such an adjustment is WRONG. The 884 index’s back prices for tomorrow will be at … 9.03, 9.17, 9.35, 9.73, and 10.06 (as USERX sits at 10.08).
Best Wishes for the new year, 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.