Current USERX price = 6.25, Up a beautiful $1.52 (32%) 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 gold stock SKI Report, written on Sunday 1/24/2016, concluded that “SKI is bearish but is extremely close to generating new index buy signals”. That report also concluded that “Yes, it is possible that even those index buy signals could be marking a high and get stopped out quickly (by declining back below the green line 92-96 index), but this rare index pattern (IF it occurs here) would strongly suggest a continuing rise that can even have the characteristics of a true SKI bull market. This chance should be the “last one”.”
If you looked at the SKI charts provided in that Report, you’d have seen that USERX was VERY close to going back over the 92-96 index (the green line in the chart). The “VERY” was capitalized in that last Report, but Jeff could not provide the specific details in deference to subscribers. Numerous 321gold readers emailed me because the chart looked like USERX had already risen above the green line 92-96 index. In fact, USERX had not yet risen over the green line, BUT IT WAS WITHIN 1 PENNY OF DOING SO. If USERX rose 1 cent or more on Monday 1/25/16, the master 92-96 index buy signal was going to generate.
And so, the gold stocks rose on 1/25/16 to generate the buy signal and Jeff bought at USERX 4.84. The master 92-96 index buy signal was generated, the 35-39 index generated the next day, and the first resistance 16-20 index sell signal generated on the following day. That WAS a classic SKI index bull market buy pattern and the gold stocks were supposed to rise through the 16-20 index sell signal into a likely SKI bull market.
The powerful rise from that time has obviously had the “characteristics of a true bull market”.
And so, you probably now want me to forecast the exact future. I rarely will do so because, as a scientist, I know the limits of predicting human behavior.
I do “know” two things. First, this is a UNIQUE index pattern. Therefore, when you read analysts’ predictions based upon any bull markets since 1974, THIS ONE WILL BE DIFFERENT. It can simply go straight up in an extraordinary manner without a correction and then collapse. This is likely to be the last SKI chart provided herein for an extended period of time. You should be able to see that after USERX rose over the green line, it immediately rose to over the faded purple line and then right up to faded blue line (and near the faded red line). The faded purple line is the 221 index. It is the master index for the super long-term. IT IS ON A BULL MARKET BUY SIGNAL that “can/may” last for years. A rise to over that next faded blue line would yield a Double Buy for the extremely long-term SKI System (that is too long-term for almost anyone to trade/invest upon). But if USERX rises over the faded red line BEFORE going over the faded blue line, that can/may be the next top. I understand that’s probably too complicated for most readers, but that’s why I provide the analysis/knowledge. If USERX goes over the faded blue line first, the extremely long-term bullish scenario is so bullish and unique that it is “scary” for the financial system. Yes, I could list SKI’s major long-term excellent predictions, but I’m not going to expend the time/effort here.
Jeff has been applying the SKI indices to the HUI index for the past 9 years. Follow USERX, but the HUI has proved to be a useful ancillary/confirmatory measure. Here’s the HUI’s SKI index chart. The HUI provided the identical index signals as USERX delayed by one day. The HUI had declined 30% more than USERX during the past year (and is more volatile than USERX to the upside and the downside because it is “narrower”, and so, its rise has been even more extreme). The HUI has only risen to the 221 index’s faded purple line. Will it now rise to the faded red and faded blue lines (ala USERX) around HUI 200 (immediately)?
Second, a decline, at any time in the future to below the green line 92-96 index is the sell-stop. Due to the short-term extreme overbought situation for the gold stocks, lots of analysts are looking for a short-term top here. That is reasonable, but UNlikely. If such a decline occurs, it would hit the sell-stop green line in several weeks, but could set up a quick new buy signal that would actually be even more long-term bullish! We’d have to see what the index pattern would be on such a 12-15% USERX decline.
SKI generated a major buy signal on 1/25/16. Jeff understands that many folks try to “time the timer” and save a few subscription dollars. But such an approach is unlikely to be successful because it involves predicting two things: The market AND the SKI indices. Gosh, I only charge $200-$350 a year. If you cannot afford that amount, I’d recommend avoiding trading/investing in any market until you have saved more resources. I don’t need your money, but I always desire new “students”.
Since the SKI indices’ buy pattern is unique since 1974, this rise is NOT likely to follow the up-and-down pattern of ANY past bull market. A new buy point can only occur after a decline that will eventually occur but cannot be forecast at this time. Jeff IS able to state that if the rise continues over months/years, that SKI will be able to state when a final leg-up is occurring (not an exact top) based upon the index pattern on the prior decline (i.e., a small decline and then a rise signals a final rise, but a larger decline and then a rise is not a major top; objectively defined by the 16-20 and 35-39 indices).
Personally, I’ve sold a little into this rise for prudence, but remain 82.5% long from 1/25/16-1/26/16 and SKI cannot sell until there is a decline to below the green line 92-96 index. My weekend SKI Updates had reached a length of 27 pages documenting the SKI signals during the bear market from 2011. I eliminated that history last weekend due to the likelihood that a new bull had commenced. I can only hope that the bull will remain intact long enough for the bull market history to reach 27 pages! The website continues to include the history of all Updates since 1/13/2006.
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 $25 (for a one month subscription) or more ($200 for an annual subscription). I also provide more frequent intra-week messages/alerts at a slightly higher price along with access to our informative Forum and a managed gold futures program. The precious metals are in a very long-term (decade+) up-trend but are the most precarious, volatile, and psychologically difficult market in the world (in my opinion). That's the way it's always been.