Current USERX price = 9.739.85, Down 12 cents (1.2%) 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 Sunday, 1/26/20, described how after the gold stocks became overbought in early January, they had declined to generate an 884 index buy signal that had executed on 1/13/20 at USERX 9.57. That short-term buy signal was extremely likely to yield a rise to an 884 index resistance sell signal. But if that resistance sell signal stopped the gold stocks, a brief decline would simply generate another 884 index supportive buy signal (as prices fell below the prices from 881-885 trading days ago). SKI remained on its long-term bullish master 92-96 and 221 index buy signals for a long-term bull market.
After that Report, the gold stocks immediately declined to USERX 9.78 on 1/27/20. That was still high enough to generate the 884 index’s resistance sell signal, BUT it was also low enough to generate a supportive 16-20 index BUY signal. The 16-20 index is also a contrarian index that buys on declines. As always, the execution of index signals occurred one trading day after they generated. Therefore, SKI executed the 884 index’s sell signal on Tuesday (1/28/20) but also simultaneously executed a conflicting 16-20 index buy. The 16-20 index is more valid than the 884 index. Therefore, as the gold stocks declined 2+% on 1/28/20, down to USERX 9.55, Jeff bought more.
The 16-20 index’s 1/28/20 buy signal was historically likely to mark THE corrective low, as it had in mid-October 2019 at USERX 8.30-8.44. The cyclical difficulty was that the bullish 16-20 index (that had just bought) was at odds with the bearish 884 index (that had just sold). How would that situation resolve? The gold stocks surged higher from exactly 1/28/20 over 3 trading days to USERX 9.91 on 1/31/20. But then they declined sharply over just 2 trading days into the 884 index’s BUY signal that executed on 2/04/20 back at 9.56. THEREFORE, THE DISCREPANCY BETWEEN THE 884 INDEX AND THE 16-20 INDEX WAS RESOLVED, WITH BOTH BEING IN SYNCHRONY ON BUY SIGNALS. A rise was expected.
The ensuing rise was very brief and meager: The gold stocks rose for only 2 trading days into 2/06/20 at USERX 9.64 before USERX dropped 2% on 2/07/20 to a new 2020 low at 9.46. Friday’s (2/07/20) behavior had the traditional characteristics of a bearish reversal: The gold stocks rose in the morning to above the previous day’s high and then declined strongly to close below the prior day’s low. Nonetheless, Jeff wrote how 2/07/20 “could be” a “fake-out break-down” because the 884 and 16-20 short-term indices were both on bullish buy signals. And the gold stocks have risen since then, although USERX has been stronger than the HUI, GDX, and the other North American gold stock measures.
Now, the corrective decline from early January has continued long enough (in Time) to approach the time frame for an intermediate-term (as opposed to just a short-term) correction that involves the 35-39 index. SKI MUST (100% probability) GENERATE 1, 2, OR 3 INDEX SIGNALS WITHIN THE NEXT 5 TRADING DAYS. SKI remains long-term bullish. A rise would generate a resistance 16-20 index sell and even an 884 index sell signal. Eventually, a bull market requires that the market rise through/above such short-term sell signals. Further sideways behavior, a decline, or even a weak rise would yield a 35-39 index sell signal. During bull markets, 35-39 index “sell” signals (as USERX declines to below the prices from 35-39 trading days earlier, that are now about to rocket higher) mark corrective lows or at least an intermediate-term bottoming process: For example. the 9/30/20 35-39 index “sell” signal executed at USERX 8.44 and marked a reasonable buy point as the bottoming process initiated and was only mildly surpassed by the decline to USERX 8.30 on 10/15/20.
A detailed description of the potential implications of 16-20, 884, and 35-39 index signals over the next 5 trading days would require an analysis that is too complicated for this public Report. However, the long-term bull market 92-96 index is down at below USERX $9 and is dropping. Therefore, unless there is an absolute plunge to below that index, SKI remains long-term bullish.
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.