 Special SKI Report #16
"221 Index Update"
Jeffrey M. Kern, Ph.D.
Email: jeff@skigoldstocks.com
USERX
| historicals
Written Sunday, February 18, 2007
Published Feb 19, 2007
Special SKI Report #16
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 the most informative gold site, 321gold,
since its inception approximately six years ago. 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 32 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 at http://www.skigoldstocks.com/about.php.
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.
New Material:
Today's Report is DRY and focuses
on one of my very long-term indices. Before proceeding, remember
that these indices mark critical points. If prices decline into
an index "sell" signal that isn't always bearish. It
can mark a low. But if an index sells, one knows that it will
have to buy back for a bullish phase.
With gold climbing nicely in
the past month while the gold stocks meander higher, the bullish
phase since May 2005 has lasted long enough for the 218-222
index (named the "221") to be coming back into the
technical picture. It's hard to believe that such a long-term
index could mark critical points. And although the 221 index
may sound similar to a 200-day moving average, it's actually
rather different. But just as people write and show how prices
eventually fall back to their 220-day moving averages, for SKI,
prices eventually come down to the 221 index. We can't be certain
if it'll happen soon, but the time appears to be "ripe".
The gold stocks need to
rise above their May 2006 highs within the next 24 trading days
or the 221 will be selling.
If the index is going to sell, prices usually fall rather steeply
into the index signal and can mark a low. Note that this isn't
a prediction of which way the gold stocks will move: The index
will provide information when the signal occurs. The point of
this Update is that the time is approaching for this next long-term
index signal. It's been 9 months since the May 2006 high and
USERX is currently at the same price that it was 10 months ago
(current price = 16.21; May 2006 high = 17.96). If you count
back 221 trading days from today, you'll see that those May 2006
high prices enter the 221 index in 24 trading days. Essentially,
the index will provide interesting information on the state of
the precious metals and more specifically, the gold stocks.
For your continued study, the
following is the history of the 221 index since 2001 using USERX
(the precious metals mutual fund):
Again, prices will need to
go to new decade highs over the next 5 weeks in order to avoid
this index. Even if that occurs, prices could then decline because
the 221 index back prices will be falling from their May 2006
highs. Or prices could begin falling very soon and sell the 221
index out near/at a major low, as has occurred after prior major
yearly rises. I've obviously got every base covered (smile),
but the point is that the 221 sell signal, whenever it occurs,
will probably mark a critical point and begin a new sequence
of 221 signals leading into another yearly major bullish phase.
Personally:
I like to write some personal
market reactions because my emotions often appear to mimic the
gold stocks' market psychology. This market has driven SKI and
Jeff (me) rather nuts since May 2006. I'd just like to get a
nice clear index signal. SKI's bull market (from the August 2005
buy signal) ended in early September 2006. I obtained a clear
sell signal, prices plunged into early October, and now the gold
stocks are basically at the same level as in early September
2005 and April 2006. The one time that SKI obtained a new true
bull market buy signal, on 11/28/06 at USERX 16.17, the market
eventually reversed and ended that bull chance. Jeff went slightly
long there for 2 weeks and sold at no profit before prices really
declined into January. And now prices are back up to those same
levels again. I really need a trend. Maybe that's why the gold
stocks have been rather lethargic: Investors/traders feel like
I do and all-the-while gold bullion moves higher...
If you are interested in following
and learning more about the state of the 221 index and the other
shorter-term SKI indices, I'll write another Report for 321gold
in a few 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.
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.
Jeff
Written 02/18/07
***
 SKI archives
email: jeff@skigoldstocks.com
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.
Communications should be sent to: jeff@skigoldstocks.com.
Copyright © 2002-2023 Jeffrey Kern. All Rights Reserved.
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