Current USERX price = 5.78, Up 5 cents (.9%) 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 2/08/15, continued to report on the buy from the 12/16/14 exact low. Whereas the prior Reports were singularly bullish, that last Report was not predictive: A rise over the next several weeks into the 92-96 index would be reaching major resistance, but a decline would generate a 16-20 index supportive buy signal. And if that supportive buy signal would be broken to the downside, an Armageddon-type decline would occur. Caution was warranted.
Due to the short-term uncertainty and the 2/06/15 plunge after the HUI hit/touched its 92-96 index resistance, Jeff sold 50% immediately on 2/09/15 at USERX 5.79. The gold stocks then declined for two trading days. THAT WAS ENOUGH TO GENERATE THE NEW 16-20 INDEX BUY SIGNAL as USERX fell below the prices from 16-20 trading days earlier. The buy signal executed on 2/12/15 at USERX 5.67 and Jeff bought back half of what was sold.
Such a buy signal usually occurs within 0-2 trading days of a low, but the gold stocks continued to decline during the following week. Therefore, the focus was and continues to be on the protective sell-stop.
SKI actually provided three sell-stops. The purely objective sell-stop was a 35-39 index sell signal as prices decline below the prices from 35-39 trading days earlier. The 35-39 index had objectively bought for intermediate-term bullishness on 1/05/15 at USERX 5.42. That index was (and still IS) supposed to sell at a profit.
The second sell-stop was based upon the 16-20 index’s sell signal from 1/08/15 at USERX 5.49. The gold stocks were supposed to (and did) simply rise through that sell signal back in early January. Once such a sell signal is broken to the upside, the gold stocks are NOT supposed to go back down below that technical point. The USERX closing low over the past few weeks was 5.52 just last Monday (2/23/15), but that 5.49 technical point was tested multiple times during the past two weeks. For example, on 2/18/15, with USERX having just closed at 5.55 on 2/17/15, the gold stocks were down 1% in the morning but then reversed higher subsequent to the release of the U.S. Federal Reserve’s minutes. And then last Tuesday (2/24/15), with USERX having just closed at 5.52, gold and the gold stocks declined in the morning but USERX then reversed to close higher once again and then continued to rise for the rest of the week.
The third sell-stop was based upon the new 2/12/15 16-20 index buy signal. This sell-stop isn’t as historically valid as the other two sell-stops, but is still relevant. It is based upon Half-Cycle Theory, meaning that if the buy signal was valid, the gold stocks should be above the buy-in price at 9-10 trading days after the buy signal (9-10 trading days is half of the 16-20 index period). The buy signal executed at USERX 5.67 and USERX was below that price early last week. But on the 8th day after the buy signal (2/25/15), USERX rose to 5.67. On the 9th day from the buy signal (2/26/15), USERX rose to 5.70. And on the 10th trading day, USERX rose again to close the half-cycle period above the sell-stop.
The SKI sell-stops have not been activated and the index buys from 12/16/14, 1/05/15, and 2/12/15 remain in effect. However, the major resistance 92-96 index is gradually declining and the objective sell-stop (a 35-39 index sell signal) is rising rather rapidly. A rising sell-stop is great for locking in the rather large profit from the original 12/16/14 buy signal at USERX 4.82, but the major technical point should be approaching: The 35-39 and 92-96 indices’ back prices are going to meet in the next few weeks (i.e., in XXX trading days; reserved for subscribers, as usual). Such a “confluence of indices” usually marks a major technical point. We could get some very bearish Double Sell index patterns at that time. For example, if USERX rises over the 16-20 index for a sell signal (as should occur so as to sell the 2/12/15 buy signal at a profit) and then fails to stay over the 35-39 index, we’d get a 16-20 index and 35-39 index Double Sell. And if the gold stocks rise over the 16-20 index and continue to rise over the 92-96 index, a very brief decline would generate 92-96 index and 35-39 index sell signals for another type of Double Sell pattern. Please do not remain long if the objective sell-stop(s) are activated…
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 $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.