Current USERX price = 7.53, Up 67 cents (9.8%) 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 2/09/14, concluded that “The historical expectation continues to be that the gold stocks will rise into the major 92-96 index resistance. That index signal is likely in 4 to X trading days (again, the “X” means that it’s reserved for subscribers)… And when that 92-96 index major resistance signal generates, a decline is strongly predicted”.
The “reserved” day number was a “7”. Therefore, a rise was expected that would top in 4-7 trading days from 2/09/14 based upon the 92-96 index. Rises from 35-39 index buy signals typically persist for 17-21 trading days. The 35-39 index buy signal had executed on 1/21/14, so as of the prior Report, 13 trading days had elapsed and the typical behavior would be for the gold stocks to rise for another 4-8 trading days based upon the 35-39 index.
Subsequent to that Report, the gold stocks continued to rise despite having already risen for 6 consecutive days. Prices continued to surge higher that week into the major resistance 92-96 index signal(s). The USERX 92-96 index signal executed on 2/13/14 at USERX 7.46. The HUI’s 92-96 index signal executed one day later, on 2/14/14 at 242.78 (signals execute at the close of the trading day).
Although the prior 35-39 index signal had marked a short-term high to the exact day on 1/21/14, nothing is perfect. The index signals usually mark highs or lows to within plus or minus 2 trading days (i.e., the exact day is the mean, with a standard deviation of 1 trading day). The USERX 92-96 index signal occurred (using hindsight) 2 days early because the high-to-date occurred on 2/18/14 at USERX 7.79. The HUI’s 92-96 index signal was only 1 day early. This past week, as gold continued to rise, USERX was unable to close above that 7.79, tying that price on 2/24/14 before declining during the remainder of last week. Nonetheless, the gold stocks remain near the price when the 92-96 index resistance signals executed on 2/13/14 – 2/14/14. The predicted decline has not yet occurred as the broad measures of the gold stocks have meandered around near their 2014 highs since the index signaled major resistance.
Analysts’ definitions of “a bull market” vary, but the SKI definition cannot change. As I’ve repeatedly described for more than a decade, a bull market requires that the 92-96 index be “the leading index” (i.e., that it be On the SKI Path of Trades): Its buy signal needs to come BEFORE a 35-39 index buy signal. The typical start of a bull market involves a 35-39 index buy signal, a rise to the 92-96 index resistance “buy” signal (as has occurred here), and then a decline to below the 92-96 index without selling the 35-39 index. The decline to below the 92-96 index resets the index ordering so that any subsequent rise over the 92-96 index causes the 92-96 index to be the “lead index” on the SKI Path of Trades.
We continue to have the opportunity (the potential “set-up”) for the beginning of a bull market. That opportunity will only be present for the next X weeks. The gold stocks need to decline approximately 10% soon to go below the 92-96 index and make another low (probably simultaneously marked by a 16-20 index buy signal) and then the 92-96 index could quickly re-buy on a brief rise to initiate a true SKI bull market. The optimal time for a decline below the 92-96 index to make another low is in X trading days because the index’s back prices (from 92-96 trading days earlier) will contain a brief hump at that time (i.e., the back prices rise to a high and then decline again, thereby allowing USERX to fall below the hump and then quickly go over the index’s declining back prices). A continuing rise right now or a persistent sideways movement would destroy the bull market possibility for many months. This is not a bull market yet, but a decline into an index-marked low in X trading days would complete the next required step in the formation of a bull market. I can specify that the “X trading days” and the new bull market 92-96 index buy signal are likely to be completed before the next SKI Report on 321gold (IF we are finally going to get a bull market). That next Report is scheduled for 3 weeks from today, but due to personal circumstances, it may be delayed by one week. Let’s get the historically-predicted decline soon to maintain the bull market set-up!
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.