Current USERX price = 6.72, Up another 47 cents (7.5%) 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 2/14/2016, was unusually “definitive and emotional” (as I reread it 3 weeks later to prepare for writing this Report). It had multiple important conclusions. How often do I write that a “unique SKI bull market had commenced” (as of 1/25/16 – 12/26/16)? Or that “a correction is UNlikely” because this bull market “WILL BE DIFFERENT” and “It can simply go straight up in an extraordinary manner without a correction and then collapse”?
Since that last Report, USERX has risen another 7.5% and the HUI/GDX have risen even more than that because they had declined 30% more than USERX during the prior year.
Note that the indices DID mark this as a potential bull market as of 1/25/16. The term “bull market” is defined in a variety of ways by different analysts. During the past week I read an article from a famous “forecaster” that stated that this is not a gold bull market and that the 1982-1983 rise also was not a bull market because gold eventually went to a lower low. But 1982-1983 WAS a SKI bull market and yielded a 300+% rise in the gold stocks (USERX). Therefore, I don’t believe anyone’s use of the term “bull market” unless they objectively define the term.
The SKI indices provide an objective definition, so when I used the phrase “bull market” in the 1/24/16 SKI Report for 321gold, it wasn’t my “opinion”. As I’ve written for a decade+, a SKI bull market requires that the master 92-96 index be the leading index (i.e., it is On the Path of Trades; something to learn about). This is only the 6th bull market since 1974. And most of such 92-96 index potential bull markets will be WRONG and will actually be marking an almost exact high. Therefore, SKI is NOT “nirvana” or “the path to instant riches”. But the failed 92-96 index buy signals have always yielded quick 2-5% losses AND Jeff’s expertise (rules) allows for avoiding many of those fast small losses (not all of them!). Such “false buy signals” are recorded and can be checked. For example, the 12/06/15 Report for 321gold focused on a new 92-96 index buy signal that had executed at USERX 4.96 on 12/04/15. That could have been the start of a bull market because the 92-96 index buy signal was on the Path of Trades, but Jeff did not buy it. It marked an exact high. That’s not unusual because the indices repeatedly mark the almost exact technical points, but “buy” signals can mark highs.
Gold (and GLD) formed a triangular pennant pattern that completed last week by breaking out to the upside. On this past Friday (3/04/16), the gold stocks gapped higher and then closed lower. Yes, that looks like a bearish top, but USERX rose another 1%, and the projection is for one more leg higher before a corrective decline occurs. The indices should be able to mark the next corrective low: During bull markets, SKI usually does not mark the intermediate-term tops, but does mark the subsequent lows (and vice versa during bear markets). This time, the long-term SKI indices MAY indicate the beginning of a corrective decline because they are also set up in an unusual (“extraordinary”) manner.
The last Report described the very long-term index set-up (the 221 master index, analogous to the 92-96 index, was on a buy signal). The Report stated that “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”. The chart was included.
Jeff was very pleased to receive emails from former subscribers, questioning that statement. It was wonderful to see how many people had learned the SKI basics because they caught my typing error: I had juxtaposed that sentence. The extremely long-term bullish case needed a rise to over the faded red line before going over the faded blue line. And that DID occur last week.
I believe that I was “emotional” in the last Report because I get upset when people miss the beginning of a bull market, but I have successfully educated a lot of people!
In conclusion, there’s never any certainty, but the bull market should persist and there should be one more short-term leg higher before a price correction that goes back down to the rising 16-20 and 35-39 indices. A break below the recent gold (GLD) pennant/triangle would negate such immediate continuing bullishness and a new USERX 442 index sell signal would also be UNexpected (always have a sell-stop). The next upside target is the rising faded blue 663 index line…
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.