Current USERX price = 9.43, Down 30 cents (3.1%) 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 Monday, 2/17/20, remained long-term bullish on USERX (i.e., the gold stocks) and short-term bullish. But that Update concluded and capitalized that SKI would generate 1, 2, or 3 index signals within 5 trading days. A rise would generate 16-20 index and 884 index resistance sell signals. During bull markets, the gold stocks eventually must rise through such sell signals, but the correction from early January 2020 had persisted for enough time to potentially involve the intermediate-term 35-39 index. During bull markets, corrections usually involve a decline to below the 35-39 index to form an intermediate-term low.
Yes, the gold stocks then rose for 5 consecutive trading days. And yes, the USERX 16-20 index executed its resistance sell signal on 2/20/20 at USERX 10.27. And then the USERX 884 index executed its resistance sell signal on 2/04/20 at USERX 10.61.
If you don’t believe in cycles and SKI indices and exactness, perhaps this will finally correct that misperception! The 2016 SKI bull market topped at USERX 10.28 on 8/18/2016. Do NOT use the USERX prices from charting services that change the historical prices based upon subsequent dividends (e.g., stockcharts.com). That top WAS at 10.28. During the week after the last SKI Report, USERX rose to 10.27 on 2/19/20 and on 2/20/20. It then went above the 10.28 on 2/21/20. It “broke out” and completed what chart analysts” perceive as a bullish “Cup and Handle” technical pattern. The Cup was the pattern from the early August 2019 top, then the rounded decline into a bottom, and then the rise into early January 2020. The “Handle” was the decline and sideways behavior in January. And then the “break-out” was the rise over the top of the Cup. The “chart technical pattern” was exactly wrong.
The problem was that the rise over USERX 10.28 was EXACTLY 881-885 trading days from the 8/16/2016 top. Therefore, the rise generated the 884 index’s SELL signal on Friday, 2/21/20, for execution on Monday, 2/24/20. On that weekend, Jeff raised the sell-stop for traders’ (and my own) long positions to a 35-39 index sell signal on a decline. Jeff was NOT prescient enough to just sell everything on the 884 index’s sell signal at the exact 2/24/20 top of USERX 10.61.
After 2/24/20 (that Jeff described as being a “scary” day due to the 884 index’s sell signal and a hyper-extended 8 consecutive trading days of gold rises), USERX plunged to 10.15 on 2/25/20. That was 1-penny above the 35-39 index’s back prices. Therefore, the index remained bullish and the gold stocks could have “held up” right there. But when USERX dropped to 10.04 on 2/26/20, it had fallen to 1-penny BELOW all of the index’s back prices and was poised to generate its sell signal. The gold stocks decline into such sell signals. Therefore, when the gold stocks began to decline again on 2/27/20, Jeff sent an early special Sell Alert. I had warned SKIers on the weekend that such an alert could occur, but many weren’t able to do anything as the Canadian markets became dysfunctional and closed within an hour after I sent that email. The large 10% crash the next day generated the 35-39 index’s sell signal (remember, such signals often mark lows during bull markets) AND the quick new 884 index BUY signal for execution on 3/02/20.
Still don’t believe in cycles and SKI indices? The plunge on 2/28/20 was 92-96 trading days from the exact index-marked low of USERX 8.30 from 10/15/2019. If you don’t remember my persistent statements that the 8.30 low would be THE corrective low, you can check the 321gold archive. The 92-96 index is the master bull market index. It’s on a bull market buy signal and remains bullish until it sells. The plunge to USERX 8.53 (on 2/28/20) hit/touched that index towards a sell signal, but it would not sell without a decline to below 8.30. And then the gold stocks rebounded last week to avoid that sell signal and maintain the bull.
Now, Jeff does not do “SKI promotions” by offering “free trials” or advertising “special limited-time discounts”. I consider “discounts” to be unfair to the long-time subscribers. And “free trials” make money because new subscribers tend to neglect to cancel their subscriptions so that the subscription renews at a higher price. I am not a business-person. My passion is prediction and helping people. As a professor, scientist, and clinical psychologist, I have been fortunate that society has supported me financially and allowed me to pursue science and helping people. But I am human, and I do spend a lot of time communicating to subscribers. The subscription fee motivates me to spend that time and it provides feedback to me regarding the “job” that I am doing with the SKI indices. So, with the large volatility and my “writing-fatigue”, here’s a large free snippet of this weekend’s subscriber SKI Update (so that I don’t have to write even more for this 321gold Report). Will you devote the time needed to read this?
“Coming into this week, the 4-day crash (from the 884 index’s sell signal on 2/24/20 at USERX 10.61) was generating 3-4 index signals that would clearly mark the next few days as the next technical point. A supportive USERX 884 index buy signal and a non-supportive 35-39 index sell signal were going to execute on Monday (3/02/20) and the 16-20 index's "questionable" (since it executes one trading day AFTER the 35-39 index's sell signal) buy signal was going to execute on Tuesday. The big question was whether the master USERX 92-96 index was going to sell after being hit/touched on Friday’s 10% crash to USERX 8.53. A decline to below USERX's 10/15/19 low of 8.30 would quickly generate the sell signal. Jeff was in cash but could easily "see" all of the index signals as marking a significant low (these introductory paragraphs are always written on Monday morning’s [e.g., 3/02/20] as a summary of the Weekend Update).
On Monday (3/02/20), the gold stocks simply rose to USERX 8.81 as gold gained $28.20. The HUI (GDX) rose into the open down-gap from last Thursday-Friday’s plunge. They would need a further rise to actually fill the open down-up. The USERX 884 index executed its supportive buy signal and its dangerous 35-39 index sell signal. The USERX 16-20 index generated its questionable supportive 16-20 index buy signal. And the HUI’s supportive 16-20 index buy signal and simultaneous 35-39 index sell signal generated for execution on Tuesday. That was all expected from the Weekend Update, but today’s rise went back over all of the 92-96 index’s back prices to delay/avoid the master 92-96 index sell signal. Jeff figured that one could wait for a day to buy back what had been sold on 2/27/20 because prices usually decline into tomorrow’s 16-20 index buy signal and it would be safer to see if the 92-96 index’s sell signal would continue to be avoided tomorrow. That delay turned out to be “wrong”.
On Tuesday (3/03/20), the gold stocks rose in the morning and then surged higher after the U.S. Federal Reserve’s (and other central banks’) emergency 0.5% cut in short-term interest rates. USERX exploded up to 9.31. Jeff “couldn’t” get himself buy on such a large daily rise despite the 16-20 index’s buy signal and looked to buy tomorrow on a decline. The rise obviously continued to avoid a master 92-96 index sell signal and reinforced the validity/importance of that index.
On Wednesday (3/04/20), the gold stocks meandered but closed a little higher at USERX 9.33. They were lower going into the final market hour, so Jeff initiated a 33% purchase in order to insure buying some back at below the prior week’s selling price. The gold stocks then rose into the close up to USERX 9.33. Jeff once again looked to buy more on a decline tomorrow, but doubted that would occur.
On Thursday (3/05/20), the gold stocks meandered before rising once again towards the end of the day up to USERX 9.54. Jeff added another 17% (up to 50% long) due to “fear of missing out” (FOMO) and looked to buy more tomorrow on a decline. The USERX 16-20 and 884 index resistances were being hit/touched and the HUI already generated new simultaneous 16-20 index sell and 35-39 index buy signals for execution on Friday. Those index signals were already marking another potential technical point (often a short-term high but also an intermediate-term rise?). A rise tomorrow, for a 5th consecutive daily gain, would add to the likelihood of a short-term high. Jeff once again planned to buy more if there was a solid decline on Friday.
On Friday (3/06/20), the gold stocks gapped a little higher and then reversed strongly to the downside. The daily chart was forming a bearish “reversal day” with a daily high above the prior day’s high and a low below the prior day’s low. Going into the final hour, USERX was estimated at below 9.31, so Jeff continued the re-buy plan with another 25% purchase (up to 75% long again). A sudden surge in the general stock market appeared to lift the gold stocks into a USERX close of 9.43.
NOW, the most important and simplest information is that the sell-stop for Mechanical SKI AND Jeff is a USERX 92-96 index sell signal. The 10% plunge on 2/28/20 had hit/touched the index towards a sell signal as of last weekend. But the immediate subsequent rise avoided any further movement towards such a sell signal. The 92-96 index’s back prices for this coming week are:
The USERX 92-96 index canNOT generate a sell signal for at least 2 trading days and that would require a plunge to below 8.43 (i.e., to a new 2020 low). The index’s back prices are rising to the 8.70-8.84 area this week and then rise to a 8.96-9.10 temporary PEAK in 8 trading days from now. Since that peak exactly coincides with the next U.S. Federal Reserve announcement on 3/18/20, you/I can wonder whether the 8.98-9.10 area will be “tested” on a decline into that time frame to again challenge the 92-96 index (and certainly “scare Jeffski”). That is NOT a prediction. I am just pointing out that possibility (set-up).
Someone else might conclude that THE most information is that the current SKI index pattern is NOW NOW NOW the closest possible parallel to the 2 GREATEST bull markets in gold stock history (since 1974). The 1979 bull yielded a rise from USERX $2 to $10 (plus huge dividends during the 1-year great bull). The 2001 bull yielded a rise from $2 to $6+ in 6 months. The 1979 and December 2001 bull markets started with a 92-96 index buy signal (of-course) and then went to a large “draw-down” into a tied 16-20 index buy signal and a 35-39 index sell signal. We’ve just had a 13% huge “draw-down” since early January that involved the 4-day great plunge. That fits with 1979’s 2-month play-around and quick 5-day 10% plunge into the index signals’ bottom. That also fits with the 2001 instant 4-day straight drop into the index signals’ bottom. THIS PATTERN HAS ONLY OCCURRED IN THOSE 2 BULL MARKETS (there has never been a “false positive”; the pattern is 2 for 2). We just missed that pattern by the smallest of mathematical fractions and 1 trading day when, as per last weekends’ Update, the 35-39 index’s sell signal had generated but the 16-20 index was at a flat zero and did not quite generate in exact synchrony with the 35-39 index. Therefore, our current index pattern just missed replicating the start of the 1979-1980 and 2001-2002 bull markets. Jeff believes in the exactness of SKI, but there ARE slight “errors” that occur. Jeff “has to” to look for a great bull here. If wrong, we have the sell-stop. The next step in a great bull is supposed to be a USERX 3-39 index buy signal BEFORE a 16-20 index sell signal. That’s the final step in the 1979 and 2001 bull market index pattern. That way, the intermediate-term 35-39 index buy signal takes USERX up and through the 16-20 index’s next resistance sell signal. The rare index pattern is important to understand for now and the future. Reread the paragraph.
Will the USERX 35-39 index soon bullishly buy BEFORE the USERX 16-20 index sells? Those indices back prices for this coming week are:
The 16-20 index’s back prices are about to rise to the 10.27-10.61 top from two weeks ago. Those back prices will be ABOVE the 35-39 index’s back prices. Therefore, the set-up IS present for completing a 35-39 index buy BEFORE a 16-20 index sell signal over the next 1-1.5 weeks. Such a new 35-39 index buy signal is another (the final?) place to buy if a strong bull market is going to finally manifest itself. The HUI has just executed a 16-20 index sell signal AND a simultaneous 35-39 index buy signal on this past Friday (3/06/20). The tied index signals typically mark short-term resistance but the tie allows for the continuing bullish intermediate-term rise. The HUI suggests that USERX will follow. The HUI’s 35-39 index would disappointingly sell on a decline to below the about 232.
The final index that is “in play” is our rather recently “amazing” short-term 884 index that buys on declines and sells on rises. The USERX 884 index is about to generate its quick resistance sell signal on Monday (3/09/20) for execution on Tuesday (3/10/20) IF/when USERX remains above 9.11 on Monday. The index had sold at the exact 2/24/20 top of USERX 10.61 and then bought on this past Monday (3/02/20) at USERX 8.81. The buy apparently missed the exact low by being late by 1 trading day. NOW, we have to “deal with” this next sell signal. Prices usually rise into such sell signals. If this is THE bull market, the gold stocks have to eventually rise through a sell signal. That still has not happened, but now we’ve got the next chance to do so. The 884 index’s back prices for this coming week are:
The 884 index’s back prices peaked at 10.28 two weeks ago (just as USERX spiked above the 10.28 final Summer 2016 peak into the index’s sell signal) and then plunged to 9.02. But now, you can see that they are flying back up to the secondary 2016 peak at 10.27 before plunging again. The 884 index remains “ready” for extreme volatility up and down but, again, a bull market requires an eventual move above/through an 884 index sell signal. The “good news” for the bullish case is that if this coming Tuesday’s likely sell signal yields a decline again, THE INDEX WILL QUICKLY BUY AGAIN unless USERX gets over $10 and stays there. Otherwise, there is likely to be a decline into another 884 index buy signal that generates on Thursday for execution on Friday. And then a quick 884 index sell signal AGAIN (that will need to be overcome). Hence, THE SIMPLE ACTION CONTINUES TO BE “BULLISH” UNLESS THE 92-96 INDEX SELLS, but Jeff will continue to try to navigate the short-term for traders via daily SKI Messages.
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.