Current USERX price = 18.07, Up just 22 cents (1.3%) since the report 4 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.
In the last gold stock SKI Report written on Sunday 2/13/11, I continued to describe how the gold stocks were in a “new phase” during which rises into SKI index signals would constitute resistances/highs. I furthermore wrote how a rise on the following Monday (2/14/11) to over USERX 17.89 would generate the first resistance signal, a 16-20 index sell signal. Such a signal was important because a subsequent decline would generate a new 16-20 index buy signal, so there would be a safety net below the market after I had bought on 1/26/11. However, most of the time, after that initial index resistance signal, prices continue to rise to the higher-order index resistance signals.
What happened? Prices did thankfully rise on 2/14/11 to over USERX 17.89 and the first index resistance signal was generated. I did not sell on that signal because prices usually continue to rise and if prices had then fallen, SKI would have simply generated a 16-20 index buy signal.
The gold stocks and precious metals then continued to rise, as usually occurs. On 3/03/11 the gold stocks had risen enough to generate the next resistance signal, a 35-39 index “buy” signal. I put the quotation marks around the word “buy” because prices did rise over the prices from 35 to 39 trading days earlier, but since SKI had entered the “new phase”, that “buy” signal constituted resistance (in SKI language, the buy signal was “XXed Out”). Therefore, I sent a special alert warning that the gold stocks were likely to be topping, but could still rise to the final resistance level, the 92-96 index “buy” signal.
The index signals were designed to execute one day after they generate so that I would have a day to execute them. Therefore, the 3/03/11 35-39 index signal was executed on 3/04/11 at USERX 19.35. That signal marked the exact high in USERX and many gold stock measures. I always write how the index signals mark exact technical points with a standard deviation of one day. As another example, the 92-96 index signal was generated on the day of the 1/25/11 low and executed on 1/26/11, missing that low by one day.
But again, prices could have risen into the final resistance signal, the 92-96 index. And although 3/04/11 was the closing high, USERX remained high enough to cross over the prices from 92 to 96 trading days earlier to generate the XXed Out 92-96 index “buy” signal on 3/08/11 and I sent out another special alert warning as I did my selling at USERX 19.02.
That final resistance signal executed the next day, on 3/09/11. What usually happens is that prices immediately decline after these resistance signals to below the prices from 92-96 and 35-39 trading days earlier. And on 3/10/11, the gold stocks plunged (as well as the precious metals and the general stock market), with USERX declining to 17.75.
The decline has been strong to fall below the prices from 92 to 96 trading days earlier. We therefore have the 92-96 index signal executing tomorrow (on 3/14/11).
So here come the next “IF” statements. If prices simply rise from this point forward, the 92-96 index will re-buy and SKI will signal a major true SKI bull market. Although prices have risen several hundred percent from the 2008 life run low when I became bullish again (after turning multi-year bearish in May 2006), their performance has been poor relative to gold and silver bullion and they have not risen in the impulsive manner that occurs during a true bull market. Such a signal would change that situation but it appears that it will be difficult to accomplish.
On the other hand, if prices continue down this coming week, the remaining SKI indices will generate new signals. The 16-20 index will generate a buy signal and the 35-39 index will generate a “sell” signal. Therefore, all 3 primary indices would execute signals within a day of each other this coming week to mark a rather massive critical technical point.
I apologize for being one week late in posting this Report, but I did warn of such a possibility in last Report. I dislocated and broke my collar bone a week ago and am having major internet connectivity problems while vacationing with my son in New Zealand. I should be OK and will be returning home in a week, so the next Report should occur on time, in three weeks from now. Although SKI turned short-term to intermediate bearish again on 3/04/11 to 3/09/11, it continues to be adamantly long-term bullish from the 2008 crash.
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.