Current USERX price = 9.42, Down another 54 cents (5.4%) 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 3/15/13, contained an error. It was missing the question mark at the end of the title, “Completed Gold Stock Armageddon?”. I apologize for failing to check the posting on 321gold to correct it. [Editor: This error has now been corrected] It’s unlikely that Jeff would make such a definitive statement because the markets are never a certainty and are always a probability. Nonetheless, the last Report concluded that 3/05/13 was another chance at the major low but that the gold stocks had already risen to hit/touch the 16-20 index resistance. That resistance had stopped every rise since the September 2012 high. Furthermore, Jeff was planning to buy a breakout above that resistance.
USERX then rose to close at 10.08 on 3/21/13. That was just enough to breakout above the prior high of 10.07 (from 2/26/13) and to close over the prior run pattern high of 10.02 (that was 6 days Up into 3/12/13). That rise was also just enough to generate USERX’s first resistance 16-20 index sell signal.
The HUI’s 16-20 index sell signal took a little longer to generate than USERX. Its first resistance sell signal executed a week ago on Friday (3/28/13) at 357.11.
And then the gold stocks plunged again this past week along with the metals. First resistance obviously held again.
Since the September 2012 high, the market has done a wonderful job of generating index signals and run patterns that have had a reasonable probability of marking a low. The plunge from 1/23/13 to 2/20/13 was SKI-callable as an “Armageddon-type” decline, but most of the other down-legs have yielded possible lows. The gold stocks would then rise for a short time after the potential low before plunging again to continue the downtrend. That’s what just happened again after the 16-20 index sell signals.
Last week’s decline generated 16-20 index buy signals for USERX and the HUI. Yes, Jeff sent out yet another Intra-Week Update on 4/03/13’s decline. This time, the buy signals are Mechanical SKI buy signals. That hasn’t occurred since Mechanical SKI bought on 8/17/12 at USERX 11.30 and sold on 11/12/13 at USERX 12.81. Therefore, the current buy signal is more significant than any of the index signals or run patterns that have occurred since the September 2012 high.
If this buy signal fails, “Armageddon #2” should initiate for another large decline. The size and duration of the decline will likely fall within the historical averages for failed 16-20 index buy signals.
Simply stated, SKI’s on this buy signal that marked last week’s decline as a probable low. A failure should yield quite a strong decline. When I write the next Report in 3 weeks, I’d enjoy being able to report that prices have risen above the 35-39 index (the prices from 35-39 trading days earlier).
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.