Current USERX price = 16.41, Up 8.6% 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.
In the last gold stock SKI Report written on Sunday 3/21/10, I described, for the second consecutive Report spanning 6 weeks, how a true SKI bull market opportunity was presenting itself but had not yet been fulfilled. Such opportunities involve the master 92-96 index: True bull market require a buy signal from the master 92-96 index that is On the Path. Such buy signals do not guarantee a bull market (there are false or incorrect buys since 1974 that sell out quickly with a loss), but all bull markets (where the gold stocks rise for about a year to a new level and at least double) have only occurred when the 92-96 index is in control and giving a buy signal. They are rather rare events and since 2000, despite the overall rising trend in the precious metals sector, have only occurred in 2001-2002 and 2005-2006, but those periods accounted for the majority of the rise in the gold stocks over the past ten years.
That last SKI Report on 3/21/10 described how the 92-96 index HAD bought again on 3/08/10 on the day that appeared to be the exact intra-day high (the indices mark critical points and sometimes can be wrong on direction) and how Jeff’s human judgment was expecting a decline to sell out the true bull market opportunity for a second time. The importance of the 4 Down and 5 Up run pattern, with the 5 consecutive daily rises occurring into 3/3/10 was also described as being a classic top pattern: But if that high was exceeded, it would be bullish.
After the last SKI Report, the gold stocks did decline during the week of 3/22/10 and sold out the 92-96 index. The traditional technical charts on the gold stock indices and gold bullion also looked like they had “broken down” in a bearish manner. And that critical run pattern price of USERX 15.52 had not been exceeded.
Bu then the rise began, with the indices once again marking the low with a 92-96 index buy signal. On Thursday (4/01/10), USERX was clearly closing above the run pattern high of 15.52 and the bullish breakout occurred.
The 92-96 index has bought again, after having been “whipsawed” and we have another chance for a “true gold stock bull market with prices rising to new level and potential gains of over 100% over the next 6-18 months (I never know in advance how far the bull can rise but it’s usually at least 100%).
However, there isn’t any certainty in predicting market movements. And most importantly, the 92-96 index buy signal could fail again! The 92-96 index WILL sell over the next 2 weeks if prices don’t continue to rise. In other words, a decline will once again thwart the true bull AND a failure to rise will accomplish the same thing.
My (Jeff’s) human judgment was correct 3 weeks ago in expecting a decline the following week, but now my human judgment is unsure as to whether the 92-96 index will sell or whether this is the first gold stock bull market since 2005-2006. It’s hard to believe that the general stock market can just continue to climb and it’s hard to believe that the gold stocks will rise rather continuously for many months without some support from the general stock market, but the opportunity is here again and it does not occur very often.
The SKI indices will either ride a true bull market much higher or get stopped out within the next 2 weeks if prices do not rise enough. I like that index set-up. It’s that simple. And simplicity yields a rather short SKI Report!
Be well, 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.