Current USERX price = 7.45, Down 16 cents (2%) 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 Sunday 4/02/17, was rather unimportant and did not contain any meaningful predictions. The gold stocks (USERX) were within a few days of generating a potential bull market master 92-96 index buy signal, but even if that occurred, the index configuration was not consistent with the start of any of the bull markets since 1974: Specifically, USERX remained below the 35-39 index (the prices from 35-39 trading days earlier) and the master long-term 221 index (the prices from 218-222 trading days earlier). As stated in that last Report, “The master 221 index would need a 3+% rise over the next 1.5-2 weeks to generate a new master 221 index buy signal, and if that occurred, USERX would then need to rise to almost $9 in the subsequent 2 weeks to avoid a quick subsequent 221 index sell signal”.
That was all correct. The 92-96 index’s buy signal generated the next day for execution on 4/04/17 at USERX 7.66. Since the bull market set-up just wasn’t “SKI-correct”, we only took a small long position. The gold stocks then rose and despite all of the bearish forecasts from analysts when gold rose and fell on Trump’s Syrian missile attack on 4/07/17, SKI did not generate any index signals and remained somewhat bullish.
The gold stocks then continued higher and generated multiple index signals for execution on 4/12/17. USERX rose to 7.96, the HUI rose to 213.25, and gold continued to rise into 4/12/17. The HUI executed its master 221 index buy signal and USERX was about to do the same thing. That was the 1.5-2 week time line provided in the prior Report. As per that Report, USERX then needed to skyrocket 9+% towards $9.00 within a week to maintain that buy signal and the HUI needed to rise 5+% to maintain its 221 index buy signal.
And there were other SKI-indications that something unusual was occurring that did not fit with a bull market. First, the USERX 16-20 index executed a “strange” buy signal on that same day (4/12/17). The 16-20 index is a contrarian index that buys on DECLINES (oversold conditions). With gold at a new 2017 high on 4/12/17 and USERX rising into the index’s “buy” signal (despite being below the prior high of 8.16 exactly 16-20 trading days earlier), something was “amiss”. Second, USERX still could not generate the 35-39 index buy signal that is needed for a bull market.
And so, that day (4/12/17) was technically-marked by the SKI indices and was the next top for the gold stocks. Gold continued to rise on 4/13/17 and 4/17/17 to record five consecutive higher closes. Such runs usually end at 5 Up days. And USERX declined during those two days for a “negative divergence”. Fundamentalists will now ascribe the weak performance in the gold stocks, and particularly in the junior gold stocks (that comprise a significant portion of USERX’s holdings), to the “problems” with GDXJ. But the SKI indices have gone through all kinds of news and “fundamental events” in the past 43 years and has continued to be predictive, so Jeff doesn’t care about “the reason”. When the gold stocks were declining on 4/17/17, it was clear that the master 221 index was extremely likely to generate a quick sell signal and Jeff began to sell.
The USERX 92-96 index remained on its buy signal, but Jeff had targeted this coming Monday (4/24/17) as THE likely time for it to also generate its sell signal. That expectation was based upon the 92-96 index’s back prices: They would reach a peak of 7.50, 7.52, 7.51, 7.54, and 7.54 on that day (from 12/02/16-12/08/16, 92-96 trading days earlier). And the most recent low, on 3/09/17, “just happened to be” (smile) USERX 7.51. Therefore, a decline to below 7.51 would simultaneously break the prior low AND move the 92-96 index towards its sell signal. That break of 7.51 began last week on 4/19/17, right after gold had gone up for an ominous 5 consecutive days.
We are at an important SKI technical point now, unlike the blasé situation from the last Report. The master 221 index for USERX and the HUI have done a quick buy-to-sell at a small loss for that index. Historically, that is ominously bearish. And the master 92-96 index may generate its sell signal tomorrow on the day that was projected several weeks ago. An approximate 15% plunge is very feasible over the next two weeks because the 92-96 index’s back prices are about to plunge from the 12/08/16 top of USERX 7.54 to the 12/16/16 low of USERX 6.47.
Based upon the SKI indices, there isn’t any reason to be long at this time: If the 221 index’s bearish pattern is wrong (unlikely), a small rise over the next 1-1.5 weeks would generate a true potential bull market 92-96 index buy signal AND the needed 35-39 index buy signal (as its back prices drop to the 3/09/17 low of 7.51). Such a Double Buy would be similar to the bull market buy signals in January 2016!
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 daily messages/alerts at a slightly higher price along with access to our informative Forum.