Current USERX price = 7.04, Down 41 cents (5.5%) 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 4/23/17, described index signals that occurred at the 4/12/17 top and the subsequent week that were historically “ominously bearish”. The conclusion was “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”.
And so, the gold stocks simply declined, as was expected based upon the indices. A potential further 15% decline was noted in the last Report. The decline to USERX 6.67 on 5/04/17 (from 7.45 as of that last Report) was “only” 10.5%.
An interesting thing happened on the way to the gold stock “cemetery”. SKI continued to be open to any new index buy signal and the master 92-96 index’s back prices were plunging to the December 2016 low just as USERX was plunging towards that low of 6.42-6.47. IF USERX COULD STAY ABOVE THE DECEMBER 2016 LOW, IT WOULD STAY ABOVE THE PLUNGING 92-96 INDEX’S PRICES AND GENERATE A NEW BUY SIGNAL.
On 5/03/17, if you went back 92-96 trading days, you would have seen that the master 92-96 index contained prices of 7.34, 7.05, 6.62, 6.47, and 6.48. USERX had declined to 6.93. Therefore, unless USERX plunged to below 6.62 the next day (on 5/04/17), the master 92-96 index was going to generate its buy signal.
Gold and the gold stocks then did the expected gap-down plunge on the next day (5/04/17) but USERX closed at 6.67 and remained above 6.62. The 92-96 index cycle had held and THE MASTER 92-96 INDEX’S BUY SIGNAL GENERATED on 5/04/17. SKI was reversing its bearishness and going long. Jeff had to recommend covering all short positions and moving back to a long position in the gold stocks.
The gold stocks have simply risen from that buy signal even as gold declined a little more before doing some recovery during the last few days. The new 92-96 index buy signal had some similarities to the 92-96 index buy signal in January 2016 that started the last SKI bull market 100+% rise. In January 2016, USERX plunged to 4.64, but by holding above the actual multi-year low of 4.62 from 9/10/15, it quickly generated the master 92-96 index’s buy 94 trading days after that 9/10/15 low and the bull market rise to USERX 10.28 had started. This time, there are multiple SKI-historical reasons to expect that this new 92-96 index buy signal will yield a profit and sell very close to the next top.
SKI and Jeff remain bullish from the master 92-96 index buy signal that generated at the 5/04/17 exact low. Any time that a 92-96 index buy signal occurs that is On the SKI Path of Trades and is not XXed out (read “About SKI” at http://www.skigoldstocks.com/about.php), it’s a potential SKI bull market for a 100+% over 6-12 months.
Jeff’s human judgment, based upon my knowledge of SKI over the past 32 years, doubts that 5/04/17 marked the start of another bull market because the USERX 35-39 and 221 indices remained on sell signals. A bull market has never started under such conditions based upon my database from 1974. THE BULL CASE REQUIRES USERX TO REMAIN ON A 92-96 INDEX BUY SIGNAL FOR THE RISE TO CONTINUE. If you go back 92-96 trading days, you’ll see that the index’s back prices are at the December 2016 low and are in the process of skyrocketing higher as per the rise in January 2017. Here’s the current chart of the indices.
The green line is the 92-96 index and the black dots are USERX’s daily price. Note how USERX plunged but held above the green line on 5/04/17 to generate its buy signal, but now the green line is flying higher. IF/WHEN USERX FAILS TO RISE ENOUGH TO STAY ABOVE THE RISING GREEN LINE, THE MASTER 92-96 INDEX WILL GENERATE A SELL SIGNAL (and Mechanical SKI + Jeff WILL SELL). Discipline does not allow for new purchases if you missed the 5/04/17 buy signal.
Jeff expects a 92-96 index sell signal to occur very close to the next high because the index’s buy signal generated on the exact low, but Jeff remains long until such a sell signal. My expectation for such a sell signal could be wrong (that’s doubted based upon historical SKI data), but that does not matter because SKI and I would simply remain long in a new bull market. Just as the last SKI Report stated that there was “no reason to be long the gold stocks”, the new buy signal meant that was no reason to be short the gold stocks because SKI would/will sell if this rise fails. Jeff expects that the 92-96 index will sell soon, well before the next public SKI Report in 3 weeks, but even if/when that occurs, the SKI indices are set-up for a final corrective low buy signal (from the Summer 2016 high) if/when another decline occurs.
I don’t state this on a regular basis, but this IS a good time to subscribe to either ride the unexpected bull market 92-96 index buy signal higher OR to sell soon (if the 92-96 index sells soon near the next top) and then probably buy back on a decline to come close to the final corrective low from the Summer 2016 top.
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.