Current USERX price = 7.57, Up 2 cents (0.2%) since the last 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.
The last SKI Report (written on 4/22/18), concluded that, “The intermediate-term trend remains sideways-to-higher from that anomalous 3/19/18 USERX bullish run pattern but this rise does NOT meet the definition of a SKI bull market because the SKI Path of Trades isn’t on a USERX 92-96 index buy signal. The next technical SKI-point is likely to take another 3-5 weeks as the 92-96 index’s prices rise up to the important January 2018 USERX top of 8.07. If USERX doesn’t rise above that price level at THAT time (Price X Time is what SKI-matters) OR if USERX falls back below the index at THAT time, the index will sell to set-up a distinct index pattern: Another chance at a true SKI bull market or the second meaningful decline of 2018”.
This 321gold SKI Update was delayed by one week because the time for that next technical point had arrived as of last weekend. The gold stocks HAD continued “sideways-to-higher” into last weekend and the 92-96 index’s back prices (i.e., the USERX prices from 96, 95, 94, 93, and 92 trading days earlier) were about to jump higher into the January 2018 highs at USERX 7.96-8.07. As of last weekend, it was expected that the 92-96 index was about to sell. The index has started moving towards a sell on 5/08/18 – 5/11/18. For example, on 5/08/18, with USERX at 7.62, the 92-96 index’s back prices were 7.34, 7.37, 7.49, 7.59, and 7.67. Therefore, USERX was below 1 of the 5 back prices. The move towards a 92-96 index sell signal continued the next day (5/09/18) as the gold stocks were flat but USERX rose to 7.68 largely due to rises in foreign currencies (the Canadian and Australian Dollars; USERX buys gold mining stocks directly in the non-U.S. exchange such that the U.S. value of those stocks is affected by movements in the foreign currency; that’s what makes USERX “special” and is likely to be “why” the SKI indices and run patterns work best using USERX). Despite that 5/09/18 rise, the 92-96 index kept moving towards a sell signal because its back prices had also increased to 7.37, 7.49, 7.59, 7.67, and the new 7.72. Therefore, the current USERX price of 7.68 continued to be below 1 of the index’s 5 back prices.
By Friday (5/11/18), the 92-96 index was moving even closer to its sell signal despite the fact that the gold stocks had risen during the week and USERX was just one day off of a new multi-month high at 7.80. USERX closed at 7.78 on 5/11/18, but the index’s back prices had risen to 7.59, 7.67, 7.72, 7.92, and 7.99. Furthermore, the small decline on 5/11/18 had yielded a generally bearish (80% historical probability) 1 Down and 2 Up USERX run pattern.
I presented the detailed index information above because you can compute the important SKI indices yourself. But most folks don’t want to spend the time doing the computations for themselves on USERX and the HUI, or to learn the important index patterns and USERX run patterns, so they spend a little money and subscribe for Jeff to do the work. I did not suggest subscribing in the last 321gold SKI Report because it was likely to take another 3-5 weeks to reach the next technical point. That situation has now changed.
The master 92-96 index sold. The sell signal, along with the 5/11/18 bearish run pattern, likely ends the expected intermediate-term rise from mid-March 2018. Such intermediate-term rises usually persist for 2-3 months, so that rise “fit with” the normal time frame. As per the 321gold SKI Report from a month ago, the master index’s sell signal now provides “Another chance at a true SKI bull market” via a new 92-96 index buy signal “or the second meaningful decline of 2018” (the first such decline was after the 1/22/18 92-96 index sell signal).
A 92-96 index sell signal opens the SKI Path of Trades to any new buy signal but a true SKI bull market requires that the 92-96 index be On the Path of Trades (ala the 1/26/2016 buy signal that yielded a bull market and the 12/18/17 buy signal that yielded a rise that failed via the 1/22/18 92-96 index sell signal). For now, the mechanical SKI System is in cash awaiting the next buy signal. The most encouraging sign for a bullish outcome is the continuing strength in the gold stocks (especially USERX) relative to gold, but SKI awaits an actual index buy signal before becoming bullish.
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.