Current USERX price = 6.89, Down 15 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 5/14/17, described how the master USERX 92-96 index had generated a new buy signal on the 5/04/17 plunge and had reversed its previously bearish posture that started during the week of 4/17/17. By the time that last Report was published, the gold stocks had already risen from the buy signal. The boldfaced print emphasized that “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”. The accompanying SKI index chart showed how the 92-96 index’s back prices were about to skyrocket higher off of the December 2016 low (92-96 trading days earlier) and that USERX needed to stay above those index back prices to maintain the buy signal. The conclusions stated that “Jeff expects that the 92-96 index will sell soon, well before the next public SKI Report in 3 weeks” and suggested that this was still a good time to follow SKI.
And so, the day that the 92-96 index signal generated (5/04/17) was the exact low and USERX continued to rise from the publication of the last SKI Report. The rise continued for only 3 more trading days into 5/17/17. That continuing rise to USERX 7.21 yielded a potentially bearish 2 Down and 6 Up run pattern. There was no need to sell at that time because the 92-96 index (that is more valid than the run pattern) was going to generate its sell signal if USERX did not continue to rise over the next few days: The 92-96 index’s back prices from 12/28/17-1/04/17 had already risen to USERX 6.74, 7.13, 7.04, 7.20, and 7.29, so the index was going to generate a sell signal if the gold stocks didn’t just continue to rise. Again, the expectation was that the rise would NOT continue, but the index would handle the matter without my human judgment.
The 92-96 index’s sell signal DID generate on Monday, 5/22/17. Therefore, SKI was selling. Gold has continued higher since that time, but the gold stocks have SKI-declined. That clear “negative divergence” is usually (almost always) a bearish sign, but one does not know how long such a divergence can continue. At the 2011 multi-year top, it persisted for many months, but such a lengthy divergence is NOT expected here. USERX has been almost perfectly correlated with GDXJ during 2017, so GDXJ (or its equivalents) has the shorting vehicle of choice. The divergence might be attributed to the GDXJ’s “reallocation” (its selling of junior mining stocks) that will end on 6/16/17. Nonetheless, GDX has also declined from the sell signal. And mathematical/mechanical SKI knows “nothing” except for how the current price relates to the indices’ (cycles’) back prices….
The SKI indices are all on sell signals, so Jeff is in cash or short GDXJ (or equivalents) using a close over the last high of USERX 7.21 as a stop-loss. If/When USERX falls below the prices from 16-20 trading days ago, that “may” (not “will”) generate another valid buy signal within the next 1-1.5 weeks. The last SKI Report provided my strong expectation for a continued rise into a sell signal and that occurred with precision. This time, the situation is less clear. If the new buy signal generates (as IS expected) and fails, another “Armageddon-decline” should/would occur (similar to the 4/23/17 SKI Report that is in the 321gold Archives). The index signals for the HUI suggest that might occur.
The SKI indices have been extraordinarily precise in marking each multi-week low and high since the bull market buy signal on 1/24/16. I’ve stated in several of these Reports that such precision “has to” end at some time, but it just keeps on going (smile)…
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.