Special SKI Report #6:
So what's ahead?
Jeffrey M. Kern, Ph.D.
written Sunday June 18, 2006
SKI Special Report #6
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
work. I have initiated a subscription website since 1/13/06 (yes,
Friday the 13th) after having posted free updates for years at
the most informative gold site, 321gold, since its inception
approximately five years ago. 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 32 years and that
is what they will continue to do!
The SKI indices contain short-term
(16-20 trading days), intermediate-term (35-39 trading days),
and long-term (92-96 trading days) indices. The long-term
92-96 index remains on its true and rare bull market since 8/09/2005
at USERX (the gold stock mutual fund) 8.07. As I've written
since that date, the precious metals are expected to rise over
many months and years until that index sells. That primary
index currently sits at a profit of 75%, down from the
123% profit at the 5/10/06 peak, with USERX currently priced
at 14.09. A more comprehensive description of these mathematical
indices and their history is here. Although I use 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 unique SKI indices, I also use "run
patterns" to guestimate 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.
Almost 4 months ago, on 2/11/06, I posted an article entitled
SKI Report: Bull Market Corrections." That article emphasized
that bull market corrections are "Hard and Fast". And
the first low of that corrective period ended the next day.
About 3 months ago, on 3/11/06, I wrote the
second SKI Special Report for 321gold, again emphasizing
that bull market corrections are "hard and fast", posing
the question, "Did yesterday mark the low?" That
article was written one day after the low. About 2 months
ago, on 4/11/06, in the third
Special SKI Report, I wrote "Was that a perfect and
important high that occurred on a classic run of 4 consecutive
days up in USERX (the gold mutual fund that is my proxy for the
precious metals market) into 4/06/06 (at USERX 15.18, a new century
high)? Or will this Third Special SKI Report somehow mark its
third consecutive low? ". That was timing bingo #3 on
these Special Reports as the metals' market bottomed that day
for another explosive month yielding large new highs for the
century. About 6 weeks ago, on 5/05/06, in the
Fourth SKI Special Report, I reprinted a perfectly-timed
sell message from 4/19/06 and portions of my weekend SKI
Update that contained such ebullient statements as "SKI
is on predictive fire!". The conclusion section of that
fourth report on 5/05/06 posed the question, "So is this
Update just happening to mark a high?"
And finally, in the last Report on 5/28/06 with USERX at 15.41,
I wrote the www.321gold.com article
describing the historically rare 2 Up and 8 Down run pattern
that has marked the major highs in 1980, 1983, and 1996, as well
as the all-time lows in 1976, 1982, 1993, and 1998. Unfortunately,
the gold stocks had just completed such a historically bearish
run from 5/10/06 (at USERX 17.96) to 5/22/06, and I had missed
calling the 5/10/06 high.
So the precious metals had plunged in the historically bearish
run pattern from USERX (the gold mutual fund) 17.96 to 14.73
while I watched profits evaporate, but then had rebounded back
for two days to 15.41 on the day that the last article was written.
What has happened since then?
That 15.41 on 5/26/06 was
the wave 2 high on a 1 Down and 2 Up run pattern off of the short-term
low. The gold stocks meandered sideways that next week and I
sold everything. I
had missed calling the top but was selling the first rebound
at USERX 15.36, 15.40, and 15.24 that week after writing the
article. The bearish run (or the "death run" as I
call it) had occurred but prices had risen nicely in the 2 days
prior to that Special Report and I sold for safety. In fact,
when prices fell through the short-term 16-20 day SKI index on
6/06/06 (did the 6-6-6 date cause it? smile), breaking through
to the downside, I initiated short positions in gold futures.
I haven't mentioned it before in these articles, but I do offer
a yoked/managed futures subscription, added onto the normal SKI
subscription, that initiates futures trades in your account as
I initiate them in my account. And if you don't need/want a
"yoked" account, preferring to trade yourself, my intra-week
messages report my futures trades as they are being executed.
I do it conservatively and have only initiated two trades since
the website opened (the following figures are rounded, not exact):
Buy 3/23/06 at $550, sell 4/19/06 at $630, and then sell 6/07/06
$631, cover shorts 6/08-6/09/06 at around $617, trading 1-2 contracts
per $15K equity (while people became upset that I missed the
rise from $630 to $730 - too dangerous for Jeff - and the fall
from $730 to $630). The account has therefore more than doubled
its equity in 5 months with minimal market exposure. I don't
"enjoy" taking on market risk and seek to be patient
so as to execute at high probability times.
So what's ahead after this second plunge down, a wave
3 decline that saw USERX fall from 15.39 on 6/02/06 to 13.20
on 6/13/06 in another classic 1 Up and 7 Down run before rebounding
nicely the rest of last week back up to 14.11? I cannot provide
definitive public predictions because I must maintain the privileges
of paid subscribers (and for days, weeks, or even a few months
at a time, it is perfectly feasible for SKI to provide ZERO high
probability predictions). Therefore, this current SKI Report
continues to provide additional post-hoc (after-the-fact) SKI
data to non-subscribers (and a little information about future
possibilities). When USERX dropped to 13.20 last week, prices
actually hit final support, touching the master bull market 92-96
index at its prior peak from 92-96 trading days ago on January
31st-February 1st at 13.33-13.41. That isn't a coincidence.
That's how the indices work year after year. Since the SKI
bull began last August, I've always written that "eventually
prices will fall to touch the master 92-96 index"
I strongly believe that a massive and lengthy Wave 3 rise lies
in front of us, but it's all a question of timing. Wave 3 might
commence in about 2 weeks or in 2 years depending upon when the
death run is negated. Actually, I usually state that everyone
IS a timer; it's just a matter of whether one is a short-term,
intermediate-term, or long-term timer. Everyone has to decide
on a time to buy and a time to sell and/or go short and then
buy back. The "death run" can be negated (in fact,
it is always eventually negated!) and is not perfect. For example,
when the opposite of the death run occurred at the exact low
of USERX 2.94 on 8/31/1998, and prices rose about 50% (not a
typographical error) in 5 weeks, that "life run" predicted
a rise that would last for years until a "death run"
occurred. In hindsight, it was correct (as prices rose over
8 years to 17.96 last month), but prices did decline again in
2000-2001 below that 1998 low subsequent to a SKI Triple Sell
index pattern in late 1998 that temporarily but strongly negated
the "life run". The same thing can happen here, in
reverse, after a death run. I am always flexible, awaiting the
next SKI index signals and run patterns that denote a change
in market direction.
I provide short, intermediate, and long-term timing calls based
upon the SKI index signals, run patterns, and my 21 years of
gold experience. That is only half of the ball game. Some subscribers
have made enormous profits while others, reading the same SKI
Updates and intra-week messages, have lost considerable amounts.
That's partly why there is the "managed" futures program
and probably a managed gold stock program coming in the future.
This market is extremely volatile, one is going against many
of the smartest people in the world employed by large entities
with significant resources (central banks?), and one has to deal
with the powerful emotions of fear and greed. Two days before
the 5/10/06 top, I had 2 brand new subscribers (having subscribed
for just 2 days), ask to cancel their subscription because "I
don't need a timing service, I am going to buy today and hold".
I wrote how they would probably soon learn differently, a quite
prophetic statement that even I didn't heed until after the 8-day
"death run". Patience is always required, as there
will always be another buy signal and another sell signal. If
you expect me to make you a fortune in a month, you'll either
get very lucky to pick the exact opportune SKI moment to subscribe,
or you'll be disappointed. If you are inexperienced, take some
time to paper invest or follow the market (perhaps along with
SKI and Jeff).
I'll write another Report for 321gold in a few weeks (but I won't
report that the "death run" has been negated until
well after-the-fact) 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. And if
you remember, I don't want a subscription cost to deter "the
small investor" or "the person with special circumstances"
from subscribing/profiting. Seriously, if the above applies,
write to me at firstname.lastname@example.org.
Note that I don't provide "free trials" or "prorated
refunds": (1) the website provides many many free samples
of SKI Reports, (2) I won't cater to folks who want free info
and then leave, but will give discounts to people who need them,
and (3) It takes time to learn and judge a timer whom you haven't
been reading for a long time (there are currently over 1100 Skiers,
most of whom have been reading me for years; see the SKI website
rankings rising at Alexa.
Best wishes, Jeff
Jeffrey M. Kern,Ph.D., is an academic psychologist with a specialty in the measurement and prediction of human behavior. The communications provided are for informational purposes only and are not intended to be investment advice or recommendations for specific investment decisions. Dr. Kern is not a registered investment advisor, but is registered as a commodity trading advisor (CTA). The information provided is considered accurate, but cannot be guaranteed. Investments/trading in narrow market segments or gold futures is for individuals willing to accept a higher level of risk for the opportunity of greater returns. Past performance is no guarantee of future performance. His website is www.skigoldstocks.com.
Communications should be sent to: email@example.com.
Copyright © 2002-2023 Jeffrey Kern. All Rights Reserved.