Current USERX price = 7.48, Up $1.11 (17%) 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 gold stock SKI Report, written on Sunday 6/01/14, concluded with “the very real possibility that USERX will avoid selling the 92-96 index until after a rise and that a 1-year major Head & Shoulders bottom has been completed as USERX has fallen EXACTLY to its Right Shoulder bottom: The Left Shoulder was at USERX 6.27 in June 2013, the Head was at USERX 5.70 at the December 2013 low, and now USERX has fallen back to 6.27 with a variety of bullish indications. Jeff’s just waiting for some objective bullish index confirmation that the final bottom is in”.
Since that Report, the gold stocks went sideways for a few days and that WAS enough to sell the 92-96 index. And as per the last Report, the gold stocks could have continued lower OR that index signal could have marked the low because index signals mark the critical point. Therefore, Jeff and Mechanical SKI could not say “Buy” at that low and did not “know” the answer. But the subsequent rise DID generate the buy signal.
The new 92-96 index buy signal was generated on 6/11/12 and prices have risen. The SKI Path of Trades is on the master 92-96 index buy signal that is REQUIRED (but does not “guarantee”) a bull market. Now it gets SKI-complicated. That 92-96 index buy signal was XXed Out because it came after a 35-39 index sell signal and then a 92-96 index sell signal. The XXing Out means that the 92-96 “buy” signal is expected to mark a top UNLESS the buy signal comes BEFORE the 16-20 index’s sell signal. And that’s what happened on 6/11/4: The 92-96 index’s buy signal came one day BEFORE the short-term resistance 16-20 index sell signal. Therefore, the index ordering predicted a rise through that resistance. And that’s what happened last week. The gold stocks rose enough last week to also generate a long-term 221 index buy signal.
The 92-96 index and the 221 index are the master SKI indices, one for the regular indices and the other for the very long-term indices/trend. A SKI bull market requires that both of those indices be on valid buy signals. Therefore, we currently DO have a bull market index pattern that can last, but with one important caveat: That 92-96 index buy signal was still XXed Out. This XXed Out 92-96 buy signal is historically supposed to yield a rise (and it has), but then it is supposed to eventually give back most of its gains via a decline to a 92-96 index sell signal. In other words, this is supposed to be a “fake bull market”.
SKI and Jeff are long the gold stocks, but “antsy”: An eventual decline is supposed to sell the current 92-96 index buy signal and take away a decent portion of the current paper profit. What I “know” is the sell stop: A 92-96 index sell signal that would also likely occur with a 221 index sell signal. Go back 92-96 trading days (to 2/04/14 – 2/10/14) and you will see that the index’s back prices are rising with that February-March 2014 rise. Go back 218-222 trading days (8/05/14 – 8/09/14) and you will see that the 221 index’s back prices are rising with the summer of 2014 rise. The rises in the indices’ back prices are in beautiful SKI-technical synchrony. USERX needs to remain ahead of those rising back prices.
Here come the IFs. The bears should celebrate (big time) IF the 92-96 and 221 indices sell in the next week or two. The bulls do have a small probability of a long-term bull market IF the indices do not sell. The index pattern usually yields a further rise and then a decline. IF that “normal” behavior occurs, SKI will be ready for an amazingly bullish true bull market (which has been my expectation for this year since turning bearish again in late February 2014). I do not “know” which scenario will occur. But I do know the sell-stop and some continuing rise is needed to avoid that sell-stop as the indices’ back prices rise over the next 1-2 weeks. Seriously, you can look back 92-96 and 218-222 trading days and see if USERX remains over those rising back prices OR Jeff can do the work for you…
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 messages/alerts at a slightly higher price along with access to our informative Forum and a managed gold futures program. The precious metals are in a very long-term (decade+) up-trend but are the most precarious, volatile, and psychologically difficult market in the world (in my opinion). That's the way it's always been.