Current USERX price = 7.07, Down 25 cents (3.4%) 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 6/25/17, described how the SKI 35-39 index had executed a buy signal as of the close of 6/20/17 at USERX 7.15. The immediate 3-day surge higher in the gold stocks was consistent with the buy signal having marked another exact low. Such 35-39 index buy signals usually portend an intermediate-term (1-3 month) rise.
USERX then declined a little on Monday (6/26/17) before rising a little on Tuesday (6/27/17) and Wednesday (6/28/17) to 7.37. When USERX was declining on Thursday (6/29/17), it was completing a generally bearish 1 Down and 2 Up run pattern. Therefore, despite the intermediate-term 35-39 index buy signal, the bearish run pattern caused Jeff to recommend selling 50% of long positions to take the partial small profit at USERX 7.25.
USERX continued to decline. It fell to 7.14 on 7/03/17 as gold gapped lower below the chart support line from the December 2016 low. The 35-39 index’s buy signal wasn’t supposed to go any loss, so the decline to a 1-penny deficit suggested continuing bearishness.
USERX continued to decline after the July 4th holiday. USERX manifested a SKI-classic 2 Up (on the 7.37 run pattern high) and 6 consecutive daily declines into 7/07/17. Such runs down usually stop at 5-6 daily declines. The last two times that we’ve had that classic run pattern were on 12/16/2014 and 12/16/2016. Those were both exact meaningful lows, as is supposed to occur with such run patterns, especially because each of those runs down averaged USERX declines of 2.5% per day. Runs that average more than 2% per day as referred to as “strong runs”. Strong runs are more predictive than “weak runs”.
The current run down averaged a weak 1.1% daily decline. Therefore, the run down did not clearly portend a low. It has an approximate 50% historical probability of marking an exact low as USERX closed at 6.87 on 7/07/17. Note how that 6.87 closing price was 1-penny above the prior low on 6/01/17 at 6.86.
The 2 Up and 6 Down run yielded a solid rise last Monday (7/10/17) to USERX 7.07, but it wasn’t enough to prevent the 35-39 index from generating its sell signal. SKI index signals were designed to generate on one day and then execute the next day (so as to provide a 1-day advance notice of execution). Therefore, Mechanical SKI officially sold on 7/11/17 at 7.06 for a 9-cent loss (1.3%). That was SKI’s second consecutive small loss after a nicely profitable 92-96 index buy signal that generated on the 5/04/17 exact low.
What’s next? SKI and Jeff are in cash but USERX has held above its prior low (so far) and the potential run pattern low of USERX 6.87 has not been broken to the downside. The gold stocks (USERX) will either break down OR will generate a new 35-39 index buy signal within the next 7-8 trading days. I am using the word “will” due to the extremely high mathematical probability of that statement being correct. The USERX 35-39 index’s back prices for this coming week “just happen” (smile) to be declining towards the prior 6/01/17 low of 6.86:
Therefore, USERX will either generate the buy signal (using the formula provided to all subscribers that Jeff automatically computes and reports) OR the breakdown will almost certainly occur. If the buy signal generates, it will be buyable with an almost instantly RISING sell-stop (i.e., a solid rise would have to quickly occur or the index would sell quickly). That’s a rather ideal situation…
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.