Current USERX price = 5.05, Down 67 cents (12%) 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 gold stock SKI Report, written on Sunday 6/21/15, described how USERX had declined to the final SKI index sell signal on 6/04/15 after having made an exact high on the special 2 Down and 5 Up run pattern into 5/13/15. A brief rise that next week was needed for any bullish case but the historical probability was 60% for “simply a continuing decline”. The long-term situation could still have turned bullish on the 12/16/2014 index and run pattern buy signals at the exact USERX multi-year low of 4.82, but SKI was in cash.
Since that report, the gold stocks have simply declined. The HUI, the XAU, and GDX are now at new multi-year lows. This past Friday’s (7/17/15) decline made a new multi-year low in gold, below the $1130.40 low recorded on 11/16/2014. Nonetheless, USERX (SKI’s primary dependent measure) and GDXJ (the index tracking the smaller gold mining stocks) remain 4-5% above their multi-year lows.
For the past 3 weeks, Jeff’s been expecting that the next meaningful technical time period for the precious metals sector would begin on this past Friday (7/17/15) and extend out for another 9 trading days. That expectation was based upon the only SKI index that could be affected by the market’s movements: The master USERX 92-96 index.
If you go back 92-96 trading days, the 92-96 index’s back prices began to plunge on 7/17/15. And those back prices will continue to decline throughout next week. It’s easiest to see what’s happening by looking at the ongoing chart of the indices. The green line is the 92-96 index.
The gold stocks continue to behave in a bearish manner and SKI remains in cash. The only bullish possibility requires that USERX get above that green line to generate a 92-96 index buy signal. Friday’s decline kept USERX below that green line in a bearish manner. Due to that decline, USERX would need to rise at least a little over multiple days to generate the 92-96 index’s buy signal. If the index’s buy signal is generated during the next 1-2 weeks, you should be able to see that the green index line is about to bottom and then rise. Therefore, as is normal for the SKI indices, if USERX does rise above the green line, there will be a quick sell-stop put in place: A subsequent failure to remain above that rising green line. PERIOD. It’s that “simple”.
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.