Current USERX price = 7.22, Down 34 cents (4.5%) 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.
Upon re-reading the last SKI Report (written on 7/22/18), I must apologize for the first time since I began posting on 321gold when it opened more than 15 years ago. That last Report described how SKI remained on a 92-96 index potential bull market from 6/18/18 at USERX 7.59. That was correct. It also described how USERX had risen to a 16-20 index first resistance sell signal and a 35-39 index buy signal as it surged higher (along with HUI/GDX) into 7/10/18 at 7.91. And then how it had declined to a 35-39 index sell signal and 16-20 index buy signal as that article was being written. The two index signals could mark a low OR a break-down. That was also correct.
What I failed to write in that last Report was that Jeff had just sold for safety (at a 2.2% loss) because the 35-39 index had sold, and would re-buy if the 35-39 index re-bought. There had never been a bull market that had started with a rise into a 35-39 index buy signal to mark a high and then sold that index at a loss. Hence, SKIers had been advised to sell on that 35-39 index sell signal.
It was correct that Mechanical SKI remained on its potential bull market 92-96 index buy signal. But the continuing decline has now generated the index’s sell signal. SKI has lost the rather normal 5% when a potential bull market (with 100+% upside potential) fails, as was described in the Conclusions section of that prior Report. It has sold just as the 92-96 index’s back prices have reached a temporary peak at USERX 7.24-7.41.
The master 92-96 index is marking a day early this week (exact day reserved for subscribers) as the next possible low OR the final bearish break-down technical point. If the 92-96 index’s sell signal is marking a low, it is set-up to quickly re-buy within a few days on a small rise. The set-up is nice, with a 90% historical probability of a profit IF the buy signal generates, because the index’s back prices (the prices from 96, 95, 94, 93, and 92 trading days earlier that you can check/see) will then begin to rise again. That would provide a rising sell-stop with very limited risk.
The internet is replete with descriptions of sentiment indicators (e.g., Commitment of Traders’ position, DSI, Optix) that are at rather extreme levels of bearishness that are usually indicative of a low. That’s all true, but it’s also true that negative sentiment can remain negative or become even more extreme for extended periods of time. And sentiment indicators do not provide stop-loss points that are always needed to prevent large losses. What I know is that if the 92-96 index re-buys quickly here, the probability of a rise is very high along with a rising sell-stop. The period right around the end of August and into the Labor Day weekend would be the danger time when the index can easily sell IF it re-buys quickly here.
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.