Special SKI Report #9:
A Precarious Bull
Jeffrey M. Kern, Ph.D.
written Saturday, September 2nd, 2006
SKI Special Report #9
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 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. A more comprehensive
description of these mathematical indices and their history is
found at http://www.skigoldstocks.com/about.php.
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 the last report for 321gold
on 8/09/06, I was wishing the SKI bull a Happy Birthday. It had
been exactly one year since the master 92-96 index had initiated
its buy signal on 8/09/05 at USERX 8.07. That index had been
touched only once in the past year, on 6/13/06, the day of the
low to date. In that 8/09/06 Birthday Report, I wrote:
"Unlike the XAU and the HUI indices, USERX has recently
moved above its July 2006 high. As long as the master 92-96 index
remains on its buy signal, the bull lives according to SKI. Prices
touched that index on the day of the low on June 13th 2006 but
did not sell the index. IN SEVERAL WEEKS THE 92-96 INDEX BACK
PRICES WILL RISE TO USERX 16.36 (current price = 16.42). Although
the gold stocks have been volatile for months, I'm now wondering
whether USERX will now remain flat for weeks and then fall a
little to touch the 92-96 index. In my view, that will mark the
critical moment to the day for the next year: the 92-96 index
will either sell or the market will explode upwards. If the 92-96
index remains on its buy signal, I'll have to write that we should
go into suspended animation for another year and expect another
100%+ rise. And then I can write another happy birthday/anniversary
report on August 9th, 2007!"
Those several weeks have passed and the 92-96 index WAS touched
this past week. I've copied portions of this weekend's SKI Update
that I've sent to subscribers today. Please note that some portions
have been withheld in deference to my subscribers and that an
intra-week alert was sent when the 92-96 index was "touched".
Also note that these excerpts discuss the precarious nature of
the bull. Please do not assume that the "touch" guarantees
an explosive rise. If the index sells, the SKI bull ends for
an extended period of time.
Excerpts from the 9/02/06 SKI Update:
"SKI Update 9/02/06 Bold print in Tables highlights
changes from the prior week.
Update Summary: Current USERX price = 16.25
The summer corrective period and/or trading range formation should
have ended on last Tuesday/Wednesday's short-term index buy signals
coupled with a touch/hit/break of the master long-term 92-96
index! (the 15-19 index bought on the day of the intra-day low,
Tuesday 8/29/06; the 16-20 and Composite indices bought one day
after the low on 8/30/06). All trends are supposed to be UP with
the 35-39 index intermediate trend having bought a month ago
on the double buy and the long-term trend remaining PRECARIOUSLY
up (see below) via the one-year-old 92-96 index buy signal. The
psychological/technical action this past week was SKI index perfection
despite unusual gold stock movements due to takeover news affecting
Goldcorp (GG; USERX's largest holding plunging) and potential
take-over candidates (GLG; rising).
As per last weekend's Update, continue to follow the master 92-96
index over the next month (stated definitively). That index continues
to be touched/hit/broken every day and can generate a sell signal
now within two trading days over the next week and probably anytime
over the next month. If prices fail to move in the exact fashion
dictated by the 92-96 index, the SKI bull will end for months
or longer, I will send an immediate sell message to all skiers,
and Jeff will initiate short positions. Don't be anxious or worried
by this wall-of-worry. Jeff is not anxious because the 92-96
index has the situation handled in a beautifully objective manner.
In a week from now the indices could even generate an important
double sell pattern right at/near what would be an important
high (a fake-out break-out).
This Past Week's Review (Jeff's Perspective and the Indices'
Monday 8/28/06: Last weekend's Update noted how the bears
needed a drop to USERX 15.92 to hit/touch/break the 35-39 index
simultaneously with the 92-96 index that was at 15.94. The market
(nature) tried to do that on Monday, but USERX held by one penny,
closing at 15.95! That was a bullish closing price, but didn't
quite provide the expected touch of the 92-96 index. Hence, I
was personally expecting a drop of a penny or two on Tuesday,
but Tuesday's 92-96 index high back price was flying up to 16.36
anyway, so any Tuesday close below 16.36 would touch the 92-96
index. The 15-19 index buy signal was generated for execution
the next day, on Tuesday 8/29/06 (A Table of index signals is
on the website via the link under the SKI index graph upon log-in;
the link is titled, "Current Index Status")
Tuesday (8/29/06): Prices opened the day by falling enough
to smash the 35-39 index. Prices had to hold or reverse to keep
the bull intact. The reversal occurred late in the day and USERX
closed up one penny. That was enough to touch the 92-96 index
while avoiding the 35-39 index prices. A 16-20 index and the
Composite index buy signal were generated for the next day, on
Wednesday (8/30/06): Despite gold's strong rise, the gold
stocks rose meekly, with USERX closing up 10 cents at 16.09.
The weak rise was appropriate for the indices because the 16-20
and Composite indices should be buying at or very near the low.
Thursday (8/31/06): The announcement of Goldcorp's (GG)
intended take-over of Glamis Gold (GLG) sent GG plunging
9% while the smaller precious metals stocks surged on the increased
possibility that they would be take-over candidates in the future
(at least that is the fundamentalists' view). Technically, the
SKI indices needed a USERX close over 16.10 (up two pennies)
and preferably over 16.15 (up 7 pennies) to prevent the 92-96
index from coming very close to selling. Goldcorp constitutes
about 20% of USERX's holdings. Therefore, if its other holdings
didn't surge, USERX would have fallen to a 92-96 sell signal.
On the other hand, if USERX had not been holding GG, it would
have skyrocketed and that would have been an unexpectedly rapid
breakout. USERX's close at 16.14 (up 5 pennies, but UP nonetheless!),
continued to break the 92-96 towards a sell signal. Prices needed
to stay above USERX 16.10 on Friday. I expected a Friday rise
to 16.23 or higher to hit resistance; resistance being the now
falling short-term indices that had their first low price of
16.23 on Friday.
Friday (9/01/06): Despite gold's small decline, the gold
stocks rose and USERX rose to 16.25. The 15-19, 16-20, and Composite
indices were touched/hit/broken on Friday, representing a touch
of resistance levels and a run pattern of 1 Down and 4 Up.
The Indices and Expectations for This Coming Week:
This follows for subscribers."
The weekend after Labor Day is typically a seasonally bullish
period for the precious metals and a period of increasing volatility
for all markets subsequent to the summer "doldrums. But
if the 92-96 index sells, SKI and Jeff become bears.
I'll write another Report for 321gold in a few 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. 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.
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.
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