Current USERX price = 6.63, Down 59 cents (8%) 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 contained an apology due to my neglecting to disclose (in the prior 321gold article) that I had sold the gold stocks in mid-July at USERX 7.56 (due to a 35-39 index sell signal). The 8/12/18 SKI Report furthermore emphasized that the master 92-96 index for USERX had generated its sell signal. Most importantly, the Report concluded that the index’s sell signal would likely mark a rather exact “bearish break-down” OR “a low”. After all, the SKI indices regularly mark the technical spots/points in Price X Time (as per the technical description). Lastly, the article concluded that the internet was replete with analysts’ articles on how oversold the gold stocks and gold were based upon “sentiment indicators” (e.g., the Commitment of Traders’ Report, the Daily Sentiment Indicator, and OPTIX) with the explicit warning that “negative sentiment can remain negative or become even more extreme for extended periods of time”.
When that 8/12/18 Report was written, USERX was at 7.22. Readers were encouraged to examine the 92-96 index’s back prices. As of 8/10/18, looking back 92-96 trading days, the index’s back prices were 7.41, 7.32, 7.15, 7.20, and 7.25. Therefore, USERX was already below three of the index’s five back prices. That was mathematically sufficient to generate the master index’s sell signal. And since prices usually decline into such sell signals (to mark a “break-down” or a “low”), any SKIers who were still long were again advised to sell in the 8/09/18 daily SKI email. ALL emails since 1/13/2006 are in the subscriber archives section of the SKI website.
The gold stocks then declined significantly (3%) on the Monday (8/13/18) after the Report was written. The harsh drop to USERX 7.01 was marked by the execution of the 92-96 index’s sell signal. Since USERX had fallen well below the index’s back prices of 7.32, 7.15, 7.20, 7.25, and 7.20, the index signal was marking a “bearish break-down”, not a “low”. The gold stocks continued to decline for the next three trading days as USERX dropped to 6.97, 6.60, and 6.51 on 8/16/18.
When the gold stocks drop below all of the regular SKI indices, the primary information comes from the long-term indices or the markets’ “run patterns”. The “crash” into 8/16/18 provided run patterns that are often marking at least short-term lows. USERX’s run pattern was 1 Up and 5 strong Down days (averaging more than 2% per day). And GDXJ completed a potentially more bullish 2 Up and 5 strong Down day run pattern. Short-term “casino patrons” were advised to buy as the gold stocks and gold then dropped on 8/23/18 to USERX 6.55.
Unfortunately (for bulls), when the sector rebounded rather strongly for 2 trading days into 8/27/18, USERX formed a generally bearish 1 Down and 2 Up run pattern at 6.86. It’s then declined for the subsequent 4 consecutive trading days into this past Friday (8/31/18).
Yes, since there isn’t any 100% certainty, as long as USERX remains above 6.55 and 6.51, the “plunge” (run down) into 8/16/18 could be a meaningful low. But the SKI indices remain bearish with the master 92-96 index’s sell signal having marked a bearish “break-down”. If the gold stocks do rise, each rise to a 16-20 or 35-39 or 92-96 index signal “will” (not “may”) mark resistance.
The current USERX run pattern is 2 Up and a weak/small 4 days down into this past Friday (8/31/18). A more bullish run pattern would form if USERX crashed 8+% on the next trading day (9/04/18) or if USERX dropped 10+% over the next several days. Such a rare crash cannot be expected, but we’ll soon see (smile).
Jeff is still adamant that the decline since we sold in the Summer of 2016 is a “corrective decline” from that rise. When the correction ends, the gold stocks (USERX) should do another one of their 100-200% rises over 6 months to 2 years.
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.