Current USERX price = 7.24, Down 86 cents (10.6%) 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 gold stock SKI Report, written on Sunday 8/25/13, described how the gold stocks were approaching the MAJOR RESISTANCE index, the 92-96 index (the green line on the SKI index chart shown in that Report), and that “the train had not left the station”, but that if the gold stocks rose that week and then declined “properly”, a SKI bull market would be setting up.
Jeff was actually looking for a rise into that Thursday (8/28/13) because such a rise would have generated the 92-96 index resistance signal and then a decline would be the set-up for a SKI bull market. The market topped a couple of days early, on the 8/26/13 reversal downward. The major resistance held, as was strongly expected, but more importantly, by failing to rise for those two additional days, the gold stocks avoided the set-up for a SKI bull market. That doesn’t mean that everything is bearish. It means that the next year isn’t likely to include the types of rises that occurred in 1979, 1982, 1993, 2001-2002, or 2005-2006.
The downside targets for the decline included USERX 7.15 and GDXJ 82.00. Those were open up-gaps (USERX’s was a weekly open up-gap from 8/05/13). The decline reached or almost reached those gap-targets this past week. More importantly, the SKI indices generated a HUI 16-20 index buy signal last Wednesday (9/11/13) for execution the next day. Prices usually fall into such buy signals, so last Thursday’s plunge was “just right” in terms of the index. USERX generated its 16-20 index buy signal on Thursday and executed on Friday (9/13/13; the intra-day low so far, but it’s only been one day!). Furthermore, the decline is about to go below the 35-39 index. Index signals often occur almost simultaneously on rises and declines: The more index signals, the more important the technical point.
Based upon the SKI indices, the gold stocks have reached the maximum downside point in Price X Time (again, the indices are not based upon just price or time, but the interaction of the two factors). There isn’t any index support below these index signals (i.e., USERX is below all of the lines in the prior Report’s SKI chart). The index pattern usually marks a low, but cannot be guaranteed. A break below these signals would be highly bearish for an extended period of time. If the expected rise occurs, in a week or two the gold stocks will generate a new 35-39 index buy signal and then the 92-96 index buy signal. That’s not a bull market because the 35-39 index buy signal will come BEFORE the 92-96 index buy signal, but it would be a powerful Double Buy index pattern (that has not happened in a few years) indicating the immediate potential for a multi-month rise. Based upon the prices that are coming into the indices from 35-39 and 92-96 trading days earlier, a failure of the Double Buy shortly after it occurs (usually almost immediately after the buy signals) would also be extremely bearish (a Triple Sell pattern between all three primary indices) that has always portended a 1-2 year major decline. In other words, if the expected rise occurs, it had better keep going. Whereas in the prior SKI Report I wrote that one shouldn’t fear “missing the train”, the next rise had better be an express train to a new higher level but shouldn’t be a “moon-shot bull market”.
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.