Current USERX price = 4.97, Up 13 cents (2.7%) 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 8/30/15, described how the gold stocks had risen to a 16-20 index sell signal that was first resistance but was also required for ANY bullish case. That’s because a decline would then generate a supportive Mechanical SKI 16-20 index buy signal. That 16-20 index buy signal had occurred, but in the short-term, another 16-20 index sell signal was within XX days of generating again for resistance. Essentially, the gold stocks were caught between the 16-20 index’s buy signals on declines and its sell signals on rises.
And so the next 16-20 index sell signal did generate the next day, as expected, and the gold stocks then declined into another supportive 16-20 index buy signal two weeks ago. As opposed to the small/tiny long position that Jeff had recommended on the first 16-20 index buy signal (because a sell signal would generate quickly), a larger long position was recommended and taken on this second 16-20 index buy signal. Such buy signals usually yield a rise into the next higher-order index, the 35-39 index, OR a rare break of that buy signal would yield an “Armageddon-type” decline.
After that 16-20 index buy signal generated on 9/04/15, the gold stocks went sideways and did begin to hit/touch the 35-39 index, moving its towards its buy signal. The buy signal (the next higher-order index buy signal that was needed for the continuing bullish case) was barely being avoided for several days, but kept moving towards the buy. On 9/15/15, the HUI and gold closed lower, but USERX eked out a 2-cent gain to close at 4.70. The 35-39 index’s back prices were 4.74, 4.69, 4.64, 4.71, and 4.63 on that day. Therefore, USERX had risen above 3 of 5 index back prices and was within one day of generating the next bullish index buy signal (that 35-39 index buy signal). The HUI was lagging USERX and needed a rise to the 110-115 area to generate its 35-39 index buy signal. The next day (9/16/15), USERX surged higher to confirm the validity of the prior 16-20 index buy signal by generating the needed 35-39 index buy signal. MECHANICAL SKI WAS ON A DOUBLE BUY INDEX PATTERN into the 9/17/15 U.S. Federal Reserve announcement. That wasn’t a “pleasant” position to be in, but the rise continued into the end of this past week as USERX rose for 4 consecutive days from 4.68 to Friday’s closing price of 4.97.
Mechanical SKI remains long from its 16-20 index buy signal and has executed its 35-39 index buy signal for potential intermediate-term bullishness via an additional 20% rise over the next month (about 21 trading days from the 35-39 index buy signal). But such a rise is NOT “guaranteed”. What is 99.9% guaranteed is that a failure to maintain the 35-39 index buy signal has historically yielded (almost always) a major decline that lasts weeks-to-months. The next 16-20 index sell signal is within XX days of generating and could/might stop this rise. If it stopped the rise, the rising 35-39 index would sell within a few days after the top for the “Armageddon-type” decline.
You may be tired of reading the above technical trivia, but here’s some more, and it’s of major SKI significance. The prior SKI Report described how the master long-term 221 index would likely come into play in “several weeks”. The actual date was this past Friday (9/18/15). This is SKI’s “ace-in-the-hole” as a rise was expected to at least hit/touch this long-term index on a rise into NOW. A 221 index buy signal is needed for any very long-term bullish case, but a quick buy-to-sell would be extremely bearish (as has happened several times from 2011-2014 at significant tops). This is 2015’s chance for bullishness or another major decline.
Long-term readers know that I refrain from advertising, hype, and definitive predictions. But every 3-6 months, a definitive statement is possible based upon the SKI indices. This is such a time. SKI is on a 16-20 index buy signal that initiated 2 weeks ago and received secondary confirmation via this past week’s 35-39 index buy signal. That’s a Double Buy index pattern that projects a 15-20% rise over the next month. Such a rise cannot be guaranteed because the 16-20 index sell signal is close to generating for resistance and the master long-term 221 index is being hit/touched for additional potential resistance. Jeff is going to prudently take some profits this coming week into the 16-20 index’s sell signal and maintain some long position for the potential continuing rise.
The definitive statement is that IF the 35-39 index generates its sell signal after this 16-20 index sell signal, a major decline should follow. Additionally, if the market fails to generate the 221 index’s buy signal, or better/worse yet, buys and then quickly sells the 221 index (as the 35-39 and 221 indices’ back prices are about to RISE and USERX needs to continue to rise to stay above those indices’ back prices), the major decline should/will be particularly probable/definitive. SKI is long, but has a definitive sell-and-reverse point that is quickly approaching.
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.