Current USERX price = 13.21, Down 78 cents (5.6%) 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 SKI Report, written on 9/12/20, described how the bull market remained intact from the next disciplined buy-point, a 16-20 index buy signal that executed on the exact 8/25/20 low at USERX 13.45. That Report concluded that “The history since 1974 is perfectly (100%) bullish here but there are no “guarantees”: “Never say Never”. The “nice” development is that a true sell-stop could occur during the next 1+ week (exact Time X Price point reserved for SKIers) via a failure to stay above the USERX prices from 35-39 trading days ago BEFORE the decline goes below the 16-20 index’s prices from 16-20 trading days earlier. That would replicate the index’s switch to bearishness that occurred shortly after the 2/24/2020 top and yielded a 25+% quick plunge into the index-marked 3/13/20 major low”.
The gold stocks then surged 4% higher the next day (9/13/20) to USERX 14.51 and USERX rose for an additional two days to 14.74 on 9/16/20. That was within just 3 cents of making a new multi-year high (the 8/05/20 high at 14.76).
Then the decline began. The 16-20 index had previously bought on the decline to USERX 13.45 and then had executed its first resistance sell signal on the rise to 13.96 on 9/04/20. During bullish periods, USERX is supposed to break above that sell signal and STAY above that sell signal during the index’s “half-cycle”. Half-Cycle for the 16-20 index is 10 trading days. That bullishness was apparently occurring because after 9 trading days (on 9/18/20) USERX was above 13.96 (at 14.39). But on the last possible day (Day 10; Monday, 9/21/20), the gold stocks plunged to USERX 13.72. Half-Cycle had turned bearish to indicate that the next 16-20 index buy signal (on a decline) should execute at below the prior buy signal at 13.45.
The 9/21/20 decline had not only caused the half-cycle to turn bearish, but had also begun to move the 35-39 index towards a potential sell signal (as prices decline to below the prices from 35-39 trading days earlier). And USERX’s continuing decline on 9/22/20 all but guaranteed that the 35-39 index was going to generate. Prices almost always decline into such sell signals. Remember (from the prior Report) that such a 35-39 index signal would add to bearishness if it occurred BEFORE a new 16-20 index buy signal. Stated differently, during historical bull markets, the 16-20 index’s buy signal had always occurred BEFORE (or tied with) such 35-39 index sell signals during an intermediate-term corrective decline inside of a bull market.
Jeff understands that all of this may be so foreign to non-SKIers that it sounds like “gibberish”. But it’s the unique indices and the use of USERX’s unique properties which yield the rather exact Price X Time technical points. And index signals are objectively generated via simple addition, subtraction, multiplication, and division that anyone can compute/verify. Therefore, the plunge on 9/23/20 to USERX 12.75 was not surprising and followed Jeff’s unusual Intra-Week Sell Update.
The plunge from 14.74 to 12.75 was on a 3 Up and 5 Down USERX run pattern. Such run patterns are highly likely to mark a high (after-the-fact) AND a low. The subsequent rise into this past Thursday (10/01/20) occurred on 6 consecutive daily USERX rises. Such run patterns have never (since 1974) extended beyond 6 days Up. NOTE that USERX was the only known measure to rise on 9/30/20 (the unchanged day at 13.32 counted as a rise because the prior day was a rise). Once again, for the thousandth time, this is another reason to follow USERX with its unique international holdings that are affected by changes in multiple foreign currencies. Such 5 Down and 6 Up run patterns are high-probability tops. This one occurred just as the rise hit/touched the 35-39 index. That’s usually resistance UNLESS/UNTIL the 35-39 index actually generates a new buy signal.
Now, the USERX (and HUI) 35-39 index is within a few days of generating a new BUY signal. That requires a rise. But the intermediate-term down-trend remains intact with a risk down to the master 92-96 index (ala the Feb-March 2020 plunge). Jeff subjectively doubts that such a large decline will occur again, but a decline to below the recent 9/23/20 low of USERX 12.75 is expected. The bull market from March 2020 needs a new 35-39 index buy signal and that historically needs to occur by 35-39 trading days from its 9/24/20 sell signal on a RISE (it’s UNlikely to buy at a low).
Note how Jeff/SKI did NOT expect/predict the recent 5-day plunge in the prior Report 3 weeks ago. I was bullish and the gold stocks rose. And Jeff did not become bearish enough to sell (to reduce risk) until AFTER the decline was already meaningful. BUT Jeff could see the bearish possibility in the index cycles 3 weeks ago and then as it was unfolding. “Somehow” (I do not know “why”) the market’s “nature” is repetitively “marked” by the indices, their patterns, and the run patterns. Again, the 35-39 index IS now set-up for a buy signal but other factors indicate meaningful downside risks and probabilities.
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 $30 (for a one month subscription) or more ($240 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.