Current USERX price = 8.42, Down another 83 cents (9%) 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 Sunday 9/18/16, was the second consecutive report describing some SKI-based technical reasons to support the conclusion that the gold stocks were in a major intermediate-term decline from USERX’s 8/18/16 high at 10.28.
Since that report, the gold stocks quickly rebounded on the 9/21/16 U.S. Federal Reserve announcement, but then began to decline again. The subscriber weekend Update of 9/24/16 stated, “Jeff still looks for a major decline starting now down to perhaps USERX X.XX where the 92-96 index and the 884 index simultaneously decline to the exact same price in about 3 weeks”. The subsequent SKI weekend Update on 10/01/16 stated, “As per last weekend, note how multiple indices will converge at much lower prices (USERX = X.XX) in just two weeks. That’s the master 92-96 index (a decline below it ends Mechanical SKI’s bull market from January 25, 2016, but that can be a low), the contrarian 663 index (a decline below the 663 index line is a buy signal), and the long-term contrarian turquoise 884 index line… Although time is running out and USERX would need to drop almost 20% in a short time period, the convergence of all those indices continues to suggest that a quick large decline is imminent…(although almost unbelievable due to the precise timing and the large size of such a move)… A decline below the prior (9/16/16) low of USERX 9.25 or even just below 9.34 is likely to initiate a strong decline into a probable low marked by multiple long-term index signals in 2-3 weeks.”
What happened? The gold stocks then declined on Monday (10/03/16) with USERX closing at 9.36 (just above the 9.34 and 9.25 levels). They then gapped lower on Tuesday morning (10/04/16) and the plunge began. Therefore, the plunge was technically SKI-perfect (again).
Subsequent to the beginning of the master 92-96 index’s SKI bull market in January at USERX 4.99, I publicly disclosed that the history of such bull markets since 1974 suggested that USERX would rise at least 100% over 6-12 months, in a rather straight-up manner, and then decline rather straight down to lose about 50% of its gain in a rather straight-down manner to a 92-96 index sell signal. And that most people would not want to sit through such a powerful decline despite the fact that the long-term 221 index’s buy signal at USERX 5.96 on 2/08/16 projected an eventual continued rise into at least 2017. Therefore, the prediction has been that USERX would now decline to a 92-96 index sell signal.
Jeff calculates/reports the SKI indices for the HUI as an auxiliary dependent measure. The USERX SKI indices continue to be the primary predictive tool. The HUI is more volatile than USERX. It rose more than USERX during the bull market and has now declined more than USERX. In fact, the HUI has just sold its master 92-96 index on the decline into this past Friday (10/07/16) to lose essentially 50% of its bull market gain. That increases the likelihood that the USERX 92-96 will also soon sell and complete its bull market from January to initiate the next gold stock “phase”.
The above paragraphs concealed the USERX price level where multiple long-term SKI indices converge by using the “X.XX”. But I did disclose above that an approximate 20% decline from 10/01/16. This past week’s 11.6% decline in USERX has not reached that approximate 20% level. THEREFORE, A FURTHER DECLINE IS PROJECTED TO OCCUR SOON INTO MULTIPLE SKI INDEX SIGNALS THAT ALL “CONVERGE”. That is not a projection for 1-2 trading days (especially since Canada is closed on Monday and that will mute any movement in USERX’s international holdings). BUT TIME IS ALMOST UP AND A FURTHER DECLINE IS PROJECTED. As always (for 16 years), I hope that this public report is useful, but I hope that you want to learn and use SKI by subscribing… If you do look forward in time “a little”, and then look back 92-96 trading days, 659-664 trading days, and 880-885 trading days, you should be able to see the price convergence level that Jeff is looking to buy (shorts cover) after months of wariness and then bearishness.
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.