Current USERX price = 16.56, Up 26 cents (1.6%) since the 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 plunge into 10/04/11 was once again marked by one index signal on the HUI and one index signal on USERX. The HUI generated a 92-96 index sell signal on 10/03/11 for execution on 10/04/11. Since the gold stocks have been in a large trading range (with some downward bias) since December 2010, such index signals have marked lows several times (e.g., generating on 6/16/11), so it wasn’t surprising that such an index signal marked a low after a large plunge. But such an index signal on the HUI did indicate, again, that subsequent rises into index signals would mark resistance, as has been the case since I wrote the article at the end of January 2011 describing “A New Gold Stock Phase”.
The plunge into 10/04/11 also generated a 442 index sell signal in USERX. The 442 index compares the current price to the prices from 439-443 trading days earlier, so it’s a long-term index and a multiple of the master 221 index. Since the 221 index has been on a sell signal (and has been bearish), that new 442 index sell signal caused a Double Sell been those two indices. Therefore, rises into the long-term indices will now also represent resistance.
And the rise since 10/04/11 is now approaching multiple indices. Look back 16-20 trading days from tomorrow (10/17/11) and that index’s back prices will be USERX 18.20, 18.59, 18.31, 17.08, and 16.30. Look back 92-96 trading from this coming Tuesday (10/18/11) and that index’s back prices will be 17.39, 17.34, 16.97, 16.96, and 16.52. Look back 439-443 trading days from this coming Monday (10/17/11) and that index’s back prices will be 16.52, 16.27, 16.45, 15.71, and 14.95.
In conclusion, the rise in the gold stocks and gold is approaching multiple index resistance signals that should mark the next high. Although I don’t dare to make predictions until there are index signals, it IS really quite feasible that the next decline to new 2011 lows will be marked by an index BUY signal (at the low) that has historically marked the end of lengthy corrections. The current corrective phase in the gold stocks has now lasted almost one year (since December 2010). Such an index signal should/would finally end the “New Phase in the Gold Stocks” that I described in January 2011.
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.