Special SKI Report #11
Last month I posted the article "Death of a Bull" (right before the precious metals plunged for a few days) and posted on the exact day of the low in gold and the gold stocks. As was written in that article, SKI did not turn bearish at that time, but a month earlier, with SKI selling on 9/11-9/12/06 and Jeff selling on 9/07-9/08/06. But the timing of the posting of that article was, as many have emailed me, a perfect contrarian indicator. Can I hit 2-for-2 with this next article, "Re-birth of a Bull"? Prices have been rising relentlessly since that time.
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. Although I use 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.
As I wrote last month, "Market analysts' definitions of bull and bear markets are quite varied. The SKI system's definitions are objective and unique, although the system is not perfect. A true bear market is signaled when a true bull market ends! We experienced the start of the most recent "true and rare" bull market, according to the SKI indices, on August 9th, 2005 when the master 92-96 index executed its buy signal at 8.07 based upon the price of USERX (the precious metals mutual fund used as a reference for analysis and prediction). For the SKI system, the bull market ended when the 92-96 index generated its sell signal on 9/11/06 and executed the sell the next day at USERX 14.85 for an 84% profit over 13 months. And if you recall my repeated references to the "death run" pattern that occurred in May 2006, the gold bear market decline should be quite meaningful either in time and/or in price. The SKI Special Report on 6/18/06 presented a delayed public introduction of the death run."
I've decided to provide more than my usual information in this Report due to the horrendous timing of that last Report and the concern that it caused some non-subscribers to sell when they read it. Since that last Report, the gold stocks and bullion have risen to this date and DID generate a new 92-96 index buy signal on the SKI Path of trades on 10/24/06. In fact, as of today, prices have now risen to generate the last SKI index signal, a 35-39 index buy signal (off of the Path because the master 92-96 index will be on the Path of trades until it sells). It is therefore possible for a new bull market to have begun because it is rare to even generate a 92-96 index on the Path of trades.
Unfortunately, although in a very long-term sense the precious metals are likely to rise significantly, the current SKI bull market is not the same as the "true and rare bull market" that I reported back in August 2005. The SKI indices are most adept at marking lows during true bull markets and at marking highs during SKI-defined bear market periods. The current signals are XXed Out (meaning that based upon history their pattern of signals are supposed to be marking some type of high). It is likely that the current 92-96 index buy signal will be selling out fairly shortly. Until that happens, it is certainly still possible for the bull to have been reborn in an unusually rapid manner, but the odds (80%) are against it. Another factor that contributes to the likelihood that a true bull hasn't been reborn is the absence of a "life run". I've written of the "death run" in May 2006 and have mentioned the "life run" pattern more recently, but I will continue to reserve its definition for subscribers. However, here's a little more proprietary information/research on life and death runs.
Death and life runs occur in pairs and sequences. That's been the case since the early 1970s until now, but I obviously have no guarantee that history will continue to repeat itself. The time spans from a death run to a life run have been 2 years, 1.75 years, 8 years, and 2 years. We have currently used up almost 6 months of time since the death run. If the market would provide a life run next week, I'd buy one day after that major bottom and be quite excited, but it hasn't happened yet. Perhaps the time from the May 2006 death run to the next life run will be the shortest in history because this decade appears to afford the most bullishness in history. I have no way of knowing that answer.
I am obviously writing this Special Report to entice you to become a long-term SKIer. But the information presented is accurate and is not "hype". I did write in the last Report, at the low for the precious metals' complex, "Since I am so bearish, prices may rise in the short-term, but continue to monitor the accuracy of the above statements, as they are, as always, on public record as per the last 6 years". Although there are never any guarantees, I strongly believe that history will repeat itself and that SKI will be issuing a buy within a day of the low (lower than now), and that this one buy will pay for years of SKI subscription costs within a few days.
I'll write another Report for
321gold in a few weeks (and if I forget, Barb will remind me
again!; smile) 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
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 and have
several types of managed gold futures accounts (managed conservatively
because I am at heart a "chickenski"; see:
Best wishes, Jeff