Special SKI Report #211
Gold Stock Update: More Rather Perfect Market Behavior

Jeffrey M. Kern, Ph.D.
Email: jeff@skigoldstocks.com
USERX | historicals
Written Sunday Nov 04, 2018
Published Nov 05, 2018

Current USERX price = 6.66, Down 25 cents (3.6%) since the last report 3 weeks ago.

Introduction (repeated from prior Reports):

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.

New Material

The last SKI Report (written on October 14, 2018) documented how the large rise on 10/11/18 had been expected, but that the rise had been expected to be a “fake-out break-out” because it had generated an XXed Out 35-39 index “buy” signal that executed on 10/12/18 at USERX 6.91. That meant that USERX had risen over the prices from 35-39 trading days earlier for a buy, but that “buy” signal had an 80% historical probability of marking a high. Index signals are often precise to the exact day, but have a standard deviation of 1 trading day. Therefore, there’s a 95% probability of them marking the technical spot (a high, a low, a break-out, or a break-down) to within 2 trading days.

The gold stocks continued to rise a little after that resistance index signal, but USERX topped two days at 6.97. THE INDEX HAD MISSED THE TOP BY 2 TRADING DAYS AND 1%. There was and still is massive SKI resistance at the USERX 7.01 price point because the master 92-96 index executed a sell signal at 7.01 on 8/13/18 and the gold stocks then “collapsed”.

The last SKI Report described how a quick new 35-39 index sell signal (as prices fall below the prices from 35-39 trading days earlier) would be quite bearish, but if such an index sell signal did not occur quickly, there could easily be another rise. The gold stocks did not decline during the week after that last Report and avoided selling the 35-39 index. But a decline did begin the following week as GDX and the HUI rose to the exact equivalent of USERX 7.01 (filling the open down-gap from the 92-96 index sell signal on 8/13/18 to the penny) and then declined.

The decline avoided the USERX 35-39 index sell signal and generated a supportive 16-20 index buy signal on 10/30/18. The execution day for index signals is one trading day after they generate (so as to give 1-day advance notice), so the 16-20 index executed its buy signal last Wednesday (10/31/18) at USERX 6.44. As I did in the prior SKI Report, here’s a reprint of the Bottom Line segment of the Weekend SKI Update that’s written every Saturday morning. So this was from Saturday, 10/27/18:

“Bottom Line: The prior XXed Out 35-39 index buy signal at USERX 6.91 DID mark a high, BUT the supportive 16-20 and 663 indices are about to buy. The 663 index buys on Monday and the 16-20 index is likely to buy on Wednesday 10/31/18. Jeff recommends buying, especially on the 16-20 index’s buy signal. USE A 35-39 INDEX SELL SIGNAL AS THE SELL-STOP: SUCH A SELL LIKELY REQUIRES A DECLINE TO A NEW 2018 LOW BELOW USERX 6.34 THIS WEEK and then starts to rise (and Jeff would send an Intra-Week Update if the index sells). This/These buys could still only be short-term ….”

Additional information has to be reserved for subscribers or they’d “complain”. For a small additional cost for a “premium” subscription, one can receive daily SKI emails.

Conclusion

The 10/31/18 16-20 index buy signal marked the exact short-term low at USERX 6.44 (smile). Jeff could NOT predict the size of the ensuing rise. The 4-5% rise on last Thursday (11/01/18) was already enough to go back over the prices from 16-20 trading days earlier to begin to hit resistance, moving the 16-20 index immediately back towards a short-term resistance 16-20 index sell signal. The key number on this past Friday (11/02/18) was USERX 6.66. Since USERX closed exactly at 6.66 (smile again for “nature and SKI”), the 16-20 index has not yet generated a sell signal, but is within one trading day of doing so…

The 16-20 index’s back prices are moving towards the prior top and will be at the following prices during this coming week:    

It is therefore feasible for the gold stocks (USERX) to rise and challenge the recent high during this coming week. Heading into an important technical and news-laden week, what Jeff “knows” is that a 16-20 index sell signal should mark resistance, a 35-39 index sell signal (on a small decline) should be quite bearish, and a break-out over USERX’s major resistance at 7.01 should yield a multi-week rise to the 92-96 index (the prices from 92-96 trading days earlier in the USERX 7.60 area).

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 daily messages/alerts at a slightly higher price along with access to our informative Forum.

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email: jeff@skigoldstocks.com

Jeffrey M. Kern,Ph.D., is an academic psychologist with a specialty in the measurement and prediction of human behavior. The communications provided are for informational purposes only and are not intended to be investment advice or recommendations for specific investment decisions. Dr. Kern is not a registered investment advisor, but is registered as a commodity trading advisor (CTA). The information provided is considered accurate, but cannot be guaranteed. Investments/trading in narrow market segments or gold futures is for individuals willing to accept a higher level of risk for the opportunity of greater returns. Past performance is no guarantee of future performance. His website is www.skigoldstocks.com.

Communications should be sent to: jeff@skigoldstocks.com.

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