Current USERX price = 5.41, Down 64 cents (10.5%) 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 gold stock SKI Report, written on Sunday 10/26/14, concluded that a decline to below USERX 5.95 within the next two trading days would be bearish and that a decline to below the 221 index should yield another “Armageddon-wave” down to major new multi-year lows.
I usually refrain from providing the specific forward numbers in these articles. I tend to preserve them for subscribers, but I included them in the last SKI Report in the hope that it would be helpful in preventing further losses after the brutal declines during the past few years. On Monday (10/27/14), USERX declined for “no apparent reason” to below 5.95 and the stage was set for a significant decline. And then on Wednesday (10/29/14), when the 221 index’s back prices were 5.83, 5.79, 5.86, 5.87, and 5.84, USERX declined to close at 5.78. That was the proverbial 1-penny break below the 221 index. The “Armageddon-wave” then proceeded as USERX quickly declined to 4.87.
The gold stocks and precious metals have rebounded during the past seven trading days. Was that THE final low? There certainly was significant capitulation based upon measures of subscriber cancellations and recent media articles projecting miner bankruptcies and gold declining to below $1000. However, the recent rebound hasn’t been strong enough (yet?) to even come close to going over any SKI indices. USERX and the HUI remain rather far below all of the SKI indices in a bearish manner.
The expectation during the past week has been for the gold stocks to stage at least some rebound and to primarily “use up some time”. Such market behavior allows the 16-20 index’s back prices to decline and come into play again as first resistance. That first index resistance is on course to come into play at the end of this coming week at USERX XXX (reserved for subscribers, but you can do it yourself by looking back 16-20 trading days).
There continue to be multiple index sources of major resistance on rises that will, at the minimum, take time to overcome. And all GLD has done on this past Friday is to rise into open down-gaps and major resistance.
The intermediate and long-term trends remain down as of now. We’ll see if the gold stocks can rise at least a little more beyond this coming Friday (11/21/14) when the 16-20 index’s back prices begin to plunge. IF USERX can get over the 16-20 index, the bullish intermediate-term scenario should be occurring as the gold stocks should either: (1) Decline quickly (even to new multi-year lows) to generate a 16-20 index buy signal for a buyable bottom, or (2) Continuing rise to the 35-39 index’s major resistance. Yes, those two possibilities are exact opposites regarding what happens after the 16-20 index signal. But if we don’t rise to get over that index, the gold stocks will be at new multi-year lows within the next two weeks. Whereas if the index signal does generate, one way or another, the gold stocks should rise to the next higher level of index resistance (the 35-39 index).
Of-course (seriously), after this multi-year decline from the 2011 Death Run tops in Silver and GDXJ (i.e., 2 Up and 5+ Down crash days that were described in 2011 SKI Updates), when the final bottom does occur, the gold stocks will rebound at least 100-200%. But that may still require a further plunge into a Life Run low run pattern of 2 Up and 5+ Down crash days…
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.