Special SKI Report #12:
SKI Bull Market Signal History

Jeffrey M. Kern, Ph.D.
Email: jeff@skigoldstocks.com
USERX | historicals
Nov 26, 2006

Special SKI Report #12

Two months ago I posted the article "Death of a Bull" (right before the precious metals plunged for a few days) and it was 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.

In early November, I posted the article "Re-birth of a Bull?". That article explained that extended impulsive waves up in the precious metals are marked by a specific SKI index pattern. That pattern had been obtained, but SKI was indicating that there was something wrong (explained below) and that, as a means of making amends for having posted the bearish article on the day of the low, Jeff was providing information that Monday (11/06/06) should mark a high.

What was wrong? In SKI terminology, the index buy signals were "XXed Out" (i.e., a loss was expected for the indices). 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 at http://www.skigoldstocks.com/about.php. A true bull market is signaled when the master 92-96 index buys (i.e., when prices have climbed higher than prices from 92-96 trading days earlier AND this signal is the lead signal among the three indices). Note that this is not the same as a moving average; prices don't just have to exceed their earlier prices; rather, a specific pattern is required. 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. The SKI index master bull market 92-96 index "buy" signals executed again on 10/25/06 and the secondary 35-39 index "buy" signal executed on Monday, 11/06/06, but those index buy signals were "XXed Out". Therefore, my last article was indicating that a high was upon us. "XXing Out" occurs after a particularly bearish pattern involving the 92-96 and 35-39 indices sell almost simultaneously, as occurred in early September. The next 92-96 index and 35-39 index "buy" signals on a price rise were supposed to be marking highs.

For students of the market, here is the history of XXed Out and True (Non-XXed Out) master 92-96 index buy signals:

Non-XXed Out (True Bull Market Signals)

You can see that true buy signals are only correct approximately 50% of the time. But when they are correct, they are big winners. That is how SKI makes money. When they are losers, they usually sell out fairly quickly.

Our recent buy signal was XXed Out. What happens during XXed Out master buy signals?

So what happened on the XXed Out buys this past month? The high wasn't marked perfectly by the indices. It occurred three days after 11/17/06. Prices declined and the master 92-96 index sold out its XXed Out buy signal on 11/17/06 for a 2% profit. It did not sell at the predicted loss, but it was not a bull market (at least not yet). That makes the XXing Out correct 80% of the time and there has never been a bull market while the SKI indices have been XXed Out. This last XXed Out buy signal sold at the low on 11/17/06 and the precious metals have risen during the subsequent 3 trading days.

Importantly, now that the XXing Out has been completed, the SKI indices are open to a true bull market if prices generate a new 92-96 master index buy signal. We'll see if that happens, but you can also note that XXed Out buy signals have only occurred during bearish time periods. We still have not, as yet, obtained the "life run" (see prior articles), so as to buy within a day of the low, but the SKI system is now open to a new bull market period.

I am obviously writing this Special Report to entice you to become a long-term SKIer. As is reported above, SKI called the 2005-2006 bull market in August 2005 and sold in early September 2006. The system is open to a new bull market as of a week ago, but is "skeptical". However, I have not made any money (and in fact, have only "made" break-evens or small losses) for the past 6 months.

I'll write another Report for 321gold in a few 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 and have several types of managed gold futures accounts (managed conservatively because I am at heart a "chickenski"; see:
http://www.tradegoldfutures.com
and
http://www.skigoldinc.com.

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.

Best wishes, Jeff
Written 11/25/06

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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.

Copyright © 2002-2024 Jeffrey Kern. All Rights Reserved.

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