Current USERX price = 6.43, Down 23 cents (3.5%) 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 SKI Report (written on November 4, 2018) described how the USERX 16-20 index buy signal on 10/31/18 at 6.44 had marked the exact short-term low (again). Prices had risen for a few days but were close to generating a resistance 16-20 index sell signal. The 16-20 index is a contrarian index that buys on declines and sells on rises. The key price was USERX 6.66, which was the exact closing price when that Report was written. The website calculates the indices automatically each day, but the simple formula (using addition, subtraction, multiplication, and division) is the same for all of the indices and is provided for folks who want to do the calculation.
Following that last Report, the gold stocks were rather flat on Monday (11/05/18), and with USERX closing unchanged at 6.66, the 16-20 index resistance signal did not generate. But when USERX rose to 6.79 on Tuesday (11/06/18), the index signal did generate. ONCE AGAIN, THE INDEX SIGNAL GENERATED AT AN EXACT SHORT-TERM HIGH (executing its sell signal one day after the high) AND THE GOLD STOCKS WENT STRAIGHT DOWN.
The decline persisted for 5 consecutive days. It usually stops after 5-6 trading days. The 1 Up and 5 Down run pattern averaged a normal loss 1.6% per day as USERX dropped to a new multi-year of 6.25. Major bottoms are typically marked by “strong” run downs that average at least 2% down per day.
More importantly, the decline generated another quick 16-20 index buy signal AND a 35-39 index sell signal (as was expected). Such an index pattern often marks a low, but can sometimes mark a bearish “break-down”. The 35-39 index signal executed on 11/13/18, just as USERX made that new multi-year low and GDXJ tested its multi-year low from September.
And most importantly, the decline generated a new long-term 663 index buy signal! The 663 index compares the current price to prices from 660-663 trading days earlier. It’s the long-term equivalent of the 16-20 index. Therefore, it buys on declines and sells on rises. It cannot generate a sell signal at any time soon because the prices from 663 days ago are simply rising towards the Summer 2016 high at USERX 10.28. The index’s buy signal generated on 11/13/18 at the exact low and executed one day later at USERX 6.28.
The rare 663 index buy signal occurred in conjunction with regular 16-20 and 35-39 index signals just as USERX made a new multi-year low on 11/13/18. That long-term buy signal marked the low-to-date and was potentially marking THE multi-year low. The rise from that low hasn’t been particularly strong and USERX has under-performed the stronger HUI/GDX measures. But there isn’t any requirement that the 663 index’s buy signal yield an immediate powerful rise because it is such a long-term index. The run down into that index-marked low did not confirm a major low because there wasn’t a powerful collapse, but such confirmation also is not a requirement for a major low.
A renewed decline to below USERX 6.25 would break the 663 index’s buy signal in a bearish manner. We are now looking to see if the regular SKI indices (the 35-39 and 92-96 indices) provide some confirmation of a major long-term low.
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.