Current USERX price = 7.39, Up 5 cents (0.7%9%) 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 Sunday 11/05/17, described how the gold stocks (i.e., the mutual fund USERX) had declined to hit/touch the two master SKI indices, the long-term SKI System’s 221 index and the regular SKI System’s 92-96 index, on 10/26/17 at USERX 7.33. Such hits/touches on a strong decline were likely to mark “some type of low” (i.e., just a short-term low or a more significant low), but the conclusion was that patience was needed. Mechanical SKI and Jeff were in cash.
The decline into the index touches on 10/26/17 HAS continued to mark the exact closing low for NY COMEX cash at $1265.90, but the gold stocks have meandered a little higher and lower since then. The expected need for patience has persisted, but it’s now been a month and the 16-20 index should (and is) coming into play.
If there’s going to be any bullishness, the first sign of bullishness is for USERX to rise into a first resistance 16-20 index sell signal. Such a sell signal is required to set up any bullish case. This index is contrarian, meaning that it sells on rises and buys on declines. USERX is within 1-2 trading days of generating that sell signal (as prices move above the prices from 16 to 20 trading days earlier). Since the gold stocks usually rise into such index signals (e.g., the last such signal executed on 10/11/17 at an exact high of USERX 8.21), IF the market is going to develop a bullish index pattern, one would expect the gold stocks to rise during the first few days of this coming week. Alternatively, if the 16-20 index sell signal is avoided, the historical likelihood is that the gold stocks will resume their decline from early September 2017 when a 92-96 index signal on 9/01/17 caused Jeff to recommend selling four trading days before the actual top.
Such a 16-20 index sell signal is not bullish in and of itself. SKI does not buy on such a short-term resistance signal. SKI would buy if the gold stocks continued to rise through the resistance signal into a 35-39 index buy signal. That index’s back prices are still in the USERX 8.00 area and would take a few more weeks to decline enough to make it likely that the index’s buy signal would generate. A 35-39 index buy signal is not a bull market. It is an intermediate-term (usually about a month, as per the 8/17/17 35-39 index buy signal). A true bull market requires a USERX 92-96 index buy signal that is On the SKI Path of Trades (as per the January 26, 2016 buy signal).
Alternatively, if the 16-20 index’s sell signal generates and prices eventually decline about 2 weeks later, the set-up for a 92-96 index bull market would occur. USERX would need to “hold up” after the 16-20 index’s sell signal and then decline rather sharply to below the recent low of USERX 7.21. In 2.5 weeks, the 92-96 index’s back prices will be 7.30, 7.26, 7.21, 7.21, 7.22. And the 16-20 index’s back price will also include the 11/14/17 low of 7.21. And that “just happens” to coincide with the next U.S. Federal Reserve announcement on 12/13/17 (smile). A decline to below 7.21 would generate an almost simultaneous 16-20 index buy signal and a 92-96 index sell signal that opens the SKI Path of Trades. Such dual index signals often mark lows and within a few trading days, as the 92-96 index’s back prices plunge to 6.97, the 92-96 index would buy for the potential bull market if USERX held over that 8/08/17 low!
In conclusion, more patience is likely needed. Although most folks have either been lulled to sleep by the past month’s sideways movement or are bearish, the set-up for a SKI bull market can occur in 2.5-3 weeks. And USERX has continued to make higher lows and higher highs since a 92-96 index buy signal that generated on the exact 5/04/17 low of USERX 6.67 (that’s the definition of an uptrend).
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.