Special SKI Report #287
More Longer-Term Gold Stock Bull Index Signals

Jeffrey M. Kern, Ph.D.
Email: jeff@skigoldstocks.com
USERX | historicals
Written Sunday May 7, 2023
Published May 8, 2023

Current USERX price = 10.85, Down 11 cents (1%) 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 4/16/23, provided a rare look at the SKI-perspective for the HUI. Normally, I just present that perspective for the MORE valid USERX dependent measure. The HUI had risen to a long-term 442 index buy signal inside of its master 221 index buy signal. In the short-term, the bullish perspective was that it would hold above its 442 index. USERX was not described, but it had just risen to come within 2 days of generating its bullish 221 index buy signal that had been rejected for 2 years (since it last sold at USERX 13.34 on 6/21/2021 after having bought on 3/27/2020 at USERX 7.08).

What happened? That immediate bullish perspective was wrong. 4/13/23 was a high and the HUI quickly declined into a 442 index sell signal. Moreover, the USERX 221 index’s was REJECTED again before it could generate its buy signal. It’s happened so many times in the 2 years, right at highs. On 4/13/23, the index’s back prices were 11.12, 11.06, 11.12, 11.27, and 11.11. USERX had risen to 11.13, to above 4 of the 5 prices in the index. The subsequent daily declines avoided generating the mathematical buy by going right back below all 5 of the index’s 5 back prices. Nonetheless, the master USERX and HUI 92-96 index remained on buy signals. Such buy signals were not due a simple rise above some price. It had required a specific pattern of index buys and sells. It was (and remains) the “SKI-classic” index pattern for gold stock (USERX) bull markets.

The decline was just enough to generate a supportive 16-20 index buy signal that executed on Friday 4/28/23 at USERX 10.39. USERX had declined to below the prices from 16-20 trading days earlier. Therefore, based upon this past week’s rise, that 16-20 index buy appears to have marked “a low”.

Here’s a reprint of the daily review for this past week that SKIers received yesterday. It serves as the initial section of each weekend Update, leading into the coming week’s (month’s, etc.) index and run pattern situation. Take a few minutes to read it and see if you’ve reached the conclusions/prediction that I (Jeff) do. I believe that it also contains a lot of basic important information that is usually ignored:

     “On Monday (5/01/23), the Australian gold stocks declined 1.5%. The North Americans and gold (GLD) gapped higher. That “fit with” last Friday’s 16-20 index buy signal. That open up-gap was quickly filled on a decline (as usual), but the decline continued into an "ugly" close. GDXJ and GLD (not HUI or GDX) manifested traditionally bearish "key reversal down" patterns, by rising above yesterday's high and then closing down below yesterday's low. USERX continued to hit/touch its master 221 index towards a buy signal, but just barely, as USERX merely held up just enough to tie its lowest back price of 10.30. This maintains the bearish pattern of hits/touches followed by "failures". The index's back prices will decline again tomorrow to 10.58, 10.30, 10.55, 10.62, and 10.55. Therefore, a rise above the 10.55-10.62 level would "smash" the index towards a "needed" buy signal. Jeff’s daily SKI message concluded that “There's only one bullish indication from today's bearish behavior. It's the same one that I wrote last Wednesday (4/26/23): "It looks so bearish that perhaps today was a low". It all "looks bearish", yet the 92-96 index isn't likely to generate its sell signal this week.” 

     “On Tuesday (5/02/23), the Australian gold stocks meandered down 0.6% to a marginal new 3-week low. The North Americans opened flatly and USERX was down 0.5%. They then began to rise after 30 minutes and kept rising, possibly on "news" that yet more regional U.S. banks are approaching "failure". After yesterday's supposedly bearish "key reversal down", GDX (and other measures) did the exact opposite via a supposedly bullish "key reversal up" (i.e., a decline to below yesterday's low and a rise that closed above yesterday's high). USERX rose to 10.50. USERX continued to hit/touch its master 221 index towards a buy signal, but just barely again, as USERX held up above the index's lowest back price (10.30 to-the-penny) but did not rise enough to "smash" the index towards a buy signal. Those back prices will decline tomorrow to 10.30, 10.55, 10.62, 10.55, and 10.55. On the bullish side, the gold stocks were "SKI-saved" today and the HUI’s 16-20 index generated its buy signal to get into synchrony with USERX. And the gold stocks rose despite a solid decline in the general stock market.” 

      “On Wednesday (5/03/23), the Australian gold stocks followed through on yesterday's USERX rise with a 2.5% gain. The North Americans opened a little higher and then meandered up and down with (surprisingly) almost no reaction to the U.S. Federal Reserve announcement of the expected 0.25% rate increase or its news conference. USERX’s rise to 10.55 kept hitting/touching the 221 index and was just enough to above stay above 1 of the index’s back prices, tie 3 back prices, but remain below 1 of the index's 5 back prices. The 221 index canNOT generate its buy signal tomorrow, but ANY rise tomorrow (above 10.55) and staying above 10.55 on Friday, would generate the buy signal on Friday. The HUI’s rise generated an instant 16-20 index sell signal after today’s execution of a 16-20 index buy signal. Such instant sell signals are usually bullishly broken via a continuing rise.”

     “On Thursday (5/04/23), the Australian XGD.ax rose a decent 1.6%, but remained below its 2023 high. USERX disclosed that it allocated an additional 5% of its money into Australian gold stocks during the first quarter of this year (up to 18% in Aussies; down to 63% in Canadians). The gold stocks again rose despite a solid 0.5%-1% decline in the general stock market. GDX, HUI, ASA, and Cash Gold (but not USERX at 10.80) rose to new 2023 highs. USERX did "smash" its master 221 index towards a buy signal that has not occurred for more than 2 years (except for a 1-day buy that generated a sell signal on the day that it bought). The index's back prices will plunge tomorrow to 10.62, 10.55, 10.55, 10.37, and 9.94. The USERX 221 index will generate its buy signal tomorrow (for official execution the following day) if USERX remains above 10.54. And the HUI’s 442 index was "smashed" towards its "needed" new buy signal after it "worrisomely" sold on 4/24/23 at 262.74. The HUI rose to above all 5 of the index's back prices (i.e., well above 274). The buy signal will generate tomorrow if the HUI remains above 272.11. If USERX rises for another 2 consecutive days, the run pattern would become very important.” 

     “And then on Friday (5/05/23), gold and the gold stocks plunged 2.5% immediately after the U.S. jobs report, yielding large gap-downs in GDX, GLD, etc. A 2.5% USERX decline would bearishly avoid generating the 221 index’s buy signal, BUT USERX was relatively strong all day due to a 3% rise in its Australian holdings and solid rises in the Australian and Canadian Dollars. ALWAYS CHECK THOSE CURRENCIES because it’s difficult for USERX to rise or decline significantly without similar movements in those currencies. The gold stocks did the typical rise to fill the day’s open down-gap, but then just kept meandering higher along with a strong rise in the general stock market. USERX (non-surprisingly) rose 5 cents to 10.85 and finally generated its “needed” 221 index buy signal (as the HUI generated its “needed” 442 index buy signal) despite a $30.60 decline in COMEX Cash Gold. Therefore, USERX made a unique bullish divergence with gold today.”

Looking forward, the HUI’s 442 has quickly re-bought for potential bullishness. USERX’s important 221 index has finally generated its buy signal. It’s the first one since the index bought on 3/27/2020 at 7.08 and then sold on 6/21/2021 at 13.34. The index’s back prices are declining strongly from June 2022 (218-222 trading days ago). That makes it more difficult/UNlikely that the 221 index is going to sell soon. The buy signal is historically likely to be bullish. Most importantly, the bullish master USERX 92-96 index buy signal remains intact and its objective sell-stop will be rising in 2-3 weeks to the 10.21-10.45 level. Therefore, when I write the next public Update in 3 weeks, USERX had better at least be above that index.

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 $30 (for a one month subscription) or more ($240 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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