cheers,
john
Last night's alert
SKI Safety Sell Alert
11/9/05
The 35-39 index generated its sell signal on Tuesday (11/8/05) for execution today on Wednesday (11/9/05). The 15-19 and composite indices will execute their sell signals tomorrow (Thursday; 11/10/05). The 16-20 index will sell on Friday (11/11/05; exactly and perfectly 20 trading days after the last 16-20 index buy signal at 8.81). This is scenario #2 from last weekend’s Update.
Safety-conscious readers will sell today (too late to do it now), tomorrow, or latest by Friday. I recommend selling. Friday’s price WILL be around or above the required 8.81. We have a clear super re-buy signal IF prices keep rising and generate a new 35-39 index buy signal (that looks unlikely). That would require re-buying at higher prices, perhaps at 9.30 (current price after a dismal USERX performance today, at 9.01, tying the high 16-20 index back price!), but that is the safe thing to do. If prices do drop, we will re-buy on a 16-20 index buy signal in just 1-2 weeks at what will probably be new lows (below 8.31).
This is all too complicated to explain here in detail. Suffice it to say that the index pattern is a minor double sell (line in the sand) that is not characteristic of true SKI 92-96 index bull markets and calls the immediate great bull market into some question, but does allow for a fast re-buy on a plunge or a rise. The indices are appropriately selling on the way up, and look to be marking a high.
My colleague won’t be selling until a 92-96 index sell signal that won’t come for at least 30 trading days to many years and one can hold long, but selling NOW is appropriate safety-conscious action. If we drop, be prepared to “catch a falling knife” in 1-2 weeks. If we rise, you MUST re-buy on a new 35-39 index buy signal.
Prices rose today exactly as the indices required, on the execution of the 35-39 sell signal. The last time I reported selling (on 10/18/05, as prices fell below 8.81), I didn’t send an alert because there was nothing unusual or uncharacteristic of a true bull. The current pattern IS inappropriate but too complicated to explain in detail.
SKI says DO IT. The indices mark the exact day (to within one day). This is the safe thing to do and we have buy points clearly marked whichever way the market moves. A nice set-up.
Last weekend's ramblings.
Jeffrey M. Kern, Ph.D.
Email: skigoldstocks@yahoo.com
USERX | historicals
for Monday Nov 7, 2005
The nail-biting tightrope-walker
The SKI system remains on its true and rare long-term bull market 92-96 index buy signal from 8/9/05 at USERX (the gold mutual fund) 8.07. The definitive stop on this buy signal (a 92-96 index sell signal) is currently in the 7.60 area. Note that it will take another 30 trading days before the definitive stop rises to over 8.07, thereby insuring a profit or at least no real loss.
Last weekend I wrote how the gold stocks HAD to rise on Monday (10/31/05), with USERX closing over 8.81 (the 16-20 index buy price from 10/14/05). However, I was extremely concerned at that time due to the unexpected and ominous decline in USERX on that Friday when every other gold stock index rose, as well as gold bullion's ominous pattern.
AND AN EXTRAORDINARY WEEK IT WAS! I would have enjoyed writing and talking with y'all each day in this extraordinary week. I had thought that the gold stocks would be toast on Monday, but the true bull market required that the stocks rise. As you probably know, gold bullion was toast last week as it plunged $14 last Monday and Tuesday, but the gold stocks rose, with USERX climbing over 8.81 on Monday and staying over 8.81 on Tuesday. Newspaper writers would obviously attribute the resilience of the gold stocks to the gold mining company takeover news announced on that Monday, with Placer Dome (PDG) and Goldcorp (GG) prices rising. GG constitutes nearly 25% of USERX's holdings (for a listing of its holdings, click here. That stock gapped up and quickly rose 10% before falling back during the day (after all, the ski indices only needed a "little" rise on Monday over 8.81; that gap was filled on this Friday). Although I usually operate completely as a psychologist/technician, I was (and am) concerned that the required rise occurred on a news-related event. Such events usually have only temporary effects, and markets usually revert back to doing what the technicals require. Nonetheless, the gold stocks continued to rise this week despite additional drops in the price of bullion and a surging U.S. dollar. It makes no logical sense to me, except that the 92-96 bull market signal required a continuing rise last week and requires a continuing rise this coming week, even though bullion appears to be heading still lower (Was that the low for bullion and the high for the dollar on Friday? Note that bullion had a key reversal down and that as I always say, key reversals have a 48% chance of being a fake-out).
Understandably, most readers want me to state definitively whether gold stock prices are going higher or lower. The current situation continues to be extremely complicated and precarious. I do know that this week is going to be extremely important and that is going to be another index nail-biter. I am not "singing-in-the-car" or singing anywhere. I remain nervous. Since the true bull market 92-96 index buy signal, the market has behaved in full accordance with bull market rules; no ski rule has been broken. The market, for the first time in 22 years, has displayed the same ski index patterns that occurred at the start of the late 1970's and early 1980's bull markets. For this to continue, the gold stocks must rise again this week, but the ski indices are once again requiring specific price movements almost every day this coming week. We are continuing to walk on a very thin tightrope that is not unusual for bull markets: For example, in the 1970s bull market, there were periods of months where prices would touch, keep touching and just barely stay above rising 35-39 or 92-96 index back prices (incidentally, this is the mathematical ski definition of the proverbial, "Climbing the wall of worry", and the climb is supposed to be successful if it's a true bull market). We are now just barely staying ahead of the rising 35-39 index back prices and hitting the resistance of the falling 16-20 index back prices. In bull markets, prices rise through the 16-20 index resistance.
A 16-20 index sell signal is supposed to be generated this week, 16 to 20 trading days after the index signal from 10/14/05. Period. IT MUST OCCUR. Last Wednesday (11/2/05), the gold stocks spiked higher with USERX rising to 9.07 and hitting/breaking the 16-20 index for the first time. Prices hit resistance and declined slightly, continuing to break the index towards its signal. I can't predict what day/price the signal should come because that will vary based upon each day's closing price. Again, you can look at the back prices and the index score here. Obviously, the only way to avoid the required signal is for prices to plunge, falling back below 8.81. That is not supposed to happen in a bull market, but a fall to below 8.81 will produce a strong decline (see below). Furthermore, the fact that prices got back over 8.81 continues to predict that the 16-20 sell signal price will be higher than 8.81 and will occur this week.
The index that should be driving you crazy is the 35-39 index, the current "wall of worry." That index was hit/touched/broken on Friday 10/21/05 at 8.60, one day after the low. That concerned me because in prior bull market, the hit/touch occurred on the exact day of the low (i.e., Was the index just off by one day or was that not the true final correction low?). In any case, that index has stayed hit/broken since that day, for two weeks now. Last Wednesday's rise to 9.07 witnessed a jump over all of the five back prices, but this past Thursday's and Friday's declines continued breaking that index towards a sell signal. This coming week, the back prices rise again; On Monday the back prices will be 8.68, 9.00, 9.13, 9.34, and 9.28 (current price being 8.92) and then a 9.10, a 9.38, a 9.24, and a 9.18 replace the first back price on each succeeding day this week. PRICES MUST RISE SIGNIFICANTLY THIS WEEK TO AVOID THAT SELL SIGNAL. To have any reasonable chance of avoiding the sell signal, it appears that prices must rise to at least 9.01 on Monday and be over 9.13 by Tuesday, and be over 9.24 by Wednesday. That would mean a 4% USERX price rise in the face of apparently falling bullion and rising U.S. dollar prices. That certainly sounds improbable, but that's the situation.
Here's the important part concerning a potential 35-39 index sell signal. This signal is supposed to occur at a critical point (and it will!), marking either a low, a high, or the break-out line-in-the-sand. Therefore, if it occurs, prices will either need to be absolutely plunging this week into the signal, falling down to below USERX 8.31 over a three-day period. It can happen and will happen if USERX falls below 8.81. The fall will be extremely hard and fast, almost too fast to sell before it happens. Alternatively, if prices rise into the signal, as is supposed to happen after a bull market low, the market will quickly (within 2 days) hold or rise slightly to generate a new 35-39 index buy signal AND THE GOLD STOCKS WILL DEFINITIVELY CONTINUE TO SOAR. A new 35-39 index buy signal would be a blessing, an ultimate definitive entry/leverage point. The third possibility is that prices rise into the 35-39 index sell signal (and therefore, we'll also get the 16-20 sell signal almost simultaneously!), and that will be a high. It's always possible that it marks a high, but in true ski bull markets, it has NEVER marked a high. Therefore, if the rise occurs into those sell signals, safety-conscious readers can consider selling and then re-buying instantly if the new 35-39 buy signal occurs.
My conclusion bullets require an unfortunately large number of "IF" statements for this complicated, very important, and precarious week. If we rise to avoid the 35-39 index sell signal this week, or if we get the sell signal and then generate a new 35-39 index buy signal, they'll be no "IFs" next weekend: The true bull will have as complete of a 100% confirmation as I can get and the rise will continue for months, up to perhaps the USERX 12-12.50 area before the next correction returns us to perhaps USERX 9.50 again as the next bottom.
1. IF USERX falls below 8.81 on any day this week, it will produce a rapid (3-day) and very severe decline to around USERX 8.31 on the day of the 35-39 index sell signal. If you can exit quickly enough, do so, but don't sell on the 35-39 index signal, as it should be marking some type of low. This scenario is not supposed to happen and will call into question the correctness of the true bull market 92-96 index buy signal. The gold stocks have obviously been acting very bullishly by rising in the face of falling bullion and rising U.S. Dollar prices, but their strength appears to have stemmed from news-related events. IF this decline does occur, at worst, prices will play around, up and down, until the true stop, a 92-96 index sell signal. IF this decline does occur, we'll still have 39 trading days to generate a new 35-39 index buy signal that will avoid the 92-96 index sell signal, thereby keeping the true bull market intact and generating the next large, long rise. The above would be strange and unusual.
2. IF USERX rises into a 16-20 index sell signal AND a 35-39 index sell signal, safety-conscious readers can sell on the day of the 35-39 index sell signal by computing the indices at the site linked above, but then MUST re-buy on a new and super-bullish 35-39 index buy signal. IF a new buy signal is generated before next weekend, I will send a super-buy-alert email to individuals who have emailed me to express an interest in the up-coming website.
3. IF prices amazing rise about 4-5% in the next few days and avoid the 35-39 sell signal, do NOT sell on a 16-20 index sell signal. Ride the bull.
4. The SKI system remains on its 92-96 index buy signal. Remember, no action is required unless and until the 92-96 index generates a sell signal.
True Bottom Line: Gold stocks must continue to rise this week based upon the 92-96 index bull market buy signal. Bullet #1 above should not occur.
Hoping for another continuing rise this week,
Skier Jeff
11/05/05
email: skigoldstocks@yahoo.com