9 replies to this topic

[SilentOne]

NOT bullish. I'm not all that surprised. Not a time to be buying or putting new money into the sector.





Silver is probably the better play next month. Tricky though.





By far the best time to add is when the LT wave is oversold.

cheers,

john

[wxman]

I think that we are at the equivalent of Jul 2003-going up big from here

[no_mind]

John, Thanks for your insight and the chart. I always forget to check on the GoldHeart indicator. Best, Tom

[SilentOne]

wxman, That is where I thought we were until I saw those charts today. Both MT and LT waves need to reverse before we can breakout. And preferably from better oversold positions. Good luck. cheers, john

[dougie]

Silent: hasnt the goldheart had some big misses?

[mss]

Silent: hasnt the goldheart had some big misses?

<{POST_SNAPBACK}>

I think a few timing problems. Mike is the guru on this indicator, but he does not post often for some reason.

[Chilidawgz]

[SilentOne]

Silent: hasn't the goldheart had some big misses?

Dougie/mss,

The GEGFI indicator is excellent for swing trading. If you bought and sold on the basis of both the MT and LT indicators, you would have captured most of the gold index swings in the last couple of years (rather than holding and hoping).

The next time the MT indicator either gets oversold or turns back up with the LT indicator, I'll be sure I am loaded up in a big way.

Reading Jeff Kern's musings, it may take till the end of the year. His signals provide plenty of whipsaw, but his next sell signal if it comes this week, will help to confirm the larger correction.

cheers,

john

PS I wish Goldheart was a little more timely in its updates as in the last instance. A turn of the MT indicator in overbought territory would have been observed and a clear signal to exit.

+++++++++++++++++++++++++++++++++++++++++++++++++++

35-39 index hit

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 rising into the 7.20 area and then the 7.60 area. The stop should be irrelevant for a long time, but on Tuesday of this past week the gold stocks fell through the critical point described in last weekend's Update. Therefore, by definition, the gold stocks are in an intermediate correction phase. It is possible for the correction to have ended already on Thursday (10/20/05), but until that is proven, the intermediate correction should, in my opinion, be honored for safety purposes. Please read this Update carefully; I would suggest saving it for reference purposes over the next week to two months.

Last weekend's Update reported that the 16-20 index buy signal at USERX (the gold mutual fund) 8.81 should have marked the EXACT bottom of a short-term correction; If USERX fell below 8.81, a more severe drop was occurring. The gold stocks did their expected and required rise on Monday (10/17/05), with gold itself rising $5. However, the broad universe of gold stocks as measured via USERX was rising less than a paltry 2%, not quite the required "explosion" that I described last weekend. I wanted to sell, but since some of the required rise did occur, I refrained. On Tuesday (10/18/05), the gold stocks were engaged in a decline that appeared to be sufficient to drop USERX down below 8.81 and I sold (non-emotionally and correctly) at 8.78 (close-of-day price). I therefore sent out a SKI Note that evening to readers who have contacted me to indicate an interest in the upcoming website (except those who only emailed me while I was away last week, as I didn't have the time to update my email lists). Note that one major advantage of having a website will be that I will be able to email alert subscribers with a press of a button when the selling/buying day has arrived. Currently I am not able to do that during the day in a time-efficient manner. I hope that you have repeatedly seen that delaying one day can result in lost profits or larger losses of 2-3% per occurrence. Avoiding only one such occurrence per year, in my view, will be worth the subscription cost. The website administrator will also handle all the email lists, etc., so that it will never be delayed, as it was this past week.

Note that selling this past week was NOT required by the SKI system. The only stop that MUST be executed is a 92-96 index sell signal that ends the 8/9/05 92-96 index buy signal. My colleague did NOT sell and will not sell until such a signal is generated. If you didn't sell, you did nothing wrong. I simply did not want to take the risk of a larger fall nor did I want to wait through a potentially extended corrective time period. Selling was also an appropriate action, but could result in a whipsaw (i.e., quickly having to re-buy at a higher price).

The expected and obtained instantaneous drops on last Wednesday and Thursday totaled another 7% and brought USERX (8.31) into contact (once again!) with those falling 439-443 index back prices (support). MOST IMPORTANTLY, PRICES HAVE NOW TOUCHED THE 35-39 INDEX. On Friday (10/21/05) the rising 35-39 index back prices reached 8.60. So what price did USERX skyrocket up to on Friday? 8.60! If it had closed at 8.59 I'd be confident that prices were going down again next week. If prices had closed at 8.61, I'd be saying that I was about to be whipsawed and that prices would rise next week. How can a mutual fund composed of 100+ gold/silver/diamond mining shares repeatedly move to an exact penny based upon the SKI indices? I have no answer and I do not attribute it to "manipulation" because I do not believe that anyone can perfectly manipulate such a large mixture of stocks to fit such an "unknown" SKI index for 31 years. In any case, Friday's rise brought the gold stocks EXACTLY into resistance at USERX 8.60.

Several months ago I wrote that I would tell you when to leverage up your gold stock investments during a 92-96 index bull market. The time to do so is on each new 35-39 index buy signal. But first we need to get an intermediate-term 35-39 index sell signal. The 35-39 index will sell this coming Friday IF prices decline below USERX 8.50 by Thursday. The back prices on Monday will 8.59, 8.60, 8.25, 8.03, and 8.18. On Tuesday, the 8.18 will be replaced by 8.52. On Wednesday, the 8.03 will be replaced by 8.50. On Thursday, the 8.25 will be replaced by 8.67. DURING A BULL MARKET, A 35-39 INDEX SELL SIGNAL MARKS THE BEGINNING OF THE END OF THE CORRECTION. A 38.2% retracement of the wave one rise from 6.28 to 9.50 equals 8.27. We reached 8.31 last Thursday. If we fall into a 35-39 sell signal, next Friday's perfect closing price would be 8.27.

Therefore:

1. If prices rise back over USERX 8.81 at any time this coming week, the 8.31 price WAS the corrective low and the next large rise has begun: BUY (if you have sold like me). Seriously.

2. If prices fall to a 35-39 index sell signal this week (probably generated on Thursday and executed on Friday's close), traders can try a short-term buy for 2 weeks. If that rise generates a 16-20 sell signal, probably in the 8.70 area, I'll strongly recommend that everyone do a short-term sell into a spike bottom buy around U.S. Thanksgiving.

3. Do NOT use USERX 8.07 as a stop anymore. The only definitive stop is a 92-96 index sell signal. If we get a 35-39 sell signal, the corrective phase can last up to 39 trading days and can include a 1-2 day spike down to 7.51 (the 61.8% retracement of the 6.28 to 9.50 leg up) without selling the 92-96 index. Perhaps that's why those 92-96 index back prices are staying so low for such a long time. By the 39th day after the 35-39 sell signal, if the corrective phase lasts that long, the 92-96 back prices will finally be rising over 8.07 and we should get a new 35-39 index buy signal by no later than EXACTLY the 39th day. That corresponds to approximately the last day of this calendar year. However, a new 35-39 index buy signal will give the definitive "All Clear" signal.

In conclusion, hopefully this past Thursday was THE corrective low and I will simply re-buy on a whipsaw if prices rise over USERX 8.81 at any time this coming week. I am skeptical that this will occur because USERX rose perfectly and exactly into resistance on Friday at 8.60, breaking the 35-39 index towards its potential sell signal. A fall back below 8.50 next week will generate a 35-39 index sell signal, telling us that we had better be in the bottoming process of an intermediate correction. The system remains bullish, on a 92-96 index buy signal that augers for the largest and longest rise of our lives until and unless there is a 92-96 sell signal. The current intermediate correction should be wave 2 down and should be followed by a monstrous wave 3 up after the correction ends. The depth of this correction now shows that if this is a true 92-96 bull, it is following a new pattern for this decade: Since it's corrected down to the 35-39 index, THE BULL PATTERN NOW CORRESPONDS TO THE TRUE BULL MARKETS OF THE 1970s.

Volatility will probably continue to increase in the weeks ahead. And the website should be completed before the end of this year, which would be a perfect scenario for a new 35-39 buy signal, new leg up. I am out of the market due to wise (in my opinion) risk aversion, but I am ready to re-enter.

Best wishes,
Jeff

Edited by SilentOne, 27 October 2005 - 03:31 AM.

[mss]

Thanks for the info, and update.

[SilentOne]

A turn back down of the MT indicator from oversold would support the idea of a rally in the gold indices. Looks like it would only be a bounce at best though. Go figure.



GEGFI update Nov. 7th

How long can the LT wave stay overbought here to support the gold indices??

cheers,

john