SKI's Comments

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SKI's Comments


Maybe I should start to use JSKaplan terms and go for critical, more critical, etc. ( smile ) . Gold stocks closed down for day 4. Userx closed down 3 at 2.53. A drop to 2.50 or lower tomorrow for day five will yield the 35-39 day sell signal. For the bulls, wouldn't it be just like the market to fall to 2.49 ( a traditional technical downside break thru of the prior low of 2.50 to yield a 35-39 day sell ) followed by a move the next day to 2.53 to give a true intermediate ( 1 month ) buy signal? No down move tomorrow can give a 16-20 index signal ( remember, the prior move over the 16-20, followed by a move under the 35-39 index [about to happen?], followed by a move below the 16-20, would complete a terrible double sell and forecast much lower prices ) . So if we move down tomorrow we can still avoid the final nail in the coffin by an up day the next day. Once prices fall below the 35-39 index I'll have the index stop on my shorts at the next 35-39 index buy.

What I've stated above is conjecture. I do not know what will happen short-term any more after today. But a move up tomorrow and perhaps the next day will indicate diddling around before a big fall. Such diddling could last for more than a week. The 92-96 index is at 2.58 and rising slightly, the 35-39 back prices bottom tomorrow at 2.50, the 16-20 are flat and bottoming at 2.52. The full moon is here.


Gold stocks moved down slightly for the 3rd day, confirming some type of top last Thursday. However, they remain resilient in the face of a declining gold prices. The resiliency is both good and bad for the bulls. It portends further declines, since prices should eventually, at a minimum go below the 35-39 day prices, which ( i hope you're tracking ) are falling. The 16-20 prices are also falling and we also need to go below them. So the resiliency draws out the time of the decline, but has avoided, so far, the dreaded double sell ( a 35-39 sell immediately after a 16-20 sell at the top ) . If we don't take a big hit soon, the 16-20 and 35-39 signals will tie, portending a potential low. The bad news is that in order to get the 35-39 sell, prices will need to decline meaningfully yet over the next week. It looks like if prices and the run keep going down that we should get a spike down on the day of the signals. The run analysis strongly indicates that an up day tomorrow would be very BEARISH and another shorting point. If the run down can continue, the end of the run will have some chance of being a low. The action of gold is characteristic of a bottomming run, a shake-out, complete with the bullcrap news that should be ignored except as a possible contrary indicator ( i noted one poster on Thursday quoting uptick in a newspaper as saying gold would easily slice upwards immediately, the newspapers always get the quotes they want and are excellent contrary indicators, not uptick's fault, it's the media ) . In conclusion, the system strongly indicates that a bottom is at least several days away and may not materialize anytime soon. Be nice Kitco, bad reading today!


Gold stocks were resilient today in the face of another drop in gold, closing strongly in the last hour but still finishing down. Userx closed unchanged at 2.58. The run analysis could be useful again here: A down day tomorrow for day three will indicate ( almost certainly, but after the fact ) that last Thursday was some type of high and that an upmove won't begin until some type of low forms again. If the run down continues past 3, the odds of it ending at a low would increase with each additional day down. The indices are all so close to each other that I can't hazard a viable guess as to which index signal will come next, but we need to drop below the 35-39 day prices before the system can generate a real buy signal. So the short-term is supposed to be down, the long-term remains down, and the intermediate is still uncertain ( flat or down ) . Nice that fsagx dropped to catch up to userx on the downside today. I've solved my shorting problems for the future by getting the ok to open multiple brokerage accounts at Fidelity. The rep said that she didn't know what the problem was since they always have more shares available to short than any one account ever wants ( not true ) ! Thanks for the kind comments, but I can't be sure that that was a high unless we go down tomorrow. 2 days does not mean anything, but so far so good for the system. Let's hope that we go down some more and then way up ( I, like most here, will do much better on a up move than a down move!


Once again, you are absolutely correct. Index bought at 2.60, sold at 2.58 for the 1% loss. I sold one day early and it was clearly based on the run pattern that should stop at 6 up plus the stupid shorting rules requiring an up move of 3 cents or more in fsagx on the hour that I execute a short. If trade had been executed on FSAGX it would have yielded one penny profit, I believe. Basically nothing lost or gained, which, if you check my guess for the trade, I said it was going to be fairly meaningless because it was OFF THE TRADING PATH. NOw, if you're ready for a little more complication: I also compute a 15-19 index to supplement the 16-20. THe correct cycle is actually halfway imbetween those two. 16-20 comes out slightly better than 15-19, but they are very close. 15-19 bought at 2.52 and sold at 2.58 on Friday. But it hit a total flat zero on Wed, so it came as close as is mathematically possible for execution on Thursday.

The index has been short since last Feb's spike up and has not had a trade since then. Bugs me that people say that the system is too short-term! But it is fine to just close one's eyes and execute the signals. Historically I'm 50-50 on beating my own system by a day or two, but over the years have increased that to about 80% due to experience ( e.g., if I'm long and there's a big spike up day and index is about to sell, I'll execute early ) . Amateurs should be completely mechanical.

You starting to believe in userx?


Gold stocks retraced yesterday's gains, with userx falling 4 cents to 2.58. Although FSAGX only fell by .33%, userx did it EXACTLY right, just like in the ski professor's upcoming textbook. I believe that today's drop looks like confirmation of yesterday being some type of high. Prices fell below all 92-96 back prices ( which were at 2.59! ) and fell below 3 of the back 35-39 day prices ( which were at 2.59! ) . If userx falls by another 4 cents on Monday the 35-39 index will give a sell to be executed on Tuesday, ending its path that started at the top on 12/8, with its losing trade ( which was not executed because it was supposed to lose, to mark a top ) after the originally projected 39 trading days ( almost 2 months; that's why the cycle is 35-39 days ) !

If the Monday drop happens the indices will be open to follow any index that gives a signal next. However, a 92-96 buy signal is XXed out and would be another shorting point. The 16-20 signal, if it come next, as prices fall below the 16-20 back prices is also XXed out because we would have just had a very bad double sell signal ( a 16-20 sell immediately followed by a 35-39 index sell ) . We should drop for months. The only exception would be if prices held over the prior low so as to generate a 35-39 buy signal. That would fit with many prognosticators calls for another leg up--and it would be a big intermediate advance of about 20% lasting 22 trading days.
The above assumes that we'll fall 4 cents on Monday, but that's the guess.


My whole system is based on a very broad composite of gold stocks and works on the broad composite. Userx correlates extremely well to the composite, and Sharefin has been amazed how userx correlates to his multinational global gold composite. I've run analyses on most major gold stocks and very especially ASA. If the trade is very good, one makes money on anything gold related, but the narrower the asset, the less the correlation with my system. Look at what happened to PDG on my last buy signal. If you'd bought on that Monday rise 9 days ago, at the close, as the index does, you'd have bought at about 9.4 and sold yesterday at 9.02. A loss. Same thing on userx: buy 2.60, sell 2.62. A gain as is supposed to be. I've run all the indices on ASA for ALL years it has ever traded and it's the best stock proxy to a composite, but the risk still increases. I used to just short comex gold, that's about as good as shorting an individual stock. I thought I had the problem solved with fsagx, but they limited me. But I know how to overcome most bureaucratic rule that makes no sense. I'm going to open 15 accounts with them. A real pain, a waste of everyone's time and money, but if that's what they want, that's what they'll get. Plus I waited all these months to get the entry I wanted and had hours of talks with their reps only to find out much of the info was wrong.

Don't react to amounts of money, it's percentages that matter. The system worked just as well when everything I had in the world after many years of saving was 25K.

fsagx now unchanged today, holding up well.


THe high back price on the 16-20 yesterday was not 2.61, it was 2.57. That 2.58 was my "guess" for what it would close at yesterday, but any close over 2.57 would have given the signal to be executed today ( apparently one day late ) so I was very sure that I'd get the signal. Scared the heck out of me when "they" closed it right over the breakout point. Closing right over the breakout point and being a high, however, is not unusual but hard to deal with emotionally and using traditional TA. That's why it can be a high. But just because it opens down this morning is not a sure sign of anything, except that the run up is likely to end today, as expected, at 6 up.


USERX closed at 2.62 today for the 6th straight up day. The 16-20 sell is executed tomorrow, but I sold today because it is so rare for this run to go beyond 6. It could happen, another up day tomorrow. Hey, this last little short-term buy signal was good and I sold at a whooping ( joking ) 1% profit, with the index selling at some larger profit or small loss tomorrow, the 9th day ( half cycle ) .

Today, prices hit the 92-96 day index. If current prices rise or hold here for a few more days, the 92-96 will give its signal, which is XXed out and supposed to be a bad buy signal ( It would take prices rising for more than 96 days thereafter for a buy on the signal to eventually yield a profit ) . That signal, if it comes is a great shorting point, the one I'd like to go short on, but have no guarantee that prices will hold up long enough to yield the signal in a few days.

So I went short today, at FSAGX 12.03 because I have to short on an upmove by law and the index could be off by a day or two, meaning that the 6th day up today could be the top.

I'm scared as I should be. USERX, by traditional technical analysis BROKE OUT to the upside today, surpassing resistance and the prior highs at 2.61 to close at 2.62. And I went short on the breakout ( dumb? ) . The Fibonacci target number I've cited many times is 2.64. So we can go to 2.64 tomorrow to be technically perfect as a top.

Current prices climbed over the 35-39 day back prices completely today. That index needs a drop below 2.59 to sell and set the stage for a large drop.

The odds of a big up day tomorrow based on the userx technical breakout, I believe, and pray, are small because the run up has been weak and runs don't change from under 2% up a day to a sudden big move. But after we go down one day, the runs would allow for an upside explosion. 2 down and 6 up or 7 up usually mark a low ( which it did ) and a high ( which I hope is correct ) .

MY indices have the gold shares market boxed in right now such that everything, even a rise tomorrow, are indicative of a top. Only time will tell if it is a short-term top ( 1-2 weeks ) or a major top ( months or longer ) . The indices don't guess on downside targets. The system simply is supposed to say when the next important bottom IS in ( if in fact this is a top ) .

Investing is gambling in my opinion. Those who think otherwise risk major losses. It's all a matter of probabilities. The probs right now strongly favor a down move very very soon. I can't find an advisor who says short gold here, but the COTs suggest that too many people are short. The critical point is here and everyone should be nervous, both shorts and longs.

Shell: Go back to EXTENDED descriptions from last Feb to April on computing indices ( several weekend lengthy posts ) . Compare current price to each of the five past days. Today we cleared all 5 16-20 ack prices on userx and have been above 1 back price, then 2 etc. over the previous few days. If you can't find the posts on the theory and the exact calculations, let me know and I'll find them easily.

I truly don't mean to cause distress on this site. I provide what I see and what I do. The indices have always made me money year over year if I follow them. Any signal can be wrong and you can never know which ones. All should be executed and one could say that I entered the short position one day too early based on my judgment because the signal is for tomorrow.

The odds are 96% because one time prices have risen thru this signal. However, even in that one instance, prices after one month fell well below the shorting point for a nice profit. I should not lose here.


I usually put all my life's "not-safe" money either long or short. When I say buy or sell, I mean everything. That's why I usually don't do a lot of moves, just wait till the high prob moment, execute everything instantly, and then hope to ride the trend change till the next high prob reversal signal. Am supposed to be in most of the time and should have just been short for almost the past year. I'm now in on my index system and will wait for a real buy signal, not this 75% probability of a small rise stuff that this last 8 day trade was.


Going up is very unlikely to give a buy signal, but anything is possible right now because on my indices are converging. We'll see and hopefully I won't lose much if the system is wrong. Come on folks, at least hope for me that I don't lose too much, though I understand that if the system is right here, some will lose, at least temporarily. The system has been right enough times to have saved at least some of Kitco some money. Congratulate chicken ski on executing like he is supposed to. That's all I can do and always want to congratulate myself on doing it the way I'm supposed to, especially if I lose ( a golden trading rule ) . I don't want to berate myself as long as I follow my system rules, though it still feels bad when the system is wrong. Right?


I've sold all golds and gone short FSAGX. Looks perfect, but too perfect can still be wrong. Odds 96% correct.

Loan Hack: if you entered PDG at 9 and are still long, I recommend selling NOW.

Userx opened up, hitting the 92-96 at 2.60, but predict an unchanged close again. The 16-20 will give its sell signal for tomorrow unless we drop a lot in the last 30 minutes ( the drop is not supposed to happen ) . The 35-39 will sell tomorrow unless we go up today and tomorrow. THe run will be 2 down and 6 up today, probably, 95% prob of not going past 6 up. Long trade made nothing, lost nothing to speak of. Not unusual as I said upon entry.

I opened up the Fidelity account to short FSAGX many months ago on Shell's info. Great, but now they tell me that I can only short 7451 shares! No one knows the answers because no one ever seems to short the Fidelity Selects except the always abnormal trader ski ( me ) . I had wanted 100,000 shares and they had previously told me it should be no problem! They had written to me that I could cover the shorts online. Now they say no, must call in person, but they don't charge me a commission on the cover!! Shorting is nice because my money continues to draw money market interest, like taking in the contango when one shorts COMEX gold.


Definitely YES. If it goes down now and holds back at the trading lows for the last 2 months ( userx 2.50-2.52 ) I am likely to get a dynamite intermediate term buy signal ( 1 solid month ) of big, big upside. But all I have now is that I'm supposed to short gold stocks now. Physical gold holders can't buy and sell every week or month, too much commission spread, have to buy and hold.


Short-term, next few days: current levels, then down.

Intermediate term: Can't call. Down in a few more days. Then either holds for a 20% rise or see long-term. Long-term will occur whether we get a rise soon and then the big drop or a big drop after a few more days.

Long-term: Bottom at 50% below current levels, userx at 1.13 ( approximate guess ) .

Long-term should be right. It's the intermediate term that indices can't call right here since it's flat. Long-term investors should be flat or short. I hate to continue to post long-term bear.... but it's definitive. This is the trend that most people should follow. All long side trades are difficult ( except the master APH who called the last bottom and is still long gold stocks )


That's the call long-term and then an enormous rise that is worth the wait. Eventually we have to get 2 up and a long run down into the bottom of a generation. That time is approaching... Even if we get an intemediate rise soon. This could be the year of THE bottom. Definitely NOT at THE bottom yet ( seriously, for long-term investors ) . I never say "definitively" unless I mean it.


ON target! Can you feel the tension building into the critical point ( s ) ??? I luv reading this site. Inflation vs. deflation... I vote eventually deflation then hyperinflation to counter the deflation as interest rates plunge to 1% long-term soon... gold tanks and then to da moon... ( or at least a Finanacci retracement of the 1980 to 2001 decline ( 6,000% up in gold stocks projected eventually, seriously!!!! ) , but I'll just be prudent and follow my indices. Opinion is fun but not profitable.


Thanks to those with the encouraging posts. This critical time is stressful as one penny moves in either direction will have severe psychological implications over the next few days. My co-developer sold today as userx closed unchanged at 2.58 for a run of 2 down and 5 up. I hold long till a signal. If you go back 16-20, 35-39 and 92-96 days, you can see all the prices converging. We should get the 16-20 sell signal and a 35-39 sell signal within the next one to two days. Unchanged or up tomorrow, for day 6 up, will generate the 16-20 sell for Friday. Unchanged or down for 2 days will generate the 35-39 sell signal for Monday. We're playing with pennies and not meaningful money, but the configuration will be very important. For now, the long-term trend is down ( definitively ) , the intermediate is flat, and the short-term is topping. Will sell and short very soon. That will be right, but we'll see on the next decline if we get a strong bear market buy signal for the last leg up ( big ) that many technicians are calling for. If you'd really compute the indices on userx here you'd be amazed at the one penny precision! A penny up or down tomorrow would have a major efect on the 16-20 and 35-39 indices. I'd guess unchanged again or one penny down tomorrow. Major signals almost here. Cheers! Be prepared for meaningful action within the next few days.


This will be an extended post and perhaps too complicated. I know that people want a simple up or down statement. I'll reach a conclusion, but critical points are complicated.

Userx rose as forecast a solid 2% today to 2.58. The 16-20 index still says higher prices ahead very short-term. The 16-20 index is breaking towards a sell and the end of this trade as current prices rise and the back prices fall. The 16-20 index will almost certainly sell by Friday, 9 days ( a half-cycle ) after the buy signal. That buy signal, executed last Monday, actually bought on a bad day, an up day, at userx 2.60. The trade had a 75% prob of being profitable ( 3-4% ) and looks like it'll sell out at a small loss or a small profit, as expected.

The 35-39 day index continued to break towards a sell as the back prices rose to 2.61 and the current prices haven't risen over 2.61. If prices move over 2.61 and stay there, the sell would be averted. If prices rise some more and then fall, the 16-20 will sell and then the 35-39 will sell, giving the predicted ( from two months ago ) flat prices over two months into the typical double sell and a subsequent plunge of big proportions. This is the highest probability scenario.

The 92-96 back prices are falling, dropping to 2.65 tomorrow and then 2.60 and 2.59 the following 2 days. We're approaching major resistance. The fibonnacci number on userx is 2.64 tomorrow! ( one penny under the 92-96 index ) . If prices rise tomorrow to 2.64, traditional technical analysis would call anything over 2.61 ( the last highs ) as a breakout, but the 16-20 would sell by Friday and remember that the indices can certainly miss a high or low by a few days.

The run analysis, which is of secondary importance to the indices, also is useful here. The current run is 2 down and 4 up. I've been expecting this run to go to 5 or 6 up. A classic important 2 down 5 or more run up !! ( just as 2 up and a big run down is very important ) . 2 Down and 5 or more up runs by definition have marked ( after the fact ) a low, and also mark a high 75% of the time. They rarely ( 6% prob ) go past 6 up. Tomorrow would be 5 up, assuming the expected up day occurs.

All of this is happening as the Fed cuts rates tomorrow. This is typical as the the indices and the fundamental news converge on the critical day, which I called for over a month ago. What the Fed does, to me, is NOT predictive. The market action counts. I've seen the Fed cut rates and the dollar RISE and gold fall. I've seen the opposite as often and I've seen all variations. Not predictive, but the market movements over the next few days will be critical.

The long-term index, 92-96, remains bearish and is extremely unlikely to change anytime soon. There is a window in 2 weeks where if we rise now, then fall in 2 weeks a little, and then rise again, a true bull signal would occur. However, this is not supposed to happen due to the big triple sell signal from winter 1998 that forecasts much lower prices still to come. Long-term trends are the easiest to call and, if one's unsure, are the safest to follow.

Therefore, tomorrow we should go up. If we pop to where userx is rising 2% to 2.64, I am selling and am supposed to go short, although the actual sell signal on the 16-20 will be on Friday and one could wait a few days. If tomorrow is a little down, hold long till Friday. If it's just a little up tomorrow, it'll be hard to call, since the run should end tomorrow or Thursday, and the 16-20 hasn't sold yet. Could hold long one more day and then short. If we drop hard tomorrow, that is NOT supposed to happen and looks disastrous, so I'll sell and cut the loss, as I would have done today if it had been going down when it should not have been.

The only way I can realistically see that this is not a important top is if we rise a little, get the 16-20 sell, also get the 35-39 day sell as prices stay below 2.61 for the next few days. Then the back 35-39 day prices will fall to 2.50 and if current prices stay over that prior low the 35-39 day index will give a new buy signal ( a bear market buy signal ) that could propel prices 20% higher over about 22 trading days.

If we go up tomorrow, staying long thereafter or beyond Friday is a dangerous proposition. I could again miss a low probability rise, but I do not lose money. The ultimate low will occur in the future ( hopefully in 3 months, but I can't predict that ) . I urge you to be prudent with long positions after the next few days. Best wishes.


A nervous day ended the way it was supposed to, at least for today, with gold stocks coming back despite a drop in gold and userx closing UNCHANGED, counting as an up day. I posted several comments today expecting them to tick to the upside and they did. Now 2 down and 2 up. The long side trade will end by the end of next week due to prices either rising to over the 16-20 back prices ( which are falling next week and the trade will reach 9 days by Friday, the half cycle ) or by falling below the 35-39 back prices ( which are rising, the stop point on this trade ) . Prices are "supposed" to rise next week and may rise every day ( but not necessarily by a lot ) to yield a run pattern of 2 down and 5 or 6 up into next Wed or Thurs ( by coincidence? the Fed Meeting ) . Prices are supposed to rise into a very high prob shorting signal by Wed to Fri of next week. A nervous day today as userx had to hold over 2.52 and it did it again at 2.53. But the back 35-39 high price on Monday is the prior high of 2.61, so the 35-39 index will probably start to break towards a sell unless we can do the improbable and close at a new high, over 2.61. The week after next all 3 index back prices will converge at around 2.60, psychological dynamite one way or another ( probably to the downside as I'll update next week ) .


System missed the first about 20% rise in 93 gold stock bull. System was developed in 84 using all prior years ( I think 72-84 ) . Was developed using primarily bull market data and the concern at the time was not how it performs in bulls, but if it performed properly in major bears. Those concerns, over the past 16 years, have been removed, in my experience/opinion. I will always be concerned about whether it will perform right next week, next month...but I haven't found anything better yet, always looking. By the way, 1988 we not a real bull in my system, only 76-80, 82-84?, 93-95. Almost had a bull off the 1998 Sept bottom, but by Dec 98 had given the third major long-term bear sell since 74. The prior two such bear signals ( only 2 of them ) caused 80% declines in gold stocks from their highs and took several years. We've reached 50% down from peak now over two years.


Gold stock and indices looking good on the short-term long side! I'm always reporting userx, as opposed to my composite, because userx is published and verifiable. Userx closed UP the required 2 cents to 2.53. As posted yesterday we "should" have closed today over 2.52 and we did, exactly, as usual. We should start to move more to the upside by Monday since the 35-39 back prices are rising to the old highs ( 2.61 ) on Monday and the 16-20 back prices are falling on Monday. Prices should rise into the end of next week to end the long trade and start a longer-term shorting trade, ending this intermediate advance. Prices should not fall tomorrow but can stay flat to slightly up.


Today's large down move in gold stocks wiped out all the gains from Monday, but just as prices didn't break out to the upside on Monday, prices did not break thru to the downside today. Userx closed at 2.51, with traditional technical analysis requiring a price below 2.50 to complete a double or triple top. Interestingly, tomorrow the high back 35-39 day price on userx is 2.52. So, unless prices rise a little tomorrow, the 35-39 day index will start to break towards a sell and the stop out of the long trade. But a break, or a start towards a sell is still not a sell signal and that 2.52 price is supposed to be temporary support. So the trade enters its third day tomorrow and should last 5-7 more days and prices are supposed to start recovering tomorrow or the next day. A big down day tomorrow would scare the living heck out of me even though today was already scarey enough.

The good news: As per my P.S. Update last night, the timers DID sell today for another loss!


Today's small down day in gold stocks ( userx was down a penny, but it and my composite may go down again tomorrow: they were held up by the South African's upmove last night and will probably be pulled down by tonight's overseas action ) continued to leave current prices barely below the back 16-20 prices ( userx at 2.59, back prices at 2.60-2.61 ) , continuing the short-term buy trade. Those back prices stay at their highs for another week or so, then start to fall, such that this trade, which lasts until prices spend several days over the back prices, should not last more than another 7 or 8 business days and will sell at that time even if prices don't break out to the upside ( remain flat ) . Historically these trades usually last either one cycle ( 16-20 days ) or one-half cycle ( 8-10 days ) . We shall see, but the downside risk here is supposed to be very little and prices are well above the 35-39 day index stop.
I forgot to give the bad news: the momentum fund timers I track bought gold stocks yesterday and If you recall they have previously marked a high about 16 straight times. The last one was on 12/20, but they sold on 12/21. I'll be surprised if we go up until they sell. Hopefully they'll sell tomorrow. I get this info one day after they execute a buy or sell. It pretty much conforms to TGF2's rankings of stock sectors, with the timers buying the groups that move to the top. Precious metals are into their top 4 stock groups now.


Gold stocks dropped today on cue, falling below the 16-20 back prices to generate an index signal for the close on Monday. As I said yesterday, I'd suggest waiting at least a day before considering buying because: the 16-20 back prices are dropping, such that any little rise after Monday will generate a 16-20 sell signal ( as prices rise back over the back prices ) and then if they fell a little again it would generate another buy signal, etc., for the next month. Actually it depends on how far ( or if ) we fall on Monday. A big down day ( where prices stay above the 35-39 day prices which are falling to the Oct/ Nov low area ) would make the risk/reward a lot better. The stop would be the 35-39 day back prices ( prices need to stay above those ) . As I've said for a long time, since the long-term trend remains down, buying is riskier than going short ( although many at kitco think I'm nuts for saying that-- but do you remember the outcry I got when I shorted BMG at the apparently low price of 2.5 in the Spring? ) . The run is now at 2 up and 3 down ( but only averaging a drop of 1% a day ) . A run down into Tuesday's close woud make the buy signal here more reliable than the 75% probability for a winning trade that I've stated. But if we don't drop much on Monday, the risk is about 7% and the reward is only 5%.
If you're thinking about my indices/system, you should be wondering: If everytime prices fall below the 16020 back prices, how does the market ever just go down. The most common way is to get a Double Sell: Prices rise over the 16-20 ( a sell ) , then fall below the 35-39 back prices ( a sell ) before they fall below the 16-20 back prices!!! for a double sell which eliminates the next 16-20 buy signal and always predicts a continuing down move. For that to happen here we have to go back up and stay there over the next month and then start to fall. Or we'll just keep going down now and this buy signal for Monday will get stopped out. The system stays short since we haven't gotten a buy signal on the path since late last january.
We've had some good predictions in the last few months. APH and Barrick went long near/at the Oct/Nov lows. Barrick sold at/near the last high. I guess APH is holding long fsagx at a 10% profit but got stopped out of his long gold at a small loss? TFG2 has been right on for a while. The timers bought right on the day of the high ( as I posted last week ) . Marantette bought well and I believe is still holding long. I hope some other experienced folks here start/continue posting technically-based predictions. I've been posting for a year now, I love this site and most of the people on it and Bart for having a free site with a search option. THANKS BART/KITCO, BUY SOME GOLD FROM KITCO WHEN THE FINAL BOTTOM COMES.


Gold stocks closed down for the second straight day, continuing to break the 16-20 index towards a possible buy signal. If they go down again tomorrow the index will give a signal for Monday's close. From a run analysis perspective, if we go down tomorrow and Monday, it would be best to also go down Tuesday for a 2 up 5 down run that often marks a top and a temporary bottom. The buy signal, which is not on the path ( so the system will remain long-term short ) , is right 75% of the time, but projects only a fairly small move back to the prior highs within a few weeks time. You know me, I won't execute it, but will go short if the subsequent rise occurs to the sell signal as prices rise back over the 16-20 back prices. The fallover the next few days should leave userx at slightly above the last 16-20 signal, when prices had risen above the back prices on 11/27 at 2.46 ( current price 2.55 ) . So prices should fall here another 2-3%.

Barfly: My guesses concerning a time and price for an ultimate bottom for Nasdaq and the xau are not worth much. Can only call them as they happen. The xau guess is in about 4 months at about half the current price.


Today's down day in gold stocks should continue into the possible 35-39 day buy signal next Monday. Expect the downtrend to continue over the next 3 to 4 days at least. The market pushed me to uncertainty and came close to breaking out, but failed, as the indices had forewarned. Kaplan apparently sold at the top of this uptrend. Note how the Fed rate cut caused the dollar to rise, as per my prior warnings. As we fall here, we're likely to set new lows for the last month, confirming the double top and making the 16-20 buy signal questionable. I once again failed to have the courage to go short and will now need a rise off the upcoming 16-20 index buy signal to initiate those shorts as prices rise back above the 16-20 back prices. If the buy signal comes next week, prices should stay flat for about a week and then rise to a slightly higher high in February and then collapse. I believe that the stock market ( at least the Nasdaq ) , after a bounce, will be lower six months from now and that gold stocks will be even lower. Will the Dow make a new all-time high before collapsing? Do not stay long the gold stocks.


We needed a penny up in userx today to break out to new highs ( as per traditional technical analysis ) and avoid the index's and run analyses continuing double top formation that has been in place since the 35-39 day signal 15 trading days ago. Looked like we'd get, felt like we'd get it, but... we DIDN'T get it. Always amazing to me. userx was unchanged today at 2.61 and unchanged from 16 days ago. The run is now 2 down and 2 up, not helpful. I personally believe that if it goes up a penny it'll be a breakout with prices rising to the 92-96 index, but I slept better this weekend having read Barrick's bearish analysis post last Friday. Time for a continuing rise is getting short: in all but one case historically, the high has come either at the 35-39 day signal or by day 22 after the signal, with most of those latter highs coming 21 or 22 days after the signal. We're at day 16 tomorrow. A rise to the 92-96 signal, if it happens, remains a 98% probability short and I'll probably go short by day 22 anyway. Maybe we'll break out to the upside tomorrow
Forgot to post that the current price did start to break the 16-20 index. If prices go down for a few days, could get a short-term 75% prob buy signal.


Kaplan sold today. We all owe him thanks and he deserves our respect for posting his thoughts so regularly. Nonetheless, if you look back to Spring 2000, you'll see me wondering what his stop was. Userx is down 20% since he bought. The fact that he sold is no sign of a low. But the fact that he bought stocks ( nasdaq? ) is also no indication of a low there. We had the five up run in the nasdaq in Sept. which I posted as the high, a generational downturn commencing. The low won't be seen until we get 5 hard down days in a row. Note the continued fall in interest rates that I've called for based on the gold stocks' decline. Gold does not lie. Recession/depression are finally approaching. Preserve your capital. We'll see if gold can break out temporarily or bullishly to the upside over the next few weeks. Keep raising cash or lock in safe interest rates for a year.


Although the xau closed down, userx and my composite closed up!!! to once again tie the high for this move set on 12/7 ( the 35-39 index signal ) , 12/20, and 12/25. Every other time I've reported a divergence between the xau and my measures, it's been a bearish report. This time is different. Prices rose to avoid the 16-20 back prices. This is critical and I feel emotional ( a problem ) . Now we have to wait the typical 3 day weekend to find the answer, but prices could fly up again starting on Tuesday. I can't wait three days. The current run analysis is meaningless ( at 2 down and 1 up ) except that the last two meaningful runs ( 1 down and 2 up ) were high probability tops. If we go a penny over them, the shorts will be covering and prices will fly on Tuesday. A bull market will require NOT TOO large a move however. If you track my comments as a sentiment indicator, today made me VERY anxious. Happy new year, the markets are set up perfectly psychologically for important moves on Tuesday. I now FEEL up, but don't know if the low probability up move will happen.


Another flat holiday day for the gold stocks, now unchanged for 15 days, 13 days since the 35-39 day signal. The gold move today was not meaningful. The move that will count will occur probably next Tuesday. If the gold stocks don't move slightly up tomorrow, the 16-20 index will start to break towards a potential buy signal, as the back prices rise and the current prices fall below those back prices ( remember that this is a contrary index ) . Cyclist on the other forum is calling for a low next Thursday and if prices do fall some next week, the 16-20 will give a 75% probability buy signal for next Thursday or Friday. IF a fall occurs prices should fall to slightly above the same prices that were present when the 16-20 index gave its last contrary sell signal ( at userx 3.46, 21 days ago ) . More on that possible buy signal if prices start to fall and we get closer, because it's "only" 75% with limited upside potential and negates the chance for a bull market. For any chance for a bull market we need to simply go up next week. By the way, the market timers ( momentum players ) sold their gold stocks two days after buying them last week for a tiny loss ( again ) . I don't know if that's good or bad for the bulls, since I know when they buy it's usually marking a high, but when they sell it isn't very predictive.


The gold stocks have now been unchanged from their levels for the past 12 trading days, since the 35-39 index signal. If they don't rise above the current price by Friday ( or if they fall next week ) , the 16-20 day index will begin to break towards a potential short-term buy signal. A fall back below those 16-20 prices is often a good buy signal for a week or two until prices rise back above the 16-20 back prices. Alternatively, if prices rise next week without falling below the 16-20 index, the 92-96 day prices will hit their next low point in 10 trading days from today. A final rise into that exact day would fit the normal pattern ( if prices haven't just fallen down after the 35-39 signal ) of a high 18-22 days after the 35-39 index signal. I would then initiate shorts that win 98% of the time. If prices rise into that 92-96 index signal, then fall, then rise again ( such that I would break even on the shorting trade ) , it would be bull market time. I doubt that will happen because of the long-term sell signal the indices gave in Dec 1998 that portend an 80% drop ( we've dropped 50% since that time, but only have had 2 other such terrible sell signals in history ) . My guess, based on the long-term 221, 443, and 664 cycles, is for an ultimate low in 4 months from now ( actually 77 stock market trading days from today ) . We will then be 664 days from the Sept 98 low, exactly 443 days from the july 99 low, and exactly 221 days from the June 2000 low, as well as about 96 days from the 11/20/2000 low. But that's just conjecture, it's too far away. Hard to see how the gold stocks will drop with the dollar falling, but I'll try to ignore such fundamental considerations ( perhaps an interest rate cut will make the dollar rise? ) .


If prices fall below the 16-20 back prices it would be a buy signal. It takes several days below the back prices to generate the signal. The last time it went over the 16-20 back prices it was a possible sell signal and that was incorrect since prices kept going up to the 35-39 index. But usually even when prices rise thru the 16-20 sell signal they fall back in about 20 days to near that same level


If we go up strongly the shortable top is only 21 trading days from the last 35-39 day signal ( the 35-39 day signal is "on the path" ) . That means 17 trading days from Friday. Not a long rise, but it would be a vicious one. The bear to bull change requires the 92-96 index to be "on the path". That will have to be explained at a later date, but it basically means that the 92-96 buy signal must come BEFORE a 35-39 day buy signal. Not the case here since the 35-39 signal came a week ago.


Your query as to the interpretation of the 92-96 index signal, should it come next week, is an excellent question ( the kind of statement that my grad students use when they don't know the answer to a question! ) . I was going to post this when we got closer to the signal. Here's what I know for as sure as I can ever get ( "definitively" ) . I definitively know that one can go short on that signal and EVENTUALLY be at a major profit because all of this is bear market patterns and signals. But if this signal comes within 10 days of the 35-39 index signal ( i.e., if the signal comes anytime next week ) , there's the unclear 50-50 chance that prices could literally explode ( about 30% really fast ) for another approximately 2.5 weeks. So we'd either explode or start down slowly. If the signal came later then 10 days after the 35-39 I'd be able to state clearly that it was marking a top. I know that it'll mark a critical point in a bear market. A really critical point. How one plays the signal, if it comes next week, is a personal decision. I'll probably have to wait two days after it: If prices begin to accelerate to the upside I'll jump on board with everything, if they drift lower I'll go short ASAP. After next week the back 92-96 day prices begin to rise so that if the current prices don't accelerate to the upside ( userx over 2.80, now at 2.52 ) the index will sell within 5 days, strongly suggesting that the top is in. I'm requesting any help anyone can offer in terms of what they have technically during next week if prices rise into Tuesday/Wednesday. If the upside breakout occurs I can increase my worth by 25% in 2.5 weeks and then make a lot to the downside. That is what I wait for. The time to act ( for me ) is near. The system remains and will remain short from Feb 2000 at about userx 3.75 and will sit thru the possible brief price explosion. Please help, anyone that feels some degree of certainty next week. I wish that I knew THE answer at this critical juncture. I know all of us, myself included, would like to know a definitive answer, but I need to maintain posting the probabilities, even when they appear to be uncertain, as objectively as I can.


Today's small up day in gold stocks stopped the down run right on time at 5 down. It's now 5 down and 1 up. We need a large move next week, at least 5% to generate the 92-96 day index signal by next Friday ( the needed time period ) . The move up needs to accelerate by Tuesday and Wednesday, following what should be a small up day on Monday. Wishing all a nice weekend and happy holiday time.


Gold stocks had a very small down day today as expected, and with userx at 2.50, maybe we'll get another small down day tomorrow to the expected retracement level of 2.47-2.48, slightly above the last 16-20 index signal at 2.46. A break of 2.46 will look bad. The run is at 2 up and 5 down ( almost always ending at 5 or 6 down ) . Am hoping for the rise to the 92-96 index price level by Tuesday's close next week. The time available is starting to get short, but these stocks can really move once the trend turns up again, if it does. The next three days are the only chance for a meaningful rise to begin, and if it doesn't materialize in the next few days it'll will once again be months before the next opportunity. We need to get started latest by Tuesday. APH sees the possibility and takes the risk. I wait and hope that the 35-39 index didn't mark the end of this 13 day uptrend. Since the dollar appears to continue heading down, that adds to the hopes.


Today's small down day in gold stocks made the current run 2 up and 4 down. The composite was held up by the upside in overseas gold stocks last night despite the moderate downside in the xau today. THerefore, it's likely that userx and my compsoite and sharefin's composite will decline tomorrow to make the run 2 up and 5 down. That run, of-course confirms ( after-the-fact ) the correctly called high last week, but in and of itself is not a buy signal unless the decline averages 2% or more per day. It's too weak. However, this decline usually simply retraces the advance back to slightly above the last 16-20 signal level ( at userx 2.46, now at 2.51 ) , which is also the 50% retracement level. Expecting, hoping for a drop tomorrow for day 5 down followed by a rise into Tuesday or Wednesday of next week into the 92-96 back prices. Alternatively we could drift down to below thback 16-20 back prices in about 7 trading days followed by a rise above the 16-20 ack prices. As you can tell, prices rarely just keep falling here, we're almost due for another rise into resistance and a probable shorting position. The 6 times in history that a 92-96 buy signal has come within 10 days of the 35-39 day buy signal, 3 times it's marked the high and 3 times prices have exploded upwards. The times of the explosions have been characterized by very mild to nonexistent declines after the 35-39 day signal. It appears likely that such an explosion is unlikely. Kitco sentiment has been negative today and a few calls to me from people who messaged last Wednesday saying "why did you not call to buy" and today message "thanks" suggests a short-term low is tomorrow. Check out Sharefin's graphs of the ski indices on userx and his composite from last night. Amazing stuff.


My indices essentially mark channels; hence a short-term short on the last 16-20 signal on Monday two weeks ago, similarly from last Friday. THe index remains in shorting mode, each rise is to be shorted in line with the continuing predominant downtrend in US-denominated gold stocks. Next short may be next week at the 92-96 with a tight stop and reverse. If that stop is hit and we fly up for three weeks thye'll be a long-term very high profit shorting entry. I'll be playing next week if we get to the 92-96 day index. I "play" with everything I've got or nothing/wait. Did you get my subscription request: ordered 1 year of the cojones newsletter in return for 1 year of the "Sit and Wait Ski Report: Guaranteed not to lose money since it tells you to do nothing".


Sharefin: The very long term ones are 218-222, 439-443, and 660-664, but they're too long term to be very relevant or as well validated. Sentiment is approaching the 92-96 area now on that chart as it is for me. And looking back to the bottom in mid-July 1999, your chart also correctly has prices having just fallen below the 16-20 for a buy. But at that bottom, the exact day of the bottom, I recorded a 218-222 buy signal as it was exactly 221 trading days from the 8/31/98 bottom. It all still works best with userx and I don't know why.

Nick: Nothing for day traders or even week traders usually, though Kaplan e-mailed me troday and said my analyses were not really useful to him because they were too short-term! But usually make 50% a year non-leveraged, used to make 100% in gold futures with a little leverage. This year the index has made about 14% long and 30% short, but I screwed up and couldn't didn't execute the short entry, so it's been 6% interest rate plus the small long profit. You ever go short?


Today's down day in gold stocks was consistent with the run analysis and signal executed last Friday which called for a top, but the final critical date/time could still be Tuesday in a week. On that day we will be exactly 96 days from a prior low, with the 92-96 index back prices therefore being at their low point. Not coincidentally, this corresponds to the day that the Federal reserve meets. If we are going to get a 92-96 index signal, it should occur on that day. Prices would have to rise to slightly higher than last friday's closing prices to generate that 92-96 signal, the last of the 3 indices. If that signal occurs it would represent a major technical/psychological point, which almost always is a point to short, but in the other 5% of cases ( when the 92-96 signal comes within 10 trading days of the 35-39 signal ) , prices have skyrocketed upward for about 3 weeks to a major major high. Hard to see how any of this will end up being indicative of an emerging bull market.


The gold stocks closed down today to complete the 1 down 2 up run into the 35-39 day index signal. They are now predicted ( 90% ) to go sideways to down for a few weeks. Usually the small downtrend is followed by another rise to approximately these same levels. So far prices are falling short of the 92-96 index levels which continue to drop. I think that we've seen the corrective rally and now go sideways for a month or even two months before the major downtrend resumes. If the 10% up probability occurs these stocks will start to fly strongly, surging another 50% but that is unlikely IMHO.


Today's small up day in gold stocks brings the run pattern to 1 down and 2 up. If you recall, IF we go down tomorrow, that completed run pattern has about of 90% probability of short-term bearish implications. If we go up tomorrow, the run would extend to 1 down 3 up and suggest higher prices. The 35-39 index buy signal is executed tomorrow, but in bear markets it has a 90% prob of portending lower prices. The likely scenario is that we are at a short-term ( several week ) top, and after the decline, we rise to slightly higher prices to terminate the intermediate term advance. Tomorrow, the 92-96 back prices will be only 1-2% above today's prices. It'll be interesting/important to see whether we hit them tomorrow.

Where's Barrick?, I appreciate his/her analysis!

I also appreciate Shell's extension of the indices to other mutual funds! Very interesting info that needs to be followed through the up and down slopes we go thru in the future. Interesting that Lexington was the other gold fund giving the "right bull" pattern in 1993, since that fund has usually been similar to userx in volatility and in including South African shares. In many of the bear years, lexington was the only fund to outperform userx to the downside and sometimes to the upside in bulls. I've tried the indices on ASA and Gold futures without success, but lexington is a real other candidate. Shell, Did it give a 2 up long run down ( 7 ) at the 1998 Aug/sept bottom?



Today was the largest surge up in gold stocks since this rally began, a powerful move. This will generate the 32-39 index signal ( termed a buy signal ) to be executed on Friday ( at the full moon ) and is within a few % of the 92-96 index prices ( which are falling every day ) , and is now within 2% of the 61.8% Fibonacci retracement level from the 9/8/00 high to the low 11 days ago.

Am I nervous at not being long? You know it. Has this happened before? You know it. I've missed a lot rallies in my life that were larger than this 14% rise so far. I've posted before that I caught a 20% rise in summer 1999 and missed that 40% next rise when gold exploded. This isn't strange to me but I always feel like ... when it happens. We all know that feeling. I have to stay in control of my emotions, as we all should, and it isn't easy. On Monday, I called my co-developer for support and said that I wanted to buy and he said he did too, but we're not allowed.

I will go long when prices cross over the 92-96, fall back below, and then rise above it. I've got quite a few phone calls to answer tonight from people asking what's going? and why didn't you contact us to buy? Userx is 14% up off it's low of 11 days ago and the 92-96 index, if the pattern unfolds correctly, would end up buying just a few percent above current prices. But what if it just keeps going up and doesn't give the needed pattern buy? Answer: I won't make any money and I'll feel even worse. But I feel even worse when I buy and the gold stocks fall 13%: then I've lost money. The index last sold in the 3.60 to 3.70 area and userx is now 2.60 up from 2.31. I am still supposed to be short these stocks.


I reported yesterday that gold stocks would have to "plunge starting tomorrow" and that "it appeared to be very unlikely that it'll happen". Today the stocks fell, but only moderately, tempered by an Australian up market overnight and a closed South African market. But the possibility of the drop into a Monday buy signal is still intact ( especially with Australians dropping 4-5% now ) . They must drop every day and a lot ( 4% ) tommorrow. Otherwise it's "sideways to up". Today, the 35-39 index continued to break slightly more towards a signal and prices need to decline every day to avoid that signal. I don't know if we'll plunge NOW or do the sideways to up pattern into a shorting signal. But if you really believe that the fundamentals are bullish, a drop now is called for. This fundamental view, that markets are moving due to the election and Greenspan, is baloney ( IMO, the true technician viewpoint ) . Prices are back to where they were at the 16-20 sell signal last Monday. The run is 2 and 1 down. One can salivate at the prospect of a continuing drop into a definitive index buy signal coupled with definitive run analysis buy signal of 2 up and 5 or more down, which is set up. That just seems too good to be true, so I'll be surprised if it happens. But ready with dry powder, as always. If we go up tomorrow, the sideways to up scenario is clear.


A strong up day in global gold stocks surged prices above last Monday's high to hit the 35-39 day index prices, the next resistance level. Only a plunge starting tomorrow can provide me with a buy signal by next Monday and that appears very unlikely. The 35-39 day signal, which will take a few days to occur has stopped every rally in the year 2000, I believe four times. That index was originally designed as a buy signal when prices rose above it. Indeed, during bull markets it marks the start of another major leg up after a correction. But in bear markets ( which the index still has us in ) , buying on this signal is very dangerous, as demonstrated for the upteenth time this year. If we get that signal I have no real call, though shorts established then will be profitable down the line, but prices could still rise to the definitive shorting area at the 92-96 index level ( which is now only about 5% higher than current prices within about two weeks ) . If you look back 92-96 days you'll see that we are approaching a temporary trough/low in prices in about two to three weeks. That is where it would be likely to hit that final bear market 92-96 day resistance level. Rising about thoose prices is a short. If prices then fall below the 92-96 and subsequently immediately rise above the 92-96, that is the system's bull market signal.

It's nice to get this rally, IMO, because I was getting very concerned that a continuing gold stock fall was predicting a severe recession/depression. This suggests some reinflation is occurring, but delays "the ultimate final bottom" in gold stocks. Note how a true and open cabal, the central banks, intervened against the dollar last month, which has apparently set this rally in motion.


fwiw-of 19 gold funds i follow only 4 have not yet reached 35/39; the other 15 have,and of these, 5 have also reached 92/96-ie,goldx,ekwax,opgsx rypmx and tgldx


The World index appears to correspond with my proprietary composite, as my composite has been over the 16-20 for 5 days and is approaching the 35-39 prices which are falling every day. If we don't go down nex week, my composite will hit those prices by Monday in a week.


I found your application of the 16-20 and 35-39 to different world sectors very interesting and informative. It's common for prices to jump above both of those indices/levels at the same time, giving tied signals. That indicates that prices are often stable for almost 35 days and then jump suddenly. My composite is being held down by the African component which is weighted moderately. All have been underperforming the North Americans. Next and final level is the 92-96 day index.


Many thanks for your daily index updates. These are much appreciated, 'though the more arcane characteristics will take time to understand.
FWIW I have constructed a spreadsheet using your method, with the FT Goldmines index as the basis for data. As you will know, Sharefin posts a chart of the FT Goldmines index. It is given as a "World" index, and its three geographical components.
I offer these comments on the current state of affairs ( as of the close on 01 December ) as illustrated by my spreadsheet. We appear to be entering an unusual / interesting situation ( IMHO ) ......

World: Index at 646......
16-20 Back = 587..585..596..596..590 Index has been above 16-20 back for 5 days
35-39 Back = 646..656..635..650..647 Index just entering range

Africas section: Index at 618........
16-20 Back = 624..644..658..665..664 Index still way below 16-20 Back
35-39 Back = 774..804..769..775..762 Index still way below 35-39 Back

Australias sectiom: Index at 766.....
16-20 Back = 723..721..732..722..724 Index, having been flirting with 16-20 Back for a few days, suddenly jumped today through both the 16-26 Back and carried on up through the 35-39 Back also.
35-39 Back = 758..723..749..755..762 Index jumped sharply through 35-39 Back in one huge leap from below 16-20 back

Americas section: Index at 636.....
16-20 Back = 553..544..554..552..545 Index has been above 16-20 back for 9 days
35-39 Back =575..608..570..596..587 Index has been above 35-39 back for 5 days


The up day in gold stocks today makes the current run 3 down and 1 up, nothing meaningful to work with. Although the xau and many stocks made highs above last Monday's high, userx and my composite are still about 1% lower than last Monday's contrary sell price. Only 6 days left to get a drop into a buy signal. If prices stay here and don't drop, in 6 days the 35-39 day index will start to break. We hit APH's chart target of xau 48 today. I can only wait and see whether we get a drop next week into a buy or if we continue to go sideways to up to the 35-39 day index signal which would still not allow me to go long. More on that signal if we approach it. I've been waiting to go long now for 10 months!


Gold stocks closed down today for the second day, making the run 4 up and 2 down. Only about another 1% down till they hit traditional support. Why don't I buy tomorrow? After all, if they continue down through that support, won't I get a buy signal? Yes, but only within the next 8 days ( a 10 day half cycle of the 16-20 index from the signal on Monday ) . They could go down slowly such that prices wouldn't fall thru the 16-20 back prices ( which are trending down towards the all-time lows ) until after the required time period has expired. Then there would be nothing to hold them up. But one could buy here and use an 8 day time period stop, such that if prices fell to new lows after 8 days, one would exit the longs at about a 4% loss.

If you pull up this year's chart of userx, note the yearly high in early February when the index sold the Jan long position and was supposed to short at 3.75 or 3.61. That has been the yearly high, with no index buy signal to date. See the multiple rallies that I have been UNable to call or participate in. But note the overriding downtrend that the index correctly portended. Only a fall to new lows within the next 8 days will temporarily terminate that downtrend as far as my system is concerned and require a long position. But when you see all the 10% rises that the index has missed, you can realize that that is normal and it ( I ) could miss a rise right here. If you check the betas on gold mutual funds, you'll also see that userx is always among the most volatile but trending performers, exactly what I require for prediction.


My composite and userx counted today as a very small down day. The run is now 4 up and 1 down, avoiding the possibility of the nice 2 down and 5 up run since we stopped at 4 up. So the run analysis here is not very useful. 2 down and 4 up can be a top, but the odds are not useful one way or another. Longer-term resistances, ala 35-39 and 92-96, are, of-course getting lower each day. Must go much lower within 9 trading days for me to get a buy signal.


I hope the index is right in suggesting that this is a temporary high. The price action was appropriate since it's supposed to move up nicely into a signal and I felt sick that I'm not aboard, but I'm used to this, being a "turtle" trader. Userx is "only" 6% above its all-time low from 4 days ago. That 85% probability 5 up and 8 down run obviously was correct at marking a bottom of some type. This is all bullish in the sense that if we drop hard the index will give a definitive buy, but such a signal occurs only once a year on average. It has been almost a year since late last January. I've got a ten trading window starting tomorrow for the drop to below the 16-20 back prices to occur. 35-39 day resistance is only about 4% above current prices. Support is about 3-4% below current prices. The run is at 2 down and 4 up. Although the erratic xau may decline tomorrow, I won't be surprised if the overnight rise in South Africans and Austaliana causes my composite and userx to be unchanged to up tomorrow making the run 2 down and 5 up. That run would be important and yield a 90% probability of marking a low ( which has already occurred ) and a high. It sure is nice to see the gold stocks move again, as they always eventually do.


The 16-20 contrary sell signal generated on Friday is to be executed today at the close of trading on gold stocks. It'll be interesting to see if today marks a temporary high, although I might still expect a basically unchanged day tomorrow to bring the run to 2 down and 5 up.


Sorry for using a confusing term. All the trading systems that I have encountered state that when prices rise and an index gives a signal, it is a buy signal. When prices fall, it usually is termed a sell signal. However, the 16-20 index is a contrary index, so as prices rise above the past prices, it is a sell signal. Hence the term "contrary sell", a sell signal generated by the contrary index. Although this suggets selling, we are oversold on an intermediate and long-term basis, so you do not hear me saying to go short, as I would if this was a definitive sell. Prices can still rise to the 35-39 day index , but my opinion is that prices will begin to decline after Monday based on this signal. I have no position in the gold stocks, but a decline to new lows, a 16-20 "contrary buy", within the next two weeks will be a definitive trading buy. SO HOLDING LONGS HERE IS PRETTY SAFE, BUT RISKS MISSING THE NICE PROFIT OF BUYING AT THE NEW LOW IFIF A DECLINE OCCURS SOON.


Perfect day today in gold stocks with userx unchanged to count as an up day and generate the 16-20 contrary sell signal for Monday. This signal represents short term resistance and usually stops the rise. Guessing, expecting, another unchanged or up 1 cent day on Monday. I am certainly not expecting any big fall in the near term since we just made a little low and prices usually stay up near this little high for about five days ( today being day two ) . If we are near a little high, the decline should once again be very slow or else the index will give an immediate buy signal since the userx back prices are now passing into the last little high one month ago ( e.g., all 5 back prices now at 2.36 to 2.37, with the current price at 2.38 ) . To repeat, a decline below those back prices within 2 weeks of Monday will see me buy with all my monies for the first time since late Jan 2000. Notice how the xau went up too much yesterday and corrected that today, but the mutual funds and broad composites went up today, including the Australians and South Africans last night. We are now 2 down and 3 up.


You understood exactly. I can't predict a level below 2.31 but can predict the time, because IF prices fall back to a new low the index will buy one or two days later, probably the next day, so the low should not very much lower. If the pattern holds the price would be 2.29, not much lower than the past two little lows, so I don't think that you would be stopped out at xau 41.25 ( but close ) . If that all happens and the rise follows, the tied signals would be represent an interpretative uncertainty at this point and I would in all likelihood not be a pig and just sell and take the profit because the technical pattern would be complete and the corrective wave up, correcting the continuing downtrend could very well be completed. If I sold and prices rose to the 92-96 back prices ( another about 10% up ) the index would go definitively short.


Gold stock prices did close above all 5 16-20 day back prices today yielding a +5. Adding together yesterday's -4, and the prior 3 days of -5, -5, and -5 ( times 4 ) yields a total index score of -56. When prices stay unchanged to slightly up on the upcoming quiet Friday, the 16-20 day index will generate a signal executed on Monday. The 85% probability that the prior 5 up and 8 down run was a low is therefore confirmed. This upcoming signal activates my indices but is not a buy signal. A fall back below the 16-20 prices would give a definitive bear market buy signal, never wrong. The signal Monday indicates we've clearly hit the first level of resistance. If we then fall, the buy signal must come within 10 trading days ( a half cycle ) from Monday. Alternatively, prices could go sideways to up for another month to hit the 35-39 day index, the next resistance level. The index remains short unless and until prices fall back below the 16-20 index prices ( remember that the 16-20 index is a trading index that is a CONTRARY index: when prices rise above the back prices it indicates overbought and when it falls below them it indicates oversold or a buy signal ) . My guess is that prices will fall to new lows within 2 weeks of next Monday to give a buy signal because the pattern in userx has been a low on 10/26 of 2.33 when APH and Barrick bought, a high 5 days later at 2.37, a new all-time low of 2.31 on the 8 days down on 11/14, and now a new high of 2.38 today. The pattern would continue with another new low below 2.31 in 11 or 12 trading days giving the buy signal followed by another new high above 2.38. At that time I would expect a tied 16-20 index signal and a 35-39 day index signal which would represent a major critical technical point. Safe, conservative traders would sell and take profits right there. Remember that I stated that the high in September when I was in the hospital was a major high, with those prices ( e.g., userx at 2.80 ) not to be seen again for a long time. Therefore, although gold stocks can now be stated to be definitively in a corrective phase to the long-term bear, the rise will be minimal. But at least we have a chance of going long soon. Have a happy holiday. As traders say, don't be a pig or a turkey if we get a buy ( smile ) !


I had thought that we might get a badly needed up day today, but userx and my composite went slightly down despite the xau going slightly up. The important resistance noted last Friday appears to be holding and the immediate future continues to look bearish. We need immediate movement up, but it looks like gold stocks and all stocks are heading down. We're now 2 up and 2 down. If we'd plunge right now for another 3 or more days I would get a run analysis buy, but since the run is starting out down so weakly, it just looks like we'll continue to drift down. Ugh!


As per yesterday's post, today was the first important technical day in a long time for the gold stocks. We needed unchanged to slightly up and instead we got a decline that moved prices below the 16-20 day back prices. We hit the resistance and immediately were repelled to the downside. Could still turn up next week, but this behavior is not good for a bullish scenario. Another bullish hope would be for a true plunge immediately since we are now 2 up and 1 down. But all of these bullish scenarios are simply hopes and none has, as yet reached fruition. So the index continues to be short and I continue to wait and hope for a trade to the long side. A disappointing day for the bulls. Hope you have a pleasant weekend.


It's time for an important move to occur as of tomorrow. Gold stocks moved up today to make the run 8 down and 2 up, but more importantly tomorrow the current prices will meet the 16-20 day back prices. Either prices fall tomorrow or the 16-20 index will break, beginning a move to a signal. That break means that we are hitting resistance. If we break the index and stay above it for a few days, then fall to new lows, the index will buy. It should look like a upside breakout ( bull trap ) which then fails and then appears to be a breakout to the downside. THe index would then buy that "downside breakout" or "bear trap". We shall see. We need unchanged to up tomorrow for a start.


A small up day today! Hallelujah, the down run ended at eight and we can see if yesterday's prices will now hold to make a bottom. I've said over the past few days that since the down run has been weak, the up side doesn't look too exciting, but again, if we can move above the 16-20 day back prices now/soon and then fall, I'll be buying. Those back prices as of tomorrow are falling down to only about 2% over today's prices. Note how we've been in this narrow low range now for 16 days, so the back prices are starting to get very low and it won't take much to move above them. Starting to get somewhat interesting and worth watching ( I always watch, but get bored sometimes ) .


Yes, today was the 8th straight down day for gold stocks ( userx's unchanged day again also counted as a down day ) , albeit very very slightly down. Very very short term traders can still go long on the first up day off this run down with a stop at the prior day's low, but the risk is low and the reward appears to be low. We've been flat to infinitesimally lower for 16 trading days now, making it likely that the low volatility will end in 3-4 trading days ( based on a 16-20 day index ) . Resistance is 2-3% above the market and support is uncallable for me since we are at all-time lows. "It don't look good to me for the long side yet".


Yes, fellow Kitoites, another day and another very slightly down day in gold stocks to continue the run down, now 5 up and 7 down. The end of this run might, as I've said before, mark a low, but the run down is so slow and meager that the ensuing up move is also highly likely to be minimal. I certainly can't recommend going long until the first up day since this run could continue for g-d knows how long, the longest in history being 9 days down. In 4 more days the 16-20 day back prices will be only 2% higher than now, meaning that a small rise will activate my indices providing the possibility of a bear market buy signal


Ugh! Another small down day in gold stocks, with userx falling to new all-time lows. The run is now 5 up and 6 down. The longest such run stopped at 9 down. This is an example why I never buy a run down until the first day up, until it ends, since I can't be sure how long it will last, can only state the probabilities which suggested an end at 5 down ( yesterday ) . And the run down has been so weak that the rebound probably won't be strong either. The only positive is that I FEEL that this is so dismal that they could still be bottoming soon. The index can't give a buy signal until prices rise above the 16-20 day prices and then fall below them. In traditional technical language, that would require that the last low several weeks ago be a left shoulder, the current new low form a head, and then after a rise the index would buy at the bottom of the right shoulder, at least two weeks from now. Although I'm getting dejected, thankful to still be in cash.


Yesterday my composite and userx closed down for the fifth straight day. The run going into today is now at 5 up ( a high ) and 5 down. Such runs have usually stopped at 5 down to mark a short-term low, so it's time for the gold stocks to go up but it's not looking very promising this morning. Furthermore, userx fell yesterday to tie its all-time low. Obviously a further fall today would suggest that other gold stocks will be following soon, falling to new lows. Let's go up! now! or at least be basically unchanged today.


As posted yesterday, the gold stocks needed a down day today to avoid a very bearish run. The needed down day was obtained today, with userx, for example, closing unchanged ( counting as a down day ) . The end of the current 5 up and 4 down run has an 85% probability of marking a minor low. Such down runs usually end at 4 or 5 days down. The down run should end above the prior low ( which for userx was at 2.33, today's price 2.35 ) . If the down run stops before making a new all-time low, that should mark a bottom with a subsequent rise to a higher high, such that one could enter on the first up day using the all-time low as a stop. My personal opinion is that the possible rise will not be large and I am hoping for a small rise into a 16-20 index signal ( prices rising above the back 16-20 day prices, which can easily happen within 7 days ) , followed by a fall ( plunge ) back below the prior lows into a powerful bear market index buy signal. As I posted a week or so ago, we have now gone more than 30 days since prices fell below the 16-20 day back prices and the time frame is now right for a rise back above the 16-20 day index since going beyond 40 days between signals is extremely rare.


Although the xau closed up largely due to copper company PD, my composite and userx closed very slightly down for the all-important 3 days down, making the current run 5 up and 3 down. The bullish hope has to be for 1 or 2 more days DOWN, which would yield an 85% prob of a minor low. An up day tomorrow would seal the current run at 5 up and 3 down, very very bearish ( 94% ) . So let us hope we go down again tomorrow and/or Thursday so that the gold stocks can then rise and then plunge to a buy. We need to hold these levels for just 8 more days to yield prices over the 16-20 and then a fall to below the 16-20 index will give a definitive bear market buy signal. I'm still waiting and the index is still short ( and very profitable ) for the past 9 months. Critical time approaching within two weeks.


Today's small down day in gold stocks brings the current run to 5 up and 2 down. IF we go down tomorrow the run analysis will be short-term bearish at an 85% probability for further down movement. An up day tomorrow will predict further up movement at about 75% probability. Those are somewhat meaningful probabilities, making tomorrow, even the moves may be small tomorrow, a short-term meaningful day. Remember I use USERX or a very broad composite at the close to compute whether the day is counted as up or down. Cheers, as we continue in a flat market period.


I apologize for being unable to update yesterday, particularly because yesterday recorded as the fourth straight tiny up day and today was the fifth. So the run is 4 down and 5 up. If you remember 5 days ago I posted that even if a run up started I wouldn't be able to call that a meaningful low. Well, now we've had a run of 5 up that has been unusually puny to the upside. Technically I can now join the gang calling last Wed a low by definition, but it's been an extraordinarily weak rise. Half the time this 5 or 6 days up here also marks a high ( albeit now a crappy high ) . I can't get a buy signal for several weeks at a minimum again, but would like for current prices to hold or rise some in the next two weeks so that a subsequent fall would give a buy. We've basically gone flat line, using up technical time for my indices as all back prices gradually decline to lower the resistance and also lower future potential buy points. Cheers.


The hoped for run down to a buy was negated today. Whereas the xau went up too much yesterday, it went down too much today. The higher South African shares caused my composite to go very very slightly up today and userx to be unchanged ( counting also as an up day ) . So now we are 4 down and 3 up. The long term trend and intermediate trend remain clearly down, the short-term is questionnable, no call. Now I hope for a steady to higher move in the next two weeks and then a drop to new lows for a buy.


Today's very small up day in the gold stocks has yielded the 2 up pattern that I was hoping for at the end of last week. A hard run down starting immediately and lasting for 5 or more days will generate a run analysis buy signal. I can hope, right, directly into the BOE auction next Tuesday seems too perfect. I cannot predict such runs before they occur but know what to do after they occur. The only apparent problem is that gold is now down 4 straight days, making it less likely that gold will drop immediately so as to take the shares down to a buyable bottom. We shall see, otherwise my system will remain bearish. Resistance is about 10% above current share prices.


Although there seems to be some optimism at Kitco today based on the out-performance of the gold stocks over gold, I can't find anything bullish here beyond a day or two. Can always be wrong on short-term ( 2 week ) moves. But today was an up day, all day, in gold stocks, moving up 1.5%. This up day was not unusual, as per yesterday's post expecting an up day today and/or Monday. Let's hope for another up day, which is reasonably likely given 3 straight down days in gold itself. And then I can fanatize a run down starting Tuesday to a run analysis buy. We're now 29 days past the time that the stocks fell thru the 16-20 day index, so another 2 weeks or so would be the average time for this kind of move down. USERX is down about 50% from its 1998 and 1999 highs. The long-term final ultimate bottom is projected at down 75-90% from those highs. This projection is based on what happened after the only two other long-term ( triple ) sell signals in history. A very small N ( frequency ) , so this is merely a guess. Another week, Kitco posters have been excellent with little crapola going on and lots of laughs, and we're another week closer to all kinds of bottoms. A hearty Cheers.


Although the xau was up today, my composite and userx closed down a little again for another all-time low. The run is now 1 up and 4 down. Such runs have only a 7% probability of marking a meaningful low. Gold continued down and the only bullish news is my Yankees won again! Such runs usually end now or shortly, so I am expecting a nontradable up day or two tomorrow or Monday. The index remains short and with each passing day the eventual buy comes at a lower ( better ) price. Still can't get a buy signal for at least a few weeks.


Gold stocks once again fell slightly to another new all-time low. And now gold has broken below traditional support lines, with uptick understandably going short on the breakthru. With the xau simultaneously hitting some of Kitco's best technicians' buy levels ( and Ivan Auger appearing to say buy ) , the next few days are exciting for me. Although I personally don't have anything that says to buy gold stocks, gold often breaks thru support and that is a bottom! Since I have no buy signal, I guess it could also just continue down right now to 250 or spend a day or two going back to the broken support at 268 before going down. Our fellow kitcoites who are going long here have courage and stops! and if they are right it'll be one great call. The run is now 1 up and 3 down which is usually pretty bearish, a continuation of the down trend. As sharefin suggests, all sharemarkets may be in strong down modes now, with gold shares going for the ride down too, plus gold, everything except cash. I couldn't get on Kitco for a long time today and couldn't reach my brokers on line either ( I still like phones better ) .


Gold continued to hold and even closed up today as the gold stocks dropped to another all-time low. Not good for the gold stocks. The run is now 1 up and 2 down. This run is not set up correctly and is not likely to yield a meaningful bottom. So let's end this run with an up day tomorrow ( not a prediction, just a hope ) . Something overall important is in process as gold continues to hold as the gold stocks drop. Either the stocks will capitulate as gold holds, with a subsequent sky-rocket in the stocks, or gold will break shortly to below summer 99 prices.
I've read some particularly discouraging posts today about gold or gold stocks never going up. This long-term decline, which technically started in the stocks for me in late Fall 1998 was marked by a long-term sell in my indices which was supposed to be devastating. It was the third such signal since 1980. If you believe in Elliot wave THEORY and 3 waves down, this is the 3rd and last wave down before a tremendous rise. In terms of time, I do not have a prediction. It could last a few more weeks or even 1-2 years. I have no choice but to watch each day go by and wait, BUT NEVER GET DISCOURAGED ENOUGH TO GIVE UP watching, waiting, and being prepared to take the opportunities presented.


I too became interested in gold stocks due to volatility and also as a way to preserve wealth during bad economic times. I have never traded for a living and I admire any one who can because I know that the stress of doing so would impact my decision-making ( I get too much fear and greed ) . I traded because I frankly wanted more money than my professorial work could provide for my kids and as I risked all of the small amounts that I had, I lived thru great anxiety, learned to follow my system ( but still not perfectly disciplined ) , and made large profits ( but still don't have the billions that I had dreamed of ) . After a while, as the money increased I realized that enough stress/money was enough and diversified out a percentage of each profit. By the high quality of your posts I thought that you must have been trading these gold stocks for a long time, as I have been doing it for almost EXACTLY the same time. You must be good to have survived!! Most don't.
I am such a psychologist/technician that I cannot believe in conspiracy theories guiding my trading. I believe that all "conspirators" are people and therefore react to market psychological forces to do what they believe is best for them. Everyone is always trying to "manipulate" a market. The central bankers are people who believe and have seen gold go down and are selling/leasing their gold to try to make more money. Unfortunately, they are supposed to be guardians of our financial system and should be selling when the price is rising and too high ( e.g., the strategic oil reserve ) . They should be buying as the prices fall. Hence, there is some legitamcy to a conspiracy theory, but I believe that they are falling prey to market psychology and that a "Trading STUPIDITY theory" is a more accurate description of their actions and that they will end up buying back at higher prices. It appears that the U.S central bank has not been a seller and I won't be surprised to hear later that they have been buying gold on its declines.
All I can say is that my system has now been thru almost everything I can imagine and it still works. I'm only scared that all gold stocks will go out of business and then I'm helpless to protect my family except perhaps thru diversification and insurance. If now is like 1993, I can say that we will have more months of slow grinding to do, since in 93 it took 80 trading days from my last signal to get a double bottom and we are only 22 days past that signal ( prices falling thru the 16-20 index ) . In 1993 I actually got a potential buy signal at the bottom, but don't list it as such and didn't execute it because it broke a rule that almost always holds: Execute a 16-20 index buy only if it occurs within 10 days ( a half-cycle ) of a 16-20 index sell. That one occurred 20 days after a sell and was therefore highly suspect and had been a bad type of signal 7 out of eight previous times. But, as I've posted before, after missing the first 20% off the bottom the system gave a clearly executable true bull market buy signal. More interestingly, when the gold stocks got smashed down and bottomed again on 9/13/93, my system gave a big rebuy signal right there at the same time that it predicted that the true bull market was over and that the next big rise should be it. Your trading approach will clearly catch more intermediate bottoms than mine. I think that I'll be able to confirm for you what kind of rise you've hooked on to and then the probabilities of selling very very close to the end of the rise as my index adds to shorts if the rise is a bear market rally.
We actually, IMO, have on Kitco a growing number of good technicians using very divergent technical systems. I haven't seen many of the technicians leave, except WileE hasn't posted in months.


I've definitely noticed the break in sentiment. I go to your incredible site once a week on the weekend, usually Sunday, as I peruse Sharefin, Kitco, Auger, Kaplan, Marantette, stochastics. You recall me saying that I expected that eventual break back this Spring. A month ago I refrained from posting to you that I thought you'd need to have more downside area on that sentiment chart! We are also definitely in undervalued sentiment area on my indices. This must occur to make a meaningful bottom, but I have no idea how long this decline will continue. In 1997-1998 it took almost 1.5 years, I got no buy signals in 1997, two little ones in 1998 before the Aug 1998 spike down buy. I'm watching anticipating a buy anytime from six days from now to ... I don't know when. Of-course it will come, it always does. But up till now, for so many months, the prices/sentiment were not set up right.


Your analyses and market strategies are first rate. Are you professionally involved in the markets? Your mentions of my spike vs. other types of bottoms also reflects an excellent understanding of what I require for a bottom: either a spike down or a move up and then down. The bottoms I lokk for are major ones. Therefore, I do not find that recent lows ( for me ) have been less volatile and the high last year was extremely volatile, involving a 45% up move in 9 days. The last great low I look at is 1998 with a great spike down. The low in summer of 1999 was of the bear market rally type involving a brief move up above the 16-20 back prices ( right before the announcment of the Bank of England sale ) followed by a slow move down to the bottom and a buy signal. That's how I've always gotten the large bear market rally signal ( same in 1985 ) . The only bull market that didn't involve a spike down was in 1993, so it clearly is possible.

You add so much to this site. I've been hoping, since my relatively brief 9 month posting history on Kitco, that I could contribute to making this site a home for excellent technical analysts. Your being here furthers this possibility. Any idea about how to attract other knowledgable people such as yourself?


I too became interested in gold stocks due to volatility and also as a way to preserve wealth during bad economic times. I have never traded for a living and I admire any one who can because I know that the stress of doing so would impact my decision-making ( I get too much fear and greed ) . I traded because I frankly wanted more money than my professorial work could provide for my kids and as I risked all of the small amounts that I had, I lived thru great anxiety, learned to follow my system ( but still not perfectly disciplined ) , and made large profits ( but still don't have the billions that I had dreamed of ) . After a while, as the money increased I realized that enough stress/money was enough and diversified out a percentage of each profit. By the high quality of your posts I thought that you must have been trading these gold stocks for a long time, as I have been doing it for almost EXACTLY the same time. You must be good to have survived!! Most don't.
I am such a psychologist/technician that I cannot believe in conspiracy theories guiding my trading. I believe that all "conspirators" are people and therefore react to market psychological forces to do what they believe is best for them. Everyone is always trying to "manipulate" a market. The central bankers are people who believe and have seen gold go down and are selling/leasing their gold to try to make more money. Unfortunately, they are supposed to be guardians of our financial system and should be selling when the price is rising and too high ( e.g., the strategic oil reserve ) . They should be buying as the prices fall. Hence, there is some legitamcy to a conspiracy theory, but I believe that they are falling prey to market psychology and that a "Trading STUPIDITY theory" is a more accurate description of their actions and that they will end up buying back at higher prices. It appears that the U.S central bank has not been a seller and I won't be surprised to hear later that they have been buying gold on its declines.
All I can say is that my system has now been thru almost everything I can imagine and it still works. I'm only scared that all gold stocks will go out of business and then I'm helpless to protect my family except perhaps thru diversification and insurance. If now is like 1993, I can say that we will have more months of slow grinding to do, since in 93 it took 80 trading days from my last signal to get a double bottom and we are only 22 days past that signal ( prices falling thru the 16-20 index ) . In 1993 I actually got a potential buy signal at the bottom, but don't list it as such and didn't execute it because it broke a rule that almost always holds: Execute a 16-20 index buy only if it occurs within 10 days ( a half-cycle ) of a 16-20 index sell. That one occurred 20 days after a sell and was therefore highly suspect and had been a bad type of signal 7 out of eight previous times. But, as I've posted before, after missing the first 20% off the bottom the system gave a clearly executable true bull market buy signal. More interestingly, when the gold stocks got smashed down and bottomed again on 9/13/93, my system gave a big rebuy signal right there at the same time that it predicted that the true bull market was over and that the next big rise should be it. Your trading approach will clearly catch more intermediate bottoms than mine. I think that I'll be able to confirm for you what kind of rise you've hooked on to and then the probabilities of selling very very close to the end of the rise as my index adds to shorts if the rise is a bear market rally.
We actually, IMO, have on Kitco a growing number of good technicians using very divergent technical systems. I haven't seen many of the technicians leave, except WileE hasn't posted in months.


I don't have a similar system for any other market outside of gold stocks. I tried with equities after developing the gold stock system and do have a system that doesn't work nearly as well as with gold stocks. A simple run analysis rule is when the stock market, using broad averages, has a run of 5 up averaging more than 1% a day, that's a major high ( we just had one in the NADAQ in Sept exactly marking a major high, before that in 1987 right at the high before that crash on the day that Prechter also called the top ) and 5 down marks a major low ( as in 1987 about 3 weeks from the 5 up high and in 1990 in the Fall before the short mideast war ) . I executed each of those signals and even went slightly short QQQ 2 weeks ago when Puetz stated that the market was going to rise into 10/28 and the 5 up had been completed, but only held till he redeclared crash and burn ) . That simple rule suggests that the stock market has not yet bottommed. I believe that gold and gold stocks operate much more on psychological factors than do any other market. Gold and gold stocks move about 90% on pure market psychology, so my psychological index works, dare I say, incredibly well. The reason that everyone should always follow gold and gold stocks is that they represent one's ultimate security to avoid one's own financial disaster. And you can go short too. And by going long and short appropriately, one can make 20-50% a year on average on gold stocks! You can make a simple 12-14% a year in trust deeds, which represents the typical historical return on the stock market and not risk the market. I regularly have done so with my "safe" money, investing in trust deed "mutual funds" which invest in many trust deeds. If anyone wants more info on that I can post it or you can e-mail me. When the ultimate bottom in gold and gold stocks comes, tell all the people that you care about because their financial lives will depend on it! All paper money sytems have always ended in disaster. Protect yourself by knowing when the gold stock bottom is in. The gold stocks also are excellent forecasters of interest rates, with a lag of about 9 months, so that can tell you when to take out a mortgage or lock in high rates in bonds or CDs. When the gold stocks start to rise, interest rates follow in about 9 months. I've posted before that I got the lowest mortgage rate recorded since at least 1975 in the Fall of 1993 because gold stocks had bottommed that Spring and interest rates kept falling. 1994 represented one of the worst years in the history of bonds. In Fall 1998, when the gold stocks had their strong rally and Greespan cut rates to save the world, I definitively stated to all I knew to sell all bonds and expect much higher rates. Of-course they didn't listen! Now the golds stocks predict lower rates ahead. So lock in these yields for several years, although I also recommend liquidating all assets ( over the next year ) that you're willing to risk to prepare for the eventual gold bull. I can't predict the damn stock market well and I therefore dislike it and avoid it if it's not a perfect buy ( it now looks to me to be an excellent sell, which I have believed since early last year for the NASDAQ ) . In my opinion ( not an index signal, just my opinion ) the NASDAQ made a classic high like gold's high in 1980. The only thing that made no sense about that high was the absence of the 5 up... it came in Sept at the secondary high!


Another update, another small decline in US gold stocks to another new all-time low. Now 1 up and 5 down, should get one or two up day starting tomorrow or Monday, nontradeable to the up side. We are now 22 days past the last time that prices passed down thru the 16-20 day index. The mean, average, from such a fall thru 16-20 back price to moving above the 16-20 back prices is 40 days. The longest ever, in 1993, was 81 days. This SUGGESTS an intermediate low within the next month which I am unlikely to catch unless it goes up above the 16-20 back prices and then falls to a quick new low, for a definitive buy. The downtrend is continuing, as expected based on the index.


Repost yesterday. Another small move down in US gold stocks after a higher opening. Now 1 up and 4 down to another new all-time low. Won't be surprised by one or two days up right now, but the trend remains clearly down. I'm terrorized by the overall stock market situation and fear disaster which will initially carry the gold stocks down with everything else. Shell wonders whether gold could advance and the gold stocks decline. My opinion: Can and has happened on a short-term basis, but I hope/believe that it couldn't continue very long. Gold would then crash or the stocks rocket up. The current decline is still slow and very bearish by historical standards. NO capitulation evident yet. Look for lower prices on everything except bonds and the dollar. The "manipulators" are just people driven by the same market/psychological forces as everyone else. Hence all markets are "manipulated", but none can be manipulated beyond the short term. Keep the powder dry on all fronts, avoid losses. The index/run analysis has always prevailed! Gold has always had it's day and it will again. Stay disciplined, whatever your discipline is.


Another day, another drop to new all-time lows in US gold stocks. The downtrend continues. Note the US dollar at new highs vs. the South African rand. Kaplan has resumed posting, so his stoppage was due to heavy workload and not despondency. Note that when we go into a bull market you will find me staying bullish and long for long periods, and with each decline stating to stay long or add to longs; that time will be the direct inverse of my consistent bearish stance for the past 7 months. I'm still guessing that that time is months away and as I posted months ago, now is the time to be gradually liquidating other investments ( e.g., trust deeds, real estate, CDs ) to increase cash for the long-term rise that will occur, though the ultimate bottom may still be some time away ( perhaps even a year away ) . From the day in April 2000 that I got stopped out of a one day long position and stated that gold stocks had entered the abyss, USERX has dropped from 3.25 to 2.43. Preserve and raise cash for the big rise that will eventually occur.


The moderately hard down day in US gold stocks, following the intraday trick move up, simply continues the down trend renewal projected yesterday. A huge down day ( e.g., 7-10% ) tomorrow could form the intermediate bottom, but we'll probably just get a slight down day and a continuation of lower prices. It's always amazing to me to see the gold stocks make new low after new low while gold doesn't break. Perhaps when gold breaks and the stocks are surprisingly firm, an intermediate bottom will be in place. Hang tough and thank Kaplan for all his work.


Yesterday's small up day stopped the down run at 2 up and 7 down, a normal non-capitulation run down. Today, userx turned down a penny so we should be starting another move down. Everything I have points to lower US gold stock prices and no bottom in sight. My long powder remains dry. Persevere and retain your capital. I've often waited years to go long and then make 50% in a month in these gold stocks. Always worth the wait. This time the wait should be extremely rewarding.


Spot gold closed slightly up today, breaking the run down at 5, as yesterday's update stated was highly probable. It is now open to decline again. The gold stocks are obviously having a poor day down 2%+ for the 6th straight down day. As previously stated, this 2 up 6 down run would have been a bottom if the decline had averaged 2% a day, but it has not. The only hope, in my book, is if the run down continues and accelerates now. That is unlikely since it would require a drop of more than ten percent in the next few days to form the great spike down. Such ultimate runs rarely start off as slowly as this one. Therefore, the run analysis and the index still do not recommend buying.


The run began from 9/27 with userx at 2.66. Yesterday userx was at 2.58, down only 3%+. If it declines 3% today, that's 6% in 6 days, a standard, non-capitulation run averaging 1% a day. Would need to make up the 6% drop we're short to date, plus 2% each day we go down henceforth. So a drop tomorrow of 8% or more would do it or over two more days a drop of more than 10%. All-time bottoms require 8 or more days and usually average 2.5% per day. August 1998 was 2 up 7 down averaging 2.5% a day.


The 18% drop in the xau in 18 days is not abnormal, averaging 1% a day. This is certainly not a major bottom and I do not believe that we are near an intermediate term bottom. Recall that I said at that time ( as soon as I got out of the hospital a few days later ) , since the 92-96 index broke that that should be a MAJOR high. I still believe that it was. I do not believe that we will see those prices again for a long time. I've also stated quite a few times that the long-term prediction generated from a "deadly" triple sell in Dec 1998 was an 80% fall from the multi-year high. So far we've dropped 54% on my indices.


Nothing much happened on Friday, although the gold stocks made a nice coomeback to close about unchanged. The 35-39 day back prices are now rising, so Friday's close yielded a -5 on the index, continuing to avoid a buy. I don't therefore have anything short-term definitive. Longer term the downtrend remains intact. Last month we hit major resistance ( 92-96 day index ) and fell, and last week Wed. we hit intermdeiate term resistance ( 35-39 day index ) and fell, it doesn't look good to me. But I have to hedge here because I don't have anything beyond an intact long-term downtrend; the market could surprise me at any time with a rally that I can't call until after it hits a high and a shorting trade. But I'm not allowed to be long now and it's extremely unlikely now that we'll get an intermediate term index buy: we had to hold on Thursday or really rise on Friday and that didn't happen. Cheers, every day, week, and month brings us closer to the ultimate buy.


We went up into the resistance yesterday and the resistance won today's battle as gold stocks fell back to yield a -3 on the 35-39 day index ( falling below 4 of the 5 prices from 35-39 days ago ) . Today's set of 5 back prices were the lowest ( passing thru the 8/3 low area ) and so it's unlikely that prices will rise to give a buy signal, but they still have a small chance if we pop back up tomorrow. Besides the most likely scenario, which is that we just keep drifting lower to new lows, we could get a run analysis buy if we drop at least 8% in the next four straight days for a 2 up 5 down run ( which only happens about once a year ) since we're now 2 up and 1 down. The US dollar-denominated gold stocks continue to look bearish. Sigh.


As previously posted, the resistance into today was 1-3% up and we went about 3% up today to yield a +2 on the 35-39 day index. If the gold stocks stay here for two more days the 35-39 index will generate an executable buy signal and after that ( as previously stated ) the window of opportunity for that buy signal will also expire. Sounds similar to Uptick needing a couple of closes over resistance. But it's got to occur now! The buy would not be a bull market, but would be an intermediate term buy for about a month. But we're not there yet, just into resistance. Spot gold is now 5 days up and is due for some down action but that doesn't mean the gold stocks can't hold at these levels! Hoping that Kapex comes back to join us and that Uptick stays with us. We're now 11 down and 2 up ( notice how USERX finally gave an up close yesterday to break the run despite the xau going down yesterday ) . I've had trouble getting on Kitco all day--what's going to happen when we get a real real move?


Intermediate buy usually yields about a 20% rise from the day of the buy, I guess about 10-11 xau points. A bull always requires a 92-96 buy, needing that 20% rise then a fall and then a rise, months away if at all. Did Marantette buy back today? Continue to appreciate you posting his buys and sells, as in this bear he is buying nicely but holding on too long.


Actually today recorded as a tiny up day overall, ending the run. But whether it ends/ended at 10, 11, 12, or more, a weak run like this has usually just been part of a continuing downtrend. The runs are probability statements, hence they can always be wrong, but only once in a while. There was 1 out 10 cases in history where a weak long run like this marked a bottom with a subsequent 20% rise in a month in gold stocks. The odds favor a continuing downtrend. Major bottoms almost always involve spikes.

Part II

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