The Next Gold Stock Critical Point

Source:

". . .prices will need to rise to new highs for the year to avoid another bearish double sell index pattern."

The SKI indices contain short-term (16-20 trading days), intermediate-term (35-39 trading days) and long-term (92-96 trading days) indices. A more comprehensive description of these mathematical indices and their history is found at SKI Gold Stocks . Basically, the indices compare today's price to prices from a specified prior time period. The name of the index specifies the time period (e.g., 92-96 index = compare today's price to prices from 96, 95, 94, 93, and 92 trading days earlier). Although I use the oldest gold mutual fund, USERX, for analyses, the predictions are applicable to the broad precious metals' market.

The gold and silver stocks (as well as the metals themselves) are likely to be reaching another critical point over the next two weeks (or slightly sooner than that). If prices don't stop SKI out for a loss this week, PRICES WILL NEED TO RISE TO NEW HIGHS FOR THE YEAR TO AVOID ANOTHER BEARISH DOUBLE SELL INDEX PATTERN. This Double Sell pattern would be following the long-term indices' Double Sell pattern in early June. It would be most bearish, but we'll see if a rise to new 2009 highs avoids such bearishness. The long-term indices' Double Sell suggests that it won't be avoided.

I've been writing this next paragraph for much of this year. After being multi-year bearish on the gold stocks since the May 2006 "death run high", the "life run low" in the Fall of 2008 predicted multi-year gold stock bullishness. Nonetheless, SKI has been strangely calling/marking highs on 2/20/09 and 3/23/09, a behavior that is not consistent with bullishness: During truly bullish periods SKI calls lows as opposed to highs. The 2/20/09 high marked by the 92-96 index has not been surpassed by gold bullion, but the gold stocks strangely rose to a higher high in June 2009 and SKI once again marked that high by selling/shorting on its long-term indices on 6/04/09.

If the gold stocks can hold up this coming week subsequent to the recent index buy signals, we are then going to see if the regular SKI indices generate a Double Sell for the precious metals complex or whether the gold stocks rise to new highs for the year. It's not "me", it's the mechanical mathematical indices...

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