- Don’t miss the start of gold’s Kinetic Window today
- How Kinetic Windows and K-Signs crush the S&P 500
- Hate the banks, love bank stocks as “stress test” charade begins
- The opioid epidemic, made possible by your tax dollars
- Reader questions about K-Signs and (here we go again) long promotions
Did you buy your gold yet today? If not, what are you waiting for?
On Wednesday we told you how gold is set to begin a three-month rise — starting today. Not because of Fed policy or Chinese buying or any of the “macro” factors we write about so often here.
Rather, it is the accumulated weight of gold’s price action going back more than a decade. Aided by an immense amount of computer power that Agora Financial has invested in for more than a year… our Jonas Elmerraji concluded that today marks the start of a 92-day “Kinetic Window” in which there’s an 83.5% probability of a price rise.
As we check our screens, the bid is $1,255 — up five bucks from this time 24 hours ago. Good start.
“I like to think of Kinetic Windows as trading with a tail wind,” says Jonas.
When Jonas isn’t poring over trading data on scads of computer screens, he flies airplanes. For a pilot, a tail wind is a good thing. With the wind at your back, you reach your destination faster and you save fuel.
And so it goes with Kinetic Windows. By heeding gold’s Kinetic windows — buying and selling twice a year — you can boost your performance over merely buying and holding by 28%, and you spare yourself many of those stomach-churning drops.
The current Kinetic Window for gold opens today… and closes on Sept. 22.
And then the following day, Sept. 23, a Kinetic Window opens for the S&P 500.
Here’s a chart of the S&P 500 that incorporates every tick of the index going back 20 years, depicting what a “typical” year looks like:
Based on Jonas’ considerable number crunching… right now is a time the broad stock market will churn up and down — with more downs than ups. But come late September, chances are strong that it’ll stage a big rally.
Simply by heeding these Kinetic Windows, you can outdo the S&P’s buy-and-hold performance by 24% a year.
And you can apply this method to nearly any stock you like. “If we run our algorithm on every stock in the S&P 500,” says Jonas, “we end up with just about 1,300 Kinetic Windows each and every year.”
Across a decade’s time, that’s about 13,000 Kinetic Windows. And he’s analyzed every one of ’em. “Over the last decade, buying every Kinetic Window on the market easily beats simply buying the S&P 500 every single year. And those results are statistically significant.”
Of course you’re not going to trade 1,300 Kinetic Windows a year. Which put Jonas in a bind as he was thrashing through this research: What can be done with all the phenomenal data he’s generated that would actually be, you know, useful for a retail investor?
“To create a trading strategy,” he said, “we’ve got to filter our huge list of Kinetic Windows so we’re only buying the very best ones.”
And that’s where the K-Sign comes in.
The K-Sign is a chart pattern Jonas discovered in the course of his research. At the risk of repeating ourselves, they appear as a letter “K” on its side. Look closely and you’ll see them here: A “K” on its back means it’s time to buy. A “K” facing the opposite direction means it’s time to sell.
When K-Signs line up with Kinetic Windows, that’s when the magic happens. The trades end up in the green 93.5% of the time.
What does that look like when you’re putting real money to work?
If you’d put $10,000 into the S&P 500 at the start of 2006, you’d have $19,503 today. If you’d acted instead on the K-Signs, you’d be sitting on more than $50,000.
Up until this week, the only people who’d seen this research up close were a handful of people in our Baltimore offices. No one has generated this kind of data before — on Wall Street or anywhere else.
Now it’s your turn to see how it works… and if you choose, to put it to work in your own portfolio. Here’s where you can start.
True to Jonas’ S&P 500 chart, it’s been a choppy week in the broad stock market. The S&P is in the green this morning, but likely to end the week down from its record close of 2,453 on Monday.
As noted earlier, gold is up… and so is crude. After another dip below $43 in overnight trading, a barrel of West Texas Intermediate is back to $43.10.
One economic number of note — new home sales, up 2.9% in May. Combined with the existing-home sales number Wednesday, the scare in the housing sector these last few weeks is over. At least for now…
The annual charade known as “stress tests” for the biggest U.S. banks is underway. Surprise, surprise — everyone passed the first round.
The Federal Reserve began conducting these exercises after the Panic of 2008. The hypothetical scenarios change from year to year. This year entailed “the U.S. unemployment rate more than doubling to 10% and severe strains in corporate loan and commercial real estate markets,” as this morning’s Wall Street Journal describes it.
The first round of stress tests found that none of the big banks would have trouble lending under that scenario. With three straight years of such results, there’s chatter the Trump administration will be even more emboldened to loosen regulations on the too-big-to-fails.
In the second round of the tests next week, the Fed will decide whether these banks can increase their dividends. A successful first round isn’t a guarantee of a green light… but that’s usually the way to bet.
This is a development our income specialist Zach Scheidt has been anticipating for months. “Banks will likely be able to better invest their own capital to generate profits. And more importantly, banks will be able to pay more of their capital to investors through dividends and buybacks.”
Yes, it’s highly likely the whole thing will end in tears; even the stress tests are turning up evidence of growing losses in credit cards. But for the time being, it’s all systems go. Readers of Lifetime Income Report are already clued into Zach’s favorite names in the sector.
In a just world, the following story would be a scandal justifying congressional hearings. Instead, everyone appears to be shrugging.
From Bloomberg: “Nearly one in four people on Medicaid, the U.S. health program for the poor, received powerful and addictive opioid pain medicines in 2015, according to research by a drug-benefits management firm.”
That’s according to Express Scripts, which analyzed 1.8 million opioid prescriptions written for 3.1 million of its Medicaid members.
Considering that about half the people on Medicaid are children… and presumably they’re not getting prescribed these meds in large numbers… we might be looking at opioids being doled out to, what, half of adults on Medicaid?
Which means much of the opioid epidemic that’s making headlines of late is being financed by you, dear taxpayer.
“Over 2 million addicts, 1.3 million emergency room visits every year,” says an email we got from our Ray Blanco. “Aunt Shirley gets a prescription for back pain, gets hooked, loses her job. Nephew Jimmy gets it after a football injury, graduates into heroin, never finishes college.”
Opioids are a $24 billion-a-year market, according to CNBC. We can’t readily discern what percentage of those revenues is generated by Medicaid… but it’s not insubstantial.
No wonder Ray is so keen on the developer of a painkiller that sidesteps all the addiction problems with opioids. This morning the company announced it had won “Breakthrough Therapy” status from the FDA. Readers of FDA Trader are up 310% since Ray’s recommendation… and he tells us it’s still got room to run.
“Can you please explain the apparently contradictory recommendations on gold in yesterday’s 5?” a reader writes.
First he reminds us of Jonas Elmerraji’s Kinetic Window on the SPDR Gold ETF (GLD) that opens today. But also spotted an ad for one of our Jim Rickards services that said, “This new ‘Executive Order’ could cause a massive run on gold.”
“I assume,” the reader says, “the special event from Jim Rickards overrides the Kinetic Window for GLD?”
The 5: Not at all.
Jim’s thesis is that whenever the White House and Congress come to terms on the debt ceiling, it will cause a jump in gold similar to the one that occurred when President Obama and House Speaker John Boehner reached a debt ceiling deal in 2011. That sent gold shooting more than $250 higher in the following month.
Jonas’ Kinetic Window in GLD runs from today through Sept. 22. That includes all of next month, plus the first couple of weeks after Congress returns from its summer break.
So if you like to mix your macro analysis with your historical price action, it sounds as if all the stars are lining up…
“Do Kinetic Windows and K-Signs work in the futures/commodities markets?” a reader inquires.
The 5: They do. Jonas is already getting inquiries from his existing readers on that very question. It might well turn into the next phase of this breakthrough project.
“I’m in a position right now,” he tells us, “where I’ve got more compelling ideas to test than I have time to test them. That’s a very good problem to have!
“And I’ve recently been experimenting with a brand-new technology from one of the biggest tech companies on the planet that could take our computational horsepower off the charts. Only a few people are aware of it at this point — and my team is using it already.
“So there’s a very good chance that we’ll be adding powerful new twists to our strategy in the months ahead as the time it takes to run computationally intense tests gets reduced dramatically.”
Hmmm… Sounds as if our executive publisher Addison Wiggin needs to allocate even more in the budget for computer hardware than he already has. It’s already been an expensive undertaking for us… but, considering the profit potential for readers like you, well worth it.
“Look, I buy a lot of publications,” writes our final correspondent, “and like to see new offerings. (You can hear the ‘but.’)
[Indeed we can. Go on…]
“BUT they are interminable, boring and too long to complete for people who work 80-hour weeks. Every minute I listen to some carney pitch a product is a minute I’ll never get back. Have you ever heard of the ‘elevator speech’? Get on an elevator and you have five floors to sell yourself or your product to the guy who is trapped with you. Try getting closer to that. Maybe I won’t punch out after the fifth redundant presentation, like I did yesterday.
“I wouldn’t mind being able to jump to the buy page, where you tell me what I get and how much it costs. Come on, anyone who doesn’t know you’re selling something deserves to waste hours on these things. Give those of us who are smarter than our pets a break.”
The 5: Gee, we figured out would be another two or three months before the complaints about “long-winded presentations” got cranked up again. Guess that’s what happens when we introduce a new service that’s getting a lot of response.
Here’s our question: Did anyone ever close a deal during an elevator pitch? No, they got a business card, a phone number or some other promise to discuss further. The successful elevator pitch was the mere foot in the door, comparable to the space ads you see sprinkled through our e-letters. The actual commerce? That takes more time and persuasion.
We’ve said it before, and we’ll say it again. Decades of testing demonstrates that “long copy” performs better than “short copy” almost every time. That’s true even today in the age of the “video sales letter.” The adage really is true, “The more you tell, the more you sell.”
If it didn’t sell, we wouldn’t be doing it…
Have a good weekend,
The 5 Min. Forecast
P.S. So you already know today is an excellent time to buy gold, based on Jonas Elmerraji’s proprietary K-Signs.
But if you wanted to play it for maximum gains over the next 92-day Kinetic Window, would you know what to do?
Jonas’ readers do. He just issued a trade recommendation around lunchtime. If it’s anything like the trades that turned up in his extensive back-testing, you’ll have a shot at doubling or tripling your money — if not much more.
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