It’s No Longer Hypothetical

  • Apple’s summer rally — called by a K-Sign in The 5 on June 15
  • Dollar rout on hold while gold takes a breather
  • Ten years after Cramer’s tearful bailout plea, he says it wasn’t enough!
  • Trump team subprime fallout: Did Mnuchin lie to Congress?
  • More Trump team subprime fallout: Dodgy cattle trade begets dodgy mortgages
  • Are cryptocurrencies really “gambling”?

“It’s been nearly picture-perfect,” says the email from Jonas Elmerraji.

Back in June we took the wraps off a proprietary trading system Jonas had developed — crunching 20 years of performance data on hundreds of stocks, pinpointing the ideal moments to buy and sell. This morning it’s worth checking out its real-world performance.

The best times to hold a stock are what Jonas calls a Kinetic Window — “kinetic” because that’s when the stock is most likely to be in motion.

By way of example, we showed you a few weeks ago how it worked with the biggest publicly held company in the world — Apple. For AAPL, there are two Kinetic Windows each year, based on AAPL’s price action from 1997–2016. That’s what’s shaded in green on the charts below.

The first starts on Jan. 27… and ends on May 27.

Here’s the chart we shared with you on June 15, showing the Kinetic Windows and AAPL’s share price up to that point in 2017.

Apple stock price

Nice, huh? By following the Kinetic Windows, you’d have avoided the big downdraft that came on June 9, when Goldman Sachs issued a report saying Apple and several other big tech stocks were overpriced.

So what’s happened since then? Well, Apple started rallying almost as soon as the second Kinetic Window opened on June 15. And it rallied even harder last week after issuing quarterly numbers that surprised to the upside. Check it out…

Apple stock price

Here’s the difference that following Kinetic Windows can make for you: Over the last 20 years, AAPL has generated an average annual return of 24.6%, excluding dividends, according to Bloomberg data.

But by holding AAPL only during its Kinetic windows, that becomes a 51.7% annual return.

That is, just by staying out of AAPL during the white spaces on that chart — about 75 days of the year — you can double the performance of merely buying and holding.

Kinetic Windows are powerful on their own. But combined with another indicator, it becomes the next-best thing to foolproof.

“Something interesting happens,” Jonas tells us, “when you take a simplified version of our Kinetic Window and slap it on a long-term price trend of a stock — it creates buy and sell signals that look like the letter K.”

Here’s an example of a buy signal — a “K” lying on its back…


Likewise, sell signals look like a “K” that’s fallen over forward.

The combination of Kinetic Windows and K-Signs generates overwhelming odds of a successful trade — 93.5%, based on Jonas’ extensive back-testing. And now there’s real-world proof it’s working. It’s no longer hypothetical.

In fact — here’s the really crazy thing — we have reason to believe when thieves broke into our Baltimore headquarters this year, they were after the hardware and software containing the algorithms revealing all those Kinetic Windows and K-Signs. (Little did they know the hardware and software is housed at a secure, undisclosed location in northern Virginia — heh.)

You can see the footage for yourself — and then learn how to put the K-Sign breakthrough to work in your own portfolio — when you follow this link.

To the markets, where it’s a sleepy summer day. After setting another record on Friday, the Dow has ticked down a bit — although it’s still comfortably above 22,000.

Gold and the dollar are likewise little moved — in contrast to Friday, when the perky unemployment numbers touched off a strong dollar rally. As a result, 93 on the dollar index is still the floor, as it’s been since early 2015. Checking our screens this morning, it’s almost 93.5.

The dollar strength put the hurt on gold Friday, but not too badly. This morning the bid is $1,258.

A word about the job numbers, since we took Friday off: Yes, the headline number of 209,000 new jobs was strong. But the fact the bulk of those new jobs are waiters and bartenders is not.

That said, the real-world unemployment rate from Shadow Government Statistics held steady at 22.1%, That’s roughly where the number has held for four months now, the “best” series of readings since early 2010.

None of that matters as far as the Federal Reserve’s plans, says Jim Rickards.

“Fed is done with rate hikes in 2017,” he tweeted on Saturday. “Strong jobs report irrelevant. Jobs were ‘mission accomplished’ long ago. The issue now is disinflation.”

Indeed. The inflation rate’s been falling for nearly six months…

To borrow a phrase attributed to Talleyrand, Jim Cramer has learned nothing and forgotten nothing.

The 5 is now in its 11th year. We’ve been around long enough that we were publishing at various milestones along the way to the Panic of 2008. And so it goes with one of the most infamous televised meltdowns in history.

On Aug. 3, 2007, Cramer screamed, sobbed and supplicated for Federal Reserve chair Ben Bernanke to “stop acting like an academic and do something!” about the gathering storm in subprime mortgage securities.

As then, we were a few days late acknowledging this ridiculous bit of theater — writing about it 10 years ago today on Aug. 7, 2007. Our executive publisher Addison Wiggin noted that only 22 days earlier, Cramer had dismissed subprime as “meaningless.” Clearly something had changed. Cramer, said Addison, “wants the Fed to cut rates and bail out the traders and fund managers who were buying up these subprime loans as if they were income instruments.”

As it happens, the Fed’s Open Market Committee was holding one of its every-six-weeks meetings that very day.

It decided against cutting the fed funds rate, leaving it at 5.25%. (Today it’s in a range of 1–1.25%!) Years later, transcripts of the meeting revealed the assembled Fed pooh-bahs laughed at the notion that subprime would turn into a significant problem. But two days after the meeting, the French banking giant BNP Paribas froze $2.2 billion worth of funds with exposure to U.S. subprime mortgages; investors couldn’t access their money.

By the 17th, the Fed indulged Cramer’s wishes with an emergency cut of its discount rate.

Then as now, Cramer was oblivious to the possibility that the free market should have been allowed to let the chips fall where they may. Noting the anniversary he says, “I still felt that if [the Fed] were to slash rates more dramatically that they could have saved things. But instead, they did it very incrementally.”

Meanwhile, 10 years and two presidents later, the shock waves are reverberating through the Trump White House…

“Americans have a right to expect that those who seek and hold top government positions will not lie to their elected representatives,” says a statement from the watchdog group Campaign for Accountability.

The naivety is touching, no?

According to The Intercept, the group is asking the Justice Department to investigate Treasury Secretary Steve Mnuchin — accusing him of lying to Congress about his days as CEO of OneWest Bank.

OneWest is the outfit Mnuchin founded in 2009 to buy the “assets” of IndyMac, one of the more notorious subprime lenders of the mid-2000s. To make the most of said assets, OneWest employees have described engaging in the practice of “robo-signing” foreclosure documents — spending no more than 30 seconds reviewing the paperwork, and certainly not checking with the county recorder’s office. This practice was widespread among the banks, and it’s clouded the title on literally millions of American homes.

But Mnuchin has told Congress on three occasions that OneWest did not engage in robo-signing — as recently as last week during an appearance before the House Financial Services Committee.

We’re not holding our breath for a perjury investigation here — even though the evidence of malfeasance is far more compelling than any of the “Russian collusion” stuff that consumes the media’s attention.

And then there’s the time Trump’s chief economic adviser Gary Cohn sold someone a herd of dying cattle. (Yes, this has something to do with subprime. Hold on.)

Breitbart recently took note of an anecdote in the 2014 book, The Secret Club That Rules the World: Inside the Fraternity of Commodities by Kate Kelly. In 1991, Goldman Sachs assigned Cohn to expand its commodities trading operation. To help test a new type of cattle contract, he arranged to buy a herd in Colorado. Cohn and his boss flew over the ranch… and discovered the cows stranded in several feet of snow, starving to death.

The moment he got back to New York, he sold. “He sold someone a cattle position knowing it was a bad quality position,” a former Goldman employee tells Breitbart.

Fast-forward to 2006 and Cohn becomes president of Goldman. It’s at this very time that Goldman is packaging up subprime mortgages and selling them to clients, knowing the mortgages are destined to go sour. Goldman go-getters would send each other internal emails bragging about the “sh*tty deal” they just made. In many cases, Goldman created these securities only so hedge fund king John Paulson could short the hell out of them — which, of course, was not disclosed to the buyers.

And this is the fellow who might have the inside track to replace Janet Yellen as chair of the Federal Reserve. Yes!

“Am I missing something?” a reader inquires. “I have been reading your publication and have not found any way to invest in cryptocurrencies.

“What do I need to do to start turning my 20 dollars into something more? That is why I joined this. Please tell me what to do.”

The 5: If you’re a new subscriber to True Alpha, heres a direct link to your special report with Louis Basenese’s top five cryptocurrency recommendations. You’ll need the login and password we emailed you when you subscribed. If you don’t have that login and password, please email our Baltimore-based customer care folks. They’ll get you squared away.

“Gentlemen, in Thursday’s 5 you stated it’s ‘an exciting time’ to speculate in cryptocurrencies and ‘there’s a go-go Wild-West appeal to the whole thing right now.’

“Speculation relies on reacting to predictions for the future before others are willing or able to do so. However, cryptocurrencies are being played in a casino in which even the house rules are not yet fully established. That is gambling, not speculating.

“The casinos in the Wild West were called ‘gambling halls’ for a good reason. Presently, there remain too many unasked as well as unanswered questions for anyone to be able to predict the future of cryptocurrencies with the reasonable confidence needed to speculate on them.”

The 5: Hmmm… We’re not too keen on the gambling analogy, but let’s play with it for a moment.

Would you feel more confident walking into a “gambling hall” if you were accompanied by a cardsharp — the kind who relied only on skill and not on deception, that is?

That’s what Louis Basenese has taken on — immersing himself in this Wild West environment to guide his readers through unfamiliar territory.

Do people get ripped off in the Wild West environment of cryptocurrencies? Yes, if they don’t take the critical step of creating a “wallet” where their currency belongs to them and no one can take it. You definitely want to do that, and Louis shows every new subscriber, step by step, what to do.

We realize that for some people, the novelty of cryptocurrencies is too intimidating and no appeal is going to overcome that. For everyone else, Louis’ invitation to a world of possibilities is right here.

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. Gold is right in the middle of a “Kinetic Window” as identified by Jonas Elmerraji’s proprietary trading platform.

The window opened on June 23, when gold was $1,255. True, gold is only $3 higher today, but that’s after recovering from a drop to $1,210. There’s still ample time for gold to end up in the green when its Kinetic Window is over on Sept. 22… and all that matters is where it is at the end of the window.

To learn more about the profit potential from Kinetic Windows and K-Signs, give this a look.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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