One hundred-three years ago, a brief 64-page text was published where a broker at a trading firm analyzed client accounts.
The year was 1915, and the market was at all-time highs. The purpose of the analysis was to see how the active clients fared after a record breaking run-up.
“Like a great majority of our customers, these traders had been bullish on the munition [World War I] and standard industrial stocks during the great speculative boom of that year, and now, with the stocks in which they had been operating up from 15 to 100 points each, their profits were relatively small and their commitments [i.e. margin] larger than at any preceding stage of the movement.”
Basically, these customers were the herd. Profits, if any, were slim and they are all-in at the high … and on margin.
Just five years later, that same market had lost nearly two-thirds of its value and is down over -61%. The book is called One Way Pockets.
Fast forward over one hundred years. We have The Money GPS with this report; Fund inflows at the highest in 20-years and nobody going short. Well, almost nobody.
A huge amount of the population is out of work and most likely relying on the markets to make up the difference. Remember back in the day, when it was bad if there were 350,000 jobless claims?
The middle class is in the midst of destruction and will (when it’s all over) basically be eliminated. It will usher in, ‘neo feudalism’.
It’s not a new idea as Prechter predicted as much nearly twenty years ago.
This backdrop or macro if you will, has produced the sentiment driving the analysis on this site as well as more in-depth technical data on the host firm’s website.
Taking all into account, under the conditions of today, this moment, we’re short the Senior Miners (GDX) using DUST as the trading vehicle (not a recommendation, not advice). The stop has been moved up to DUST 19.58.
Quotes used with permission.