When the Levee Breaks

‘When the levee breaks, I have no place to stay.’

Or, to quote Steven Van Metre (time stamp 30:03):

“… and they know in a computer traded market which this is, that’s massively overvalued, it’s going to send stocks down faster than ever before.”

That sentiment dovetails directly into the firm’s stance:  Work only the short side of the market.  It can break at any time.

We’ve already seen major brokerages can’t handle huge volume surges during mass client access. 

The latest episode was Schwab’s system lockup.

… and that’s when the market is going up!!!  What’s going to happen when it goes down with the same (or more) velocity?

As GDX continues to deflate with very little upside bias thus far, the short position was increased (not advice) on Wednesday.

The chart shows the current trend-line and the short entries (via DUST). 

If we are in a real deflationary event, if gold and GDX are leading the way lower, the expectation is for a steady sustained and relentless decline with few if any upward spikes.

Such downward action has been seen before; especially in the oil markets.

The stop for DUST has not been moved (not advice) and is currently at DUST, 21.19.

A new daily low for GDX will allow the stop in DUST to be moved higher.

If the market (S&P, Dow, NASDAQ) opens lower tomorrow, Friday and continues decisively lower, we might add Tuesday, November 24th, 2020, as another empirical data-point for Holiday Turns.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

One response

  1. Pingback: Was That The Top? « The Danger Point

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