The market is topping

If you are a student of market history, you know GameStop is simply another manifestation of something that occurs time and again in cycles.

Charles Dow found that primary uptrends in the stock market had three phases: accumulation, participation and distribution. The accumulation phase occurs at the very start of a bull market when, as Dow put it, “strong hands” (those with cash) are accumulating stock from “weak hands” (those who need to sell stock for cash). Generally, “strong hands” are considered to be financial market institutions and “weak hands” are retail investors. During the participation phase of an uptrend there is solid, consistent buying of stocks from most participants as the “news” on the economy improves. Finally, during the distribution phase, speculation and leverage become predominant, with the “strong hands” then distributing their stock (an IPO boom is a sign) to the “weak hands,” whose eyes are now wide with $ signs.

That’s when the stock market tops and asset price deflation occurs, many times bringing on debt deflation.