Short

ABX -- Don't Get caught up in a Value Trap

has been in the news of late, and given the downside volatility burst, many advisors are now telling retail and institutional investors to buy into the ABX relative value play. Experts have been saying this almost every time a new low is printed -- averaging down or piling in just because price is relatively cheap is a sure way to loose money, particularly given that most retail investors suffer from the drag of transaction costs as a result of being constrained by a limited account size for spreading allocations of a balanced nature across a broad basket of alpha ideas.

The Sentiment Jet-Stream that RunningAlpha.com Capital Markets tracks ( available to premium clients on Bay Street ) has not been tricked into this bull trap, but has issued a crash warning ahead of the market panic that got underway during each bearish episode in 2012, 2013, and again in 2015. Now that we are resting near the lows,

What should an investor do?

One thing is certain -- you need to maintain patience and let the natural cadence of market rhythms play out in accordance with the general theory of crowd-physics and volatility reflexivity -- positive feedback effects that amplify ordinary events into magnified outcomes. This amplification of downside volatility, as indicated by the Sentiment Jet-Stream elevate the risk for continued bouts of panic selling for shares of ABX; and therefor value investors should be warned that a clear and present danger continues into October for these shares. Until then, avoid getting lulled into a false sense of safety, regardless of the magnitude of any dead cat bounces.

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