Margin Debt Nears '07 Froth Level - Real Time Insight
11 Mars 2013 - 11:46AM
Zacks
The past few weeks have seen various charts
floating around portraying the rise in margin debt on the NYSE over
$350 billion.
Last week, BofA Merrill Lynch technical analyst
Mary Ann Bartels publised a research note with her analysis of the
data generating a "sell signal." The last time their indicator
flashed "sell" was April 2010, right after the infamous "flash
crash" in May. Here's their chart...
Bartels also called for a correction in
mid-January before the S&P had broken out above 1475. So she
has marshalled some more data for the cause.
But I am starting to listen closer to her now.
This is no small correlation. And the fact that real cash balances
are so low and margin debt so high again speaks louder than any
sentiment survey of mere opinions.
As economic and market conditions seem to justify
ever new highs, and serious investors consider the possible end of
the secular bear, is this indicator a BIG flashing-red warning that
should make you much more cautious?
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