By Cory
Margin Debt hits historical levels, watch this spread!
Here is another straight to the point chart by our friend Chris Kimble. As much as we talk about margin debt driving the markets when we see this as the only/main factor it is very concerning. The spread pointed out below can continue to grow but this is another sign (not timing indicator) that the US markets are far too extended.
Click here to visit Chris’s site for more great charts.
…Here’s the posting…
CLICK ON CHART TO ENLARGE
This chart from Advisors Perspectives/dshort.com looks at the S&P 500 and margin debt (inverted) over the past 20-years. When the spread was wide back in 2000 & 2007 and started narrowing (investors reducing margin exposure), stocks started to sell off.
This chart updates that the spread is now at historical levels. Should this spread start narrowing quickly, it would send a short-term caution message to stock market bulls.
Source:: The Korelin Economics Report
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