Tuesday, May 7, 2013

NYSE Margin Debt Nearing Historical High

This graph shows the strong correlation between margin debt and the S&P stock index.  Investors are using leverage to take advantage of the surge in stock prices.  This is a sign of confidence in the market but it is also a contrarian indicator.  Leverage helps to drive the market upwards but it also depresses stock prices more rapidly when the bubble bursts. 


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