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Sunday, March 01, 2015 6:00:53 PM
Margin debt gives major Bear market signal. Attention weekend warriors, the margin debt level released by the NYSE a couple of days ago has given a major Bear market signal.
Here is the margin debt chart:
Notice the gold colored 10 month MA line that was broke which is the signal line.
My fellow weekend warriors, first off, I'm no perma-Bull. I trade best when I'm absolutely neutral and have no biases and let the market dictate my actions. That's just me. Each to their own. With that said, I'm not so sure we can view this drop in the margin debt as being the equivalent of previous drops.
Think about the CPI. If you chart the CPI, it has done something that it only does at the start of a major bear market. It plunges. However, not all CPI plunges should be viewed equally. In this case, the CPI is not dropping because businesses are having to cut prices just to move product. In the scenario, businesses have totally lost pricing power and are selling below cost just to reduce inventory. That's not the situation we have today with the CPI. The CPI, today, is dropping because the price of oil dropped, and the energy cost savings businesses are experiencing are being passed on to the consumer. I know there's the US dollar perspective but let's just stay on the side of market demand right now. Could not the margin debt be like the CPI? That is margin debt is dropping because oil is what was used as collateral a lot of margin buying. With the drop in oil, sovereign wealth funds are having to reduce their margin debt levels. In that scenario then, the margin debt break of the 10 month MA in the chart above is not as bearish as previous signals. If this interests you, I posted a report and video here: Does Margin Debt Break Signal Stock Market Crash 2015
Here is the margin debt chart:
Notice the gold colored 10 month MA line that was broke which is the signal line.
My fellow weekend warriors, first off, I'm no perma-Bull. I trade best when I'm absolutely neutral and have no biases and let the market dictate my actions. That's just me. Each to their own. With that said, I'm not so sure we can view this drop in the margin debt as being the equivalent of previous drops.
Think about the CPI. If you chart the CPI, it has done something that it only does at the start of a major bear market. It plunges. However, not all CPI plunges should be viewed equally. In this case, the CPI is not dropping because businesses are having to cut prices just to move product. In the scenario, businesses have totally lost pricing power and are selling below cost just to reduce inventory. That's not the situation we have today with the CPI. The CPI, today, is dropping because the price of oil dropped, and the energy cost savings businesses are experiencing are being passed on to the consumer. I know there's the US dollar perspective but let's just stay on the side of market demand right now. Could not the margin debt be like the CPI? That is margin debt is dropping because oil is what was used as collateral a lot of margin buying. With the drop in oil, sovereign wealth funds are having to reduce their margin debt levels. In that scenario then, the margin debt break of the 10 month MA in the chart above is not as bearish as previous signals. If this interests you, I posted a report and video here: Does Margin Debt Break Signal Stock Market Crash 2015
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