Margin Debt and S&P 500

viktor_k67

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Starting from June 2015 according to the NYSE report margin debt dropped by $50,000 M. As I understand it means that at least $50,000 M of the margin money was pulled out of stock market. I assume that if margin money were pulled out then non-margin funds were also pulled out. There is no doubt that traders were closing their position and as a result we had a correction in August-September 2015 - see the the chart below

20151123margindebt.png


Last time we had something similar drop in the "Margin Debt" in period from April until September of 2011. As a result of pulling money out of the stock market we had correction in June-July of 2011. At that time, at least $60,000 M on margin funds were pulled out of the market and S&P 500 dropped more than 16%. Now, so far $50,000 M of margin money were pulled out and S&P 500 had about 12% correction.

Unfortunately we still do not have October's data neither at
http://www.marketvolume.com/quotes/economic_report.asp?release=margin_debt
nor at the original source at
http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=tables&key=50&category=8

I do not know when the data will be posted, however, if the October's "Margin Debt" is down, on my opinion, it could be a sign of coming recession. On the other hand, if "Margin Debt" went up in October (as indexes did) - it could be some positive sign. I guess, we should wait to see whether the investors continue pulling money out of the market.

I am not fundamentalist, so, I would appreciate any additional inputs...
 
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