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Reading history on the Margin-debt chart


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#1 diogenes227

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Posted 22 March 2020 - 06:50 PM

From the link:

 

 

For anyone who pays attention to FINRA margin debt this market crash was no surprise.

 

If there was anything surprising about what is now 30% plunge in the SPX, it was that it took so long to happen.

 

But as history shows on the chart, whatever the final decline is to be, it’s likely it won’t be until after a big bounce any a week, any day, any minute now.

 

This market is massively oversold and it’s a positive sign that governors and mayors, allied with scientists and health-care providers across the country, have taken over the front-line fight against the pandemic as Washington goes on dithering.

 

The trouble with the margin-debt numbers is they are reported a month late so one pretty much has to guess, based the price action during the month, where the debt level might be in the current month. While we can see the SPX crash here in March on the chart, the margin debt line is only up to date through February. I would assume from the current price action in March it’s now a lot lower, probably akin to that drop in 2008 marked by the black vertical line.

If so, we may be closer to a bear-market bottom (six months or so) than the pattern in 2000 (which took about three years).

 

For more discussion and the chart:

 

IT'S NOT THE WHAT WITH MARGIN DEBT, IT'S THE WHEN


"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."


#2 brucekeller

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Posted 23 March 2020 - 02:27 AM

From the link:

 

 

For anyone who pays attention to FINRA margin debt this market crash was no surprise.

 

If there was anything surprising about what is now 30% plunge in the SPX, it was that it took so long to happen.

 

But as history shows on the chart, whatever the final decline is to be, it’s likely it won’t be until after a big bounce any a week, any day, any minute now.

 

This market is massively oversold and it’s a positive sign that governors and mayors, allied with scientists and health-care providers across the country, have taken over the front-line fight against the pandemic as Washington goes on dithering.

 

The trouble with the margin-debt numbers is they are reported a month late so one pretty much has to guess, based the price action during the month, where the debt level might be in the current month. While we can see the SPX crash here in March on the chart, the margin debt line is only up to date through February. I would assume from the current price action in March it’s now a lot lower, probably akin to that drop in 2008 marked by the black vertical line.

If so, we may be closer to a bear-market bottom (six months or so) than the pattern in 2000 (which took about three years).

 

For more discussion and the chart:

 

IT'S NOT THE WHAT WITH MARGIN DEBT, IT'S THE WHEN

Thanks, you always seem to have a pretty good idea of what's going on longer term.