(6/1/13)
The latest data from the NYSE involving Margin Debt (in nominal
dollars) has risen just above the all time high made in July of 2007 (point A)
and is way above the level achieved back in March of 2000 (point B). However if we adjust the Margin Debt
in terms of real dollars the current level of Margin Debt is still below the
July 2007 peak but equal to that of March 2000. Finally looking back at the prior
two events when the Margin Debt peaked in March of 2000 (point C) this signaled
a major top which was followed by a 50% correction in the S&P 500.
Meanwhile back in 2007 the current level level of Margin Debt was first achieved
in May of 2007 (point D) however it still took 5 more months before a major top
occurred in October of 2007 (point E). At this point we don't know which
potential scenario is in play however there appears to be a key short term
support area near 1600. This is where the trend line connecting the
2000 and 2007 highs (green line) along with the sharp upward trend line from the
2011 low (blue line) converge at.
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