(3/29/14)
The Margin Debt Level from the NYSE shows investors continue to
borrow money to buy stocks as the Margin Debt made a new high in February.
The significant spike upward in the Margin Debt the past year is similar to what
occurred in 2007 and further back in late 1999 and 2000 which were eventually
followed by significant corrections in the S&P 500. Although most of the major indices
have been in a choppy trading range since early March the Nasdaq has been
showing signs of weakness. The next few weeks may offer a clue as to
whether this weakness is just a normal correction or is morphing into something
more significant. The Nasdaq has a key support level just above 4120 which
is along its 100 Day EMA (green line) and 61.8% Retrace from its last leg
higher. If this support level is taken out then a drop back to the low
made in early February (point a) is certainly possible.
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