Bob Carlson

Investors always want to know when to get out of a market before a top. For stocks, consider the level of margin debt. That’s the word from a technical analyst at Street.com, Helene Meisler. Margin debt on the S&P 500 is a short amount below the level is reached before the 2011 peak. It’s also not too far below the levels reached near the peaks of 2000-2001 and 2007-2008.

Margin Debt tends to rise as markets rise. While there is no magic number that rings a bell at the top, you can see from the chart below that in the last decade once Margin Debt gets over $300 billion we would have to consider we are no longer ‘early’ in a rally. It tends to put to bed the notion that folks are underinvested in the market.