We mentioned earlier the recent rise in Margin. Have a look at the following chart:
NYSE Member Firm Margin Levels
The raw numbers are not what actually matter — and adjusting for inflation isn’t significant.
The reason Margin matters is that it is potentially revealing of extreme sentiment and/or speculation (margin clerks can do major damage in a downturn).
There are a few ratios I would like to identify and convert to oscialltors relative to Margin:
Total Margin / Total Market Cap
NYSE Margin / Account Assets
Margin / Trading Volume
Total Margin / Market Volatility
The idea would be to test these versus historical tops and bottoms . . .