Perhaps this time it really is different, though..Stock Market Margin Debt
Sure Janet Yellen reassures the market and poof the market jumps. No risk any more!!! Buy and hold and simply get rich. Actually was in a meeting yesterday discussing just this. Why do you try to “time the market”? I countered by I would not feel comfortable being down 50% once over 10 years but twice. Or how about waiting countless years for the Nasdaq to reach prior peaks…Even the worlds greatest investor Warren Buffet suffered severe losses. More so in the Great Depression ( I forgot I was told that could not happen any more) it took 25 years to get back…or in 1973 only 12 years…I love it only ..only 12 years…Most people can not live through a 20% draw down let alone wait for 12 years…I mentioned the Japanese stock market which was at a high of 39,000 in 1989. Well, that is not the US market.
As an investor or trader….I know that anything can happen. I am not a bear nor a bull. I try to stay out of big trouble and try to keep my losses small. Not fun as yesterday I exited my long QLD and QQQ only to see them bounce up with the Yellan rally. What I did do was follow my rules. We had a clustering of 4 distribution days and historically this has shown heavy institutional selling.
The market had a good snap back rally yesterday ( relief rally???).The COMPQ and SPY were both higher by .75%, decent up moves.Volume was mixed on the day with the New York showing higher volume and the Nasd having lower trading. It would have been more convincing to see higher volume all around. Leading stocks rallied and that is what you want to see. However the market has suffered some real damage in the last few days and we will have to see some strong heavy volume in both the major averages and quality growth stocks before we can get comfortable that the rally is back on solid ground.
According to NYSE’s latest monthly report, investor margin debt increased by $25.8 billion to $464.31 billion. While we did see two consecutive monthly declines in leverage, margin debt has now recovered in a very robust fashion. Without a doubt, the extremes still remain in place and warn that investors are overly exposed to equities,