DONT MISS JACKPOT ENTRY IN GOLD SOON..... ASHISH TIWARI-9598723458. Caution urged as margin debt levels hit new highs Assets to Watch for today: U.S Session: Dow, S&P 500, GBP/USD, USD/JPY, Gold Caution urged as margin debt levels hit new highs A number of warning signals are flashing in the global stock market, and while not indicative of an imminent crash, they’re telling investors to exercise caution, say market strategists. Today U.S. indices are pointing to a flat-to-higher open on Monday, after Asian stocks plunged following poor data out of both Japan and China. Japans Nikkei 225 fell over 1.0 percent early in the day, after data showed the Japanese economy grew 0.7 percent year-on-year in the fourth quarter of 2013, down from a preliminary reading of 1.0 percent. Its kind of a miss. It is probably not enough to shock the Bank of Japan into action, but it is worrying, probably because business investment is still not looking strong. Meanwhile, Chinas Shanghai Composite fell 2.9 percent, following data on Saturday that showed the country running a trade deficit of $23 billion in February. That compared to forecasts for a surplus of $14.5 billion. Margin debt, which tends to spike alongside stock rallies and pullbacks, has been rattling investors for months. As that debt goes up, the market’s foundation gets shakier and shakier the longer it lasts the deeper the correction could be. Also of concern is the bull market’s fifth birthday on Monday. The average bull market only lasts about 4.5 years, putting the current one in rarefied territory. Of the 12 bull markets since World War II, only half have lasted five years, and only three have made it to their sixth birthday. What is troubling is that much of the buying is being fuelled by cheap debt. While no formal definition of a “bubble” exists, I see a bubble as a price jump in an asset given the availability of cheap financing. Margin debt hit record levels at the end of January, according to New York Stock Exchange data. Margin debt at the end of January reached $451.3 billion, its fifth record month in a row. Margin debt returned and surpassed record levels set in July 2007 back in April when it topped $384.37 billion.
Posted on: Mon, 10 Mar 2014 15:02:14 +0000
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