The NYSE Margin Debt as an Alert for Forecasting Stock Market Course
The Margin on Debt is provided by NYSE. NYSE Stock Exchange at the end-of-each-month publishes data regarding the margin debt. There can be found also historical data back to 1959. Here are three interesting charts regarding historic NYSE margin on debt.
The first chart shows the two series in real terms — adjusted for inflation to today's dollar using the Consumer Price Index as the deflator. We were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its an all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July, 2007, three months before the market peak.
Tuesday, 25 June 2013 18:07
The TIPS Market & Gold Price
The 10-year Treasury bond yield is up 91bps from this year’s low of 1.66% on May 2 to 2.57% yesterday, the highest since August 8, 2011. The selloff in the bond market was initially triggered by mounting concerns that the Fed would start to prepare an exit strategy from its ultra-easy monetary policy if the US economy continued to improve and the unemployment rate continued to fall. Those concerns were heightened during Fed Chairman Ben Bernanke’s congressional testimony on May 22. They were confirmed in his press conference on June 19.The increase in the 10-year nominal Treasury yield has been surpassed by the 10-year TIPS yield, which is up 126bps from minus 0.62% on May 2 to 0.64% yesterday. This yield has been abnormally low (i.e., negative) since the fall of 2011. It seems to be in the process of normalizing back into a range of 1%-2%.
Friday, 14 June 2013 12:05
An Important Issue for all Traders
Time after time ahead of major news, there seems to be someone who knows something before it happens — there seem to be trades that hit too hard and fast before the news is actually made. There was some shady trading ahead of the Consumer Confidence number at the end of last month (May 2013). About a quarter of a second before the number was released, there was an eruption of orders in the SPDR S&P Sector ETF (SPY), the e-Mini (electronically traded futures), and in hundreds of stocks, according to Nanex, a market research firm.
After some digging CNBC's Eamon Javers reported that the source of the early trading was Thomson Reuters. The company has a well known deal with the University of Michigan, the source of the data, that allows Thomson Reuters to release that data 5 minutes before it's supposed to come out (9:55 am) to clients who pay for that privilege.
But Thomson Reuters also provides a service called "ultra-low latency", which allows premium customers to get numbers like Consumer Confidence and the Institute for Supply Management's manufacturing index number 2 seconds before it's released to the general public for $2,000 a month.
Two seconds in high frequency trading time is an eternity. The University of Michigan responded to this by saying, essentially, 'we do it because people pay for it.'
As the Dow Jones recently falls many traders claim to see what is called in technical analysis: THE HINDENBURG OMEN. This phenomenon portends a stock market crash.
THE HINDENBURG OMEN PHENOMENON IN US MARKETS
The Hindenburg Omen is a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash. The rationale is that under "normal conditions" a substantial number of stocks may set either new annual highs or new annual lows, but not both at the same time. As a healthy market possesses a degree of uniformity, whether up or down, the simultaneous presence of many new highs and lows may signal trouble.