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I had some time to look into the NYSE margin debt a little further. From
the attached chart you can see that the margin debt 3 month change
closely tracks the 3 month change in the S&P 500 (which is really no
surprise). What I noticed is that in the recent run up, it has taken a
significantly greater increase in margin debt to get a smaller percentage
increase in the S&P. I think that this may relate to the recent increase
in the money supply. It was not since the early 90's that a greater
margin debt was necessary to get the market higher. I also noticed that
readings of an increase of up to and over 10% precede weakness in the
S&P. Maybe this is due to short term borrowing, or more likely to my
arbitrarily picking a 3 month time frame. (the data is monthly figures
for the NYSE Margin Debt and the S&P 500)
Happy Holidays
Ron McEwan
Attachment Converted: "f:\eudora\attach\margindebtchng.gif"
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