Margin Debt Update we still have our Psychology Composite rating of P4.  That is not terrible, but if you remember, the P5 of February suggested the market was not headed in a good direction in the short-term.  However, now we have a new high in the stock market almost every day.  The very positive Monetary Composite and the extremely positive Valuation Composite keeps us strongly in the bullish camp for the long-term, but we still have that P5 of February in our peripheral vision.

About a year ago, we were screaming about how bullish the annual increase in margin debt was, since it had previously dropped into a net liquidation of margin debt that had historically generated massive bull markets in its wake.  However, that has changed.  We now see that margin debt has increased from that very somber time of a year ago by 28%.  We don't consider this ultra-ominous, but you can see that in "some" cases (like 2004 when the Fed was about to start raising interest rates) it did presage a correction. we're still watching those new highs, but when you think about it, the signs are saying it is not a good time to be chasing new stocks.  Our discipline says to wait on a better juncture, so that's what we're doing.

Don Hays

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