Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.

Margin debt, the funds an investor borrows from their broker against a margin account, acts as a double-edged sword in the trading arena. It amplifies potential profits by enabling investors to capitalize on an investment's upside without committing the full investment amount. Conversely, it can also intensify losses, especially if the value of the instrument in question declines.

The current level of FINRA Margin Debt is $742.96 billion, up 5.84% from $701.98 billion last month and 18.99% from $624.38 billion one year ago. This $742 billion is the highest level of leverage seen in the current bull market that started in 2023, but it remains lower than the peak of $935 billion reached in October 2021, when most markets peaked in November 2021. Investor credit, calculated as the sum of free credit cash accounts and credit balances in margin accounts minus margin debt, is now -$465 billion, nearly matching the peak of $500 billion in 2021.

Margin debt is released with a two-week lag and is currently trending higher, which is ultimately supportive for markets but also builds risk at the same time.

Market Situation Report: Margin Debt - asdf

Learn more about the Market Situation Report written by Tier 1 Alpha.

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