We mentioned earlier the recent rise in margin. Have a look at the following chart:
NYSE Member Firm Margin Levels
click to enlarge
Sources: Bloomberg, RR&A
The raw numbers are not what actually matter, and adjusting for inflation isn't significant.
The reason margin matters is that it is potentially revealing of extreme sentiment and/or speculation (margin clerks can do major damage in a downturn).
There are a few ratios I would like to identify and convert to oscillators relative to margin:
Total Margin / Total Market Cap NYSE Margin / Account Assets Margin / Trading Volume Total Margin / Market Volatility
The idea would be to test these versus historical tops and bottoms . . .