There are high levels usage of margin in the current equities markets.
In March, margin debt was at $13 billion.
We have reached these levels in prior years. We saw them in 2000, 2007 and were close in 2011. What happened shortly thereafter? Stock market declines, that's what!
So, we now see high margin levels as we approach the trading anecdote of "sell in May and go away."
Will this hold true for this May? Well, no one knows the future but with margin use very high most investors will have limited or no cash available to make additional equity purchases. This is a structural element that leads to what we call a market "running on fumes."
Be careful. What does that mean?
Well, if you have profits no harm in taking partial profits, scaling down positions, raising up your stops, etc.
If you are ready to put on a new trade, why not plan out what you are going to do BEFORE you put your money at risk and get your emotions of fear and greed started?
Good news! We now have our free trade calculator tool you can use to define your buy price, stop, price target and determine the risk you will take on the trade. Plan it out and then email it to yourself to follow along. Simple! Effective.
Here it is at www.tradeplay.com/calculate
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