![]() In other words, margin is usually used as a tool to increase leverage or exposure to a security or the broader market. Although some trading activity requires the use of margin, such as short-selling, most outstanding margin debt is viewed as a snapshot of risk tolerance. "Margin debt" describes the amount of money investors have borrowed from their broker, with interest, to buy or short-sell securities. But it's an oft-overlooked risk indicator - outstanding margin debt - that could really tell the tale of where the broader market heads next. Select valuation-based indicators portend the S&P 500, Dow Jones, and Nasdaq will ultimately head lower. However, there are a handful of indicators with impressive track records. There simply isn't an indicator that can accurately predict where the stock market will move next 100% of the time. To be fair, if there were an indicator that perfectly called stock market corrections and bear markets, as well as market bottoms, everyone would be using it by now. This risk-focused indicator portends new lows for the stock market The thing is, the stock market might not be anywhere near a bottom. Of course, history also shows that buying during these bear market dips is the smartest thing patient investors can do. The velocity and unpredictability of moves lower are enough to make investors question their willingness to stick around. Regardless of whether you're a tenured or new investor, bear markets can be scary. 10, 2022, and are firmly in the grips of a bear market. Since hitting their respective all-time highs between mid-November and the first week of January, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-dependent Nasdaq Composite (NASDAQINDEX: ^IXIC) have plunged by as much as 22%, 26%, and 34%, through Oct. Though you probably don't need the reminder, it's been an abysmal year for professional and everyday investors alike. ![]() All figures quoted in US dollars unless otherwise stated. This article was originally published on.
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