{"id":335,"date":"2025-11-28T13:54:59","date_gmt":"2025-11-28T13:54:59","guid":{"rendered":"https:\/\/wholesalemicro.com\/index.php\/2025\/11\/28\/chart-of-the-week-the-calm-before-the-margin-call\/"},"modified":"2025-11-28T13:54:59","modified_gmt":"2025-11-28T13:54:59","slug":"chart-of-the-week-the-calm-before-the-margin-call","status":"publish","type":"post","link":"https:\/\/wholesalemicro.com\/index.php\/2025\/11\/28\/chart-of-the-week-the-calm-before-the-margin-call\/","title":{"rendered":"Chart of the Week: The Calm Before the Margin Call"},"content":{"rendered":"

Lately it feels like investors can\u2019t miss. The S&P keeps setting new highs while volatility has been relatively low.<\/span><\/p>\n

But something still doesn\u2019t feel right. So I thought I\u2019d take a look at what\u2019s actually happening under the surface.<\/p>\n

And one chart in particular caught my eye because it tells me that this rally is running on borrowed confidence.<\/p>\n

\"Turn<\/p>\n

As you can see, U.S. margin debt just climbed to a new all-time high.<\/p>\n

What does it mean for you and your portfolio?<\/p>\n

When people borrow more to buy stocks, it usually means they\u2019re feeling confident. Sometimes that confidence is justified. Other times, it\u2019s a warning sign.<\/p>\n

In this case, it might be both.<\/p>\n

Borrowed Money Is Powering the Market<\/span><\/h2>\n

Back in July, I told my\u00a0Extreme Fortunes<\/em>\u00a0readers that: \u201cWe\u2019re in a low-volatility, grind-higher phase led by retail momentum.\u201d<\/p>\n

That hasn\u2019t changed.<\/p>\n

On the surface today, everything looks okay. Stocks keep climbing and corporate earnings seem solid.<\/p>\n

In other words, the path of least resistance right now is to take a \u201chold steady\u201d approach.<\/p>\n

But underneath the surface, rising margin debt is like adding accelerant to a fire.<\/p>\n

When investors buy on margin, they\u2019re amplifying their exposures. That means wins can be bigger, but so can losses.<\/p>\n

In a quiet, steady rally that\u2019s fine. But the moment volatility ticks up or market sentiment sours, that leverage becomes a problem fast. If we get hit with surprise inflation numbers, or if tariff rhetoric flares up again, or if the Fed turns more cautious, all that leverage could make a small pullback feel a lot bigger.<\/p>\n

In other words, margin debt won\u2019t start the fire. But it will make it worse when it happens.<\/p>\n

So what should you watch out for?<\/p>\n

If margin rates begin to rise (meaning lenders see more risk) or if there\u2019s an uptick in forced sell-outs (margin calls), that\u2019s the moment the \u201cgrind\u201d might shift into something a lot less friendly.<\/p>\n

And if the market\u2019s upside becomes concentrated in fewer names while margin debt climbs, that\u2019s another red flag.<\/p>\n

Here\u2019s My Take<\/h2>\n

I\u2019m not sounding an alarm bell just yet. This chart is a warning sign, not a red light.<\/p>\n

In fact, I believe this rally can continue, and it\u2019s likely that we\u2019re still in that \u201cgrind higher\u201d zone.<\/p>\n

But this chart tells us that our margin of safety has thinned. The upside remains, but getting caught when the tide turns is far more dangerous than it was a few months ago.<\/p>\n

It\u2019s not a reason to abandon the market, but rather a reminder that the next leg of upside will require stronger fundamentals and broader participation\u2026<\/p>\n

Not just leverage and momentum.<\/p>\n

Regards,<\/p>\n

\"Ian
Ian King
Chief Strategist,\u00a0Banyan Hill Publishing<\/em><\/p>\n

Editor\u2019s Note:<\/b><\/em>\u00a0We’d love to hear from you!<\/p>\n

If you want to share your thoughts or suggestions about the\u00a0Daily Disruptor<\/em>, or if there are any specific topics you\u2019d like us to cover, just send an email to\u00a0dailydisruptor@banyanhill.com<\/a>.<\/p>\n

Don\u2019t worry, we won\u2019t reveal your full name in the event we publish a response. So feel free to comment away!<\/p>\n","protected":false},"excerpt":{"rendered":"

When investors borrow more to buy stocks, it often means they\u2019re feeling confident. Is today’s confidence justified or is it a warning sign?<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-335","post","type-post","status-publish","format-standard","hentry","category-etf-investing"],"_links":{"self":[{"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/posts\/335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/comments?post=335"}],"version-history":[{"count":0,"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/posts\/335\/revisions"}],"wp:attachment":[{"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/media?parent=335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/categories?post=335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wholesalemicro.com\/index.php\/wp-json\/wp\/v2\/tags?post=335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}