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Margin Debt continued to move higher in January. When margin debt starts to unwind, it can exert downward pressure on equity markets as borrowed stocks bought on margin are sold. Consequently, we’ll be keeping a close eye on this indicator over the coming months.
The InvesTech Bellwether Index is a proprietary composite of stocks which are in the most sensitive economic sectors of the market. The key prerequisite for each component stock was that it have adequate market capitalization and over 20+ years of established track record. Selection emphasis was given to companies that displayed a cyclical price pattern and peaked prior to bull market tops. At the start of the year, the InvesTech Bellwether Index had been diverging from the blue chip indexes, however, it is now at a new high alongside the S&P 500 (graphs below).