Junk Bond Spread Model: Neutral
Chart shows historical spread between junk bonds and Treasury bonds. Note the inverted y-axis in order to align with theme of "high" values corresponding to aggressive market position.
Recession periods are shaded.
Summary:Margin debt is money investors borrow to invest in stocks. High margin debt indicates bullish investors, and tends to lead stock market corrections, particularly after margin rates begin falling from their peak. This model looks at changes in margin as a percent of total stock market value.