Chart of the Week - Margin Debt Alert

Chart in-focus from the latest Weekly S&P500 ChartStorm

Jun 23, 2026

Note: this is a new series for free subscribers and is intended to give an insight into the work that goes into The Weekly ChartStorm + provide a little further explanation on charts and concepts.

This week we’re looking at a clear and present warning indicator for the US Stockmarket.

This indicator warned us of 3 major market peaks over the past 3 decades.

So it’s something we definitely need to factor in.

I will say two caveats though, first; you get the best signal on these types of indicators when it goes to an extreme AND then turns (i.e. see the circles below).

Second, it is just one data point and just one part of the larger puzzle.

But then again, we do have more and more puzzle pieces telling us similar things (be careful). For example, as covered in the Chart Of The Week (and featured + discussed regularly in the Weekly ChartStorm), consider the following points:

Maybe we don’t peak immediately, maybe the market doesn’t crash, and maybe it just even goes sideways instead of down, and maybe it is all just different this time.

But maybe, just maybe, you should have a think about how to navigate your portfolio through a downturn. What if stocks stop going up? What if dips keep dipping? What if history repeats?

Do you have a plan to protect capital, do you have buffers in place, will you have cash to deploy on the other side of the downturn, do you have the fortitude to ride out a large or prolonged downturn in stocks, have you thought of ways to benefit in a downturn?

Sorry to give you extra homework, but definitely a few things to think about here!

Bottom line: the margin debt expansion indicator is at bear market warning levels.

p.s. yes —I will update this chart in future editions of The Weekly ChartStorm, so stay tuned!!

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Further Thoughts…

I wanted to add a couple of extra charts because I can just hear the questions already — first one is the same chart above but extended all the way back as far as the data goes. This one answers the queries around more data points, and basically it confirms the same message as the first chart. Yes it is a valid and reliable warning indicator.

The next chart looks at the year over year change in margin debt MINUS the year over year change in the S&P500, so basically it strips out the effect of market movements. Because I am sure some will quip that “yeah but margin debt just goes up when stocks go up, and stocks go up into market peaks”.

But again, the signal still looks good, and the surge in margin debt this year remains significant even adjusting for market movements. So again, the warning stands.

And as another angle, this chart shows the net margin debt balances (margin debt minus free credit) as a percentage of market cap, and this indicator just broke through the top end of the range. So basically another way of saying yes margin debt has gone up a lot and investors are more levered-up than usual. (again, yes the warning is still in place)

So while this is all just one data series, and only one of the many ways investors are getting levered exposure to stocks these days (with levered ETFs, futures, options, and various other “financial innovations”), and only one piece of the larger puzzle, it is a potent and clear warning signal.

It’s enough to make you want to dig further, and think a bit more about capital protection strategies and asset allocation so that you’re ready if/when it does turn.

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Topdown Charts Professional