Trader Bullishness Hits Three Year High As NYSE Margin Debt Jumps Most Since April 2015

Tyler Durden's picture

Having plumbed the depths of despair in early 2016, market participants are now in a state of near-record euphoria. One indication of this comes from the latest NYSE margin debt data, which showed the biggest jump since April 2015, rising by $27 billion to $474.6 billion, the highest since last July, as investor net worth calculated by the difference of Margin Debt from Free Credit Cash Accounts and Credit Balances in Margin accounts, once again dipped lower.

Another one comes courtesy of Gluskin Sheff's David Rosenberg who in his daily note reports that "net speculative position on the CME as far as SPX contracts are concerned have ballooned nearly 70% since mid-July to 38,083 net longs, a bullish bet we have not seen since June 2013, and this is one vivid sign of just how complacent the masses are."

Rosenberg speculates that "the buyers look to have exhausted themselves at this point", even though it is still not clear just who the buyers are, with mutual fund flows rising on a weekly basis without an offsetting rebound in ETF inflows in recent weeks, stock buybacks declining and insider stock buying at the lowest on record.

He also points to the previously noted record collapse in asset volatility, namely the VIX which in recent weeks recorded its lowest prints in years.

Rosenberg's conclusion is that complacency and pervasive bullishness abounds, which is somewhat at odds with the constant refrain that the market is at all time highs because this remains the "most hated rally"  in history.

His warning: “As per Bob Farrell and his Rule #5, ‘the general public buys the most at the top and the least at the bottom'."

That's true but Bob Farrell never explained just when central banks buy as well, which is topic now that even Reuters - more than one year after we first pointed it out - has an article describing how the "Swiss central bank steps up stock buying spree"

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buzzsaw99's picture

it isn't complacency. the central banks will not allow stocks to fall and that is a FACT.

Snaffew's picture

sad, but true.  Central banks will also be the unintended orchestrators of the crash as soon as one national currency spirals beyond control amid global currency competitions.

Bluntly Put's picture

They only let the market work when they want to get rid of a bunch of their mistakes.

Then the market is the bad guy so after a while they can regain control and start printing again.

SomethingSomethingDarkSide's picture

Or, markets are a complete fucking farce and the data now reflects it.  SPX Contracts & Low VIX reflect Central Bank futures purchases, Share Buy Backs, and Short Covering.


Looking at it through "this is a Free Market" pair of Walgreens Glasses can make you confused, much like the producers of the above charts.

tedstr's picture

Its not bullishness.  Its traders using every last nickle to try to generate gains fom this flat market.  It wont ake much to push this sucker over the edgge.

back to basics's picture

All it would take for this central bank created farce of a market to tip over is one butterfly 10,000 miles away they didn't see flapping its wings. 

It will happen, it's the WHEN I don't know.