In the short run, it is difficult to see what can stop equities at this point. Low inflation, central bank support and relatively robust economic data have created a Goldilocks scenario for equities. However, perhaps as a result it is worthwhile looking at what could go wrong. One of the more important intermediate indicators on the equity market is derived from the stock of US margin debt at the NYSE.

Judging by the comments from most analysts and commentators, global equities are the place to be and equity markets are still doing well. This is certainly true if you look at Japan, but in general it is not exactly correct. On a 1 month basis, even the otherwise resilient S&P 500 is now flat and many stock markets are down significantly. Indeed, despite widespread investor optimism we are now seeing broad based weakness on a monthly basis.

Margin debt on the NYSE continues to rise, both when looking at the rate of change as well as the level of negative cash balances (lower chart).  Overall margin debt rose strongly going into 2013 and is now sitting only…

Brazil and Spain have both come off their upper trading range bands. Other indices still look overbought

Continuing the ongoing trend, all US sectors but Telecom look to be overbought and the conditions merit caution.

Global risk assets continue to look overbought, as we mentioned in our previous post. The current environment continues to merit caution for long biased traders.

As we pointed out last week, global risk assets generally look overbought and are due a short term correction. It is impossible to pick bottoms and tops, but from the point of view of tactical trading, the current environment merits…

Technically global equity markets now look overbought across the board with 14 day RSI readings above 60 for all major stock markets. Many RSIs are above 70. This suggests that over-performing markets such as the Nikkei and the DAX may…

Most US sectors look oversold based on their individual trading ranges. We have suggested investors to go long utilities before based on a simple trading rule following bollinger bands. Utilities are currently trading well below its lower band and looks…

Only very few US equity sectors and global stock market indices currently appear attractive based on technicals. Still, there is an interesting opportunity for a contrarian play within US defensives with healthcare and telecoms looking very rich while utilities look…