Margin debt

This is an update of a chart I first shared back in April.
See: Is investors’ money where their mouth is?

Margin debt at Interactive Brokers (click for larger image):

Even though stock markets have continued to climb and are recording record highs, IB customers have reduced the amount of risk they are taking in the recent months.
Their amount of margin debt is actually close to 18 month lows, and nowhere near the peak of optimism seen in April 2011, just before the start of the last major correction.

This can mean two things.
Either the market has further to climb before we will see higher optimism, and the higher margin debt that usually comes with it.
Or, being somewhat more sophisticated investors, IB clients have turned more cautious in anticipation of an imminent pullback. We saw a similar divergence back in 2008-2009, when margin debt at IB started increasing several months before the eventual market bottom.

Since the NYSE is reporting very high margin debt levels (see related articles linked below), I suspect we are seeing the latter.

Time will tell.

Danny