Loan Stock Investments Reached A Record Level

Loan stock investments increased by 72 percent in March compared to 2020 and broke a new record.

Loan stock investments reached a record level. The growth rate of the loan transactions used to buy shares climbed to the level in the periods of weakness in the market before. In a research note shared by Bank of America Strategist Stephen Suttmeier, following expressions were used: “The S&P 500 may be challenged by the annual rate of change in credit transactions above 60 percent. This is a situation that has happened dozens of times before ”. According to the data compiled by the Financial Sector Regulatory Authority, while the share purchases made with credit transactions broke a record with 823 million dollars in March, it increased by 72 percent compared to the same period of 2020. Strategists and analysts expected a correction or a decline in the S&P 500 Index, taking into account technical indicators. The S&P 500 index, which completed 5 consecutive weeks with gains and realized the longest weekly rising streak after August, ended last week with losses and was instrumental in the end of this rally. Jim Paulsen, Chief Investment Strategist at Leuthold Group, said, “I expect a 10-15 percent correction in the S&P 500 this year, I don't know when it will happen, but it could happen at one of the higher levels in the rest of 2021.” With the S&P 500 index rising since the end of March, it has reached the overbought zone according to technical indicators. According to the 14-day relative strength index indicator, the S&P 500, which entered the overbought territory in recent weeks, is currently trading at the border. According to the S&P 500 stochastic indicator, it has been in the overbought zone since March.