In his MarketWatch column, Mark Hulbert highlights the use of margin debt as a market indicator. Margin debt is the total amount investors borrow to purchase stocks. As Hulbert notes, research by Norman Fosback, former president of the Institute for Econometric Research, concludes that “a good long-term indicator can be created by comparing total margin debt with its 12-month moving average.” If the current level is above the 12-month moving average, it is considered a bullish indicator; if below, a bearish one. Fosback’s research suggests “an 85% probability that a bull market is in progress when the indicator is bullish, in contrast to only a 41% probability when the indicator is bearish.” The indicator appeared to work well in the 2007-09 bear market, but not as well in 2011. Currently, it has been sending bearish indicators for five straight months.