Interpretation of Decreasing Debit Balances in Brokerage Accounts

Explanation

Debit balances in brokerage accounts represent margin debt i.e. borrowings by investors from the brokerages for investment in the market. Smart money technicians consider margin investors as a group of astute investors and hence interpret large leveraged investments as a bullish signal. Therefore, an large increase in the debit balances is considered a bullish sign while a decline is considered a bearish sign.