Margin Debt is a measure of borrowed money to buy stocks. It can be used to gauge mass speculation. As the chart above shows, margin debt tends to peak around the top of the market. A preccipitous fall can be a valuable indication that the market could follow suit. A simple correlation of Margin Debt as a percentage of the price level of the S&P500 vs. the S&P500 reveals a value of 0.87, dating back to 1959.
Used in concert with the other two indicators in this series, these become a useful tool set to gauge investor expectations, which over a short to medium timeframe, win the day.