Lots of stocks rising 100% is not the signal. The signal is how much debt sits behind those moves, and almost nobody checks that number.
Published on June 24, 2026 · by Alex · Leverage · Bubbles · Federal Reserve
While the market waited for rate cuts, the Federal Reserve sent a different signal: rates could stay high for longer, and some voices are now even talking about hikes.
And even so the Russell 2000 — the index of small American companies — hit record highs, up close to 20%. That contrast is the starting point.
Over the last twelve months, the number of companies up more than 100% is more than double the average of the past decade. And they are not spread out: most belong to the same handful of themes.
| Sector | Role in the rally |
|---|---|
| Artificial intelligence | The core |
| Memory and semiconductors | The infrastructure holding it up |
| Data centres | Where it gets built |
| Energy | What it takes to power them |
The gains concentrating in a single supply chain is what separates this from a normal bull market. When a market rises for many different reasons, bad news is contained. When it rises for one, bad news reaches everything at once.
While prices rise, one number tells a different story: margin debt — the money investors borrow from their broker to buy more stock.
Many analysts watch its year-over-year growth rate, using a zone around 40% as a reference. The logic is simple: when credit for buying stocks grows at that pace, the rally is no longer being paid for by new savings but by borrowing.
That zone appeared before Black Monday in 1987, before the dot-com bust in 2000, and before several of the more recent episodes of turbulence.
Worth saying honestly: this is a pattern, not a law. There have been periods of fast margin credit growth with no dramatic ending, and the indicator does not say when. It tells you how much fuel is stored, not whether someone is about to strike a match.
Here is what most people have backwards. Big declines rarely start when everyone is frightened — that is the end, not the beginning.
They start when leverage stops growing and positions begin to be liquidated by obligation. Not because someone decides to sell, but because the broker demands collateral that is not there, and selling stops being a choice.
That moment tends to arrive before the economy officially recognises the problem, which is why declines seem to come out of nowhere when in fact they were being announced in a number almost nobody watches.
For now there is no obvious recession and the records keep coming. But one number keeps growing quietly, and it is the same one that showed up before several of the market's hardest moments.
It is the money investors borrow from their broker to buy more stock. When that credit grows at an annual pace near 40%, the rally is no longer being paid for by new savings but by loans. That zone appeared before Black Monday in 1987 and before the dot-com bust in 2000.
Over the last twelve months the number of companies up more than 100% is more than double the past decade’s average, and they cluster in a single supply chain: artificial intelligence, memory and semiconductors, data centers and energy.
Not when everyone is scared — that is the end, not the beginning — but when leverage stops growing and positions get liquidated by obligation: the broker demands collateral that is not there and selling stops being a decision. The indicator shows how much fuel is stored, not when someone lights a match.
This article is the written version of the Saturday analysis.
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