When the

New York Stock Exchange

releases its margin debt figures in the next 10 days, it could show an increase in the absolute amount of margin debt. But the key metric to focus on is not the absolute level of margin debt, but the amount that margin debt represents as a percentage of overall stock market capitalization.

In these terms, margin debt has been decreasing steadily since March of last year, and that's not likely to have changed in April, even if the overall level of margin debt increases significantly. Using a hypothetical increase of $20 billion in margin for April (a fairly big increase), margin would still amount to just 1.17% of the market's valuation, which would be lower than last month's reading of 1.18%.

Not So Marginal Data
Overall margin debt is decreasing, but more importantly, it's also decreasing relative to the market's total capitalization.

Source: TrimTabs.com

According to Charles Biderman, president of


, the fact that the market is rising faster than margin debt is a good sign for the markets. The reason is that when the next downturn comes -- if it comes --- there won't be as much margin selling to exacerbate the downward move.

"The market's risk profile remains low as long as margin debt grows slower than the overall market," Biderman says.

Since peaking in February 2000 -- when margin debt represented 1.52% of the stock market's valuation -- margin debt has been trending down. Of course, the market has been crushed since that time period, and many folks who were on margin have either been reformed or have washed out of the market. Whatever the case, margin debt has been shrinking, both on an absolute basis and on a percentage basis.