Wall Street’s Borrowing Binge Is Slowing, and BofA Says That Can Signal a Top
Bank of America's top technical strategist flagged a pattern that preceded every major market peak since 2000, and it is showing up again right now in the data investors use least.
At the end of September, Americans who borrow against their stocks owed their brokers about $1.48 trillion, close to a record. That debt has held up, but its growth has slowed sharply.
In a note dated October 23, 2026, Bank of America (NYSE:BAC | BAC Price Prediction) technical strategist Paul Ciana said year-over-year margin debt growth fell to 31.4% in September, down from 53.7% in May. He said that when growth cools off after an extreme run, the slowdown has lined up with past market peaks and can signal a top. He framed the slowdown as a warning sign of elevated risk.
Both the broad market and the retail broker rose after the warning. SPDR S&P 500 ETF Trust (NYSEARCA:SPY) rose 0.57% to 769.66 on October 27. Robinhood Markets (NASDAQ:HOOD) gained 1.85% to $94.56 on the same day it reported a record margin book that is growing much more slowly.
Why BofA Pays Attention to Slowing Growth
BofA ranked May’s growth rate fourth-highest since 1998. The only higher levels came in 2000, 2007 and 2021, and a stock decline followed each one.
The total itself is still rising. September balances rose 1.80% from August and sit 1.47% below June’s high. The growth rate, however, has fallen.
The pace matters more than the total because each new dollar of margin debt is new buying power. When that new borrowing slows, the market loses a source of demand. If prices then fall, margin calls (demands from brokers for more cash or collateral) push borrowers to sell into the decline. Riding a late-cycle rally is fine as long as the exit is planned, which is the whole subject of our free bubble survivor’s handbook.
Ciana raised this risk before. On June 29, with growth near 54%, he wrote that “U.S. equities could face a corrective phase in the third quarter.” He also pointed to an opposing pattern: “Typically, risk assets such as the S&P 500 rebound after midterms unless more severe downside risks materialize.”
Leverage Is Moving Into Funds and Options
Over one month, the ten largest leveraged equity ETFs took in $12 billion of new money while their market value fell $20 billion. The largest triple-leveraged semiconductor fund drew $9 billion in two weeks, the biggest two-week inflow in its history.
These funds borrow internally to deliver two or three times an index’s daily return, so investors get leverage without a margin loan showing up in brokerage data. Options work the same way, because a small premium controls a large position. Retail traders recently made up 61% of options volume on one large market maker’s platform.
Robinhood’s Margin Growth Has Slowed Sharply
Robinhood’s margin book hit a record $22.1 billion in the third quarter. Year-over-year growth slowed to 59% from 127% in the second quarter, and the book stands only 2.3% above its June level.
Revenue rose 12% to $1.42 billion. Diluted EPS fell 16% to $0.51, and net interest revenue fell 9% to $415 million.
The Fed announces its rate decision on October 28, with the upper bound of its target range at 4.00%. A rate cut reduces the margin borrowers pay, and it also cuts Robinhood’s interest income. Management estimates that each quarter-point move changes revenue by about 1.5%.
What Robinhood’s Slowing Margin Book Means for HOOD Stock
We believe the stock has more downside risk. The stock trades between a 52-week low of $63.52 and a high of $150.47, and it is down 35.17% over the past year.
That decline shows some slowing, but the price still shows a margin book that stops growing while rates fall. Trading volumes early in the fourth quarter were already about 5% lighter than in the third quarter.
SPY has held up better. It is up 12.87% year to date, and it tracks the broad market that Ciana said typically rebounds after midterms, with less exposure to retail borrowing.
Two data points would show whether this view is wrong. If FINRA’s October margin data moves above June’s high, or if Robinhood’s fourth-quarter margin book rises clearly above $22.1 billion, the borrowing cycle is still running.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
