Sector Sum Indicator Warning Market is Moving Toward Extremely Overbought Level

Sector Sum Indicator Warning Market is near Extremely Overbought.  The proprietary Investor Intelligence Sector Sum Indicator measures how overbought or oversold the equity markets.  This is done by analyzing the number of bull trends among the 45 major industry groups. The indicator ranges from +40, overbought, to -40, oversold.  Represented in the chart below, the…

Why Present High Margin Debt is Worrisome for Stock Market

Why Present High Margin Debt is Worrisome for Stock Market. Although margin debt has declined a bit, this chart from Sentiment Trader indicates that it is still close to all-time highs. That’s despite many warning signs that the stock market is overbought.  Why is this worrisome? Very high margin often precedes major market declines.  It…

Play it Again Sam: This Important Short-Term Indicator is Warning Investors the Market is Even More Overbought

Short-Term Indicator is Warning Investors the Market is Even More Overbought.  We thought it was important to show how The Investor Intelligence Short-Term Composite Indicator (see chart) has moved even further into overbought territory .  As a result its showing close to 80% from slightly below 70% two weeks ago.  At that time, we wrote about…

Why Sentiment Indicators are a Powerful Contrarian Tool

History has shown us that retail investors as well as so-called market professional are usually wrong about the direction of the stock market. So betting against them is a way to help you make money.  Strong evidence of that comes from the Investor Intelligence Bull/Bear poll of more than 100 stock market writers who historically…

This Important Short-Term Indicator is Warning Investors the Market is Quickly Becoming Overbought

The Investor Intelligence Short-Term Composite Indicator has proven to be a valuable tool for short-term market timing ever since it was developed in the 1960s. A reading of over 70 means the general index has become oversold. Below 30, it has become overbought. Three weeks ago, as shown in the chart below, it was at…