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Sector Sum Indicator is Warning Stock Market is Risky

Sector Sum Indicator is Warning Stock Market is Risky. The sector sum indicator measures the number of bull trends among the 45 industry sectors to determine market risk, and whether the market is about to reverse itself. The chart from Investors Intelligence shows the indicator is close to +30, which means most of the 45 sectors are overbought, and risk is high for a downturn. You’ll note during the past year that a high-risk indicator was followed by rocky times.  Conversely, when the indicator was extremely low, -30 and below, the markets moved up.  In other words, reversals from high levels are bearish for the market. Upturns from the lows are bullish for the market.

The Sector Sum indicator
The Sector Sum indicator

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Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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