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Sector Sum Indicator Warning Market is Moving Toward Extremely Overbought Level

The proprietary Investor Intelligence Sector Sum Indicator measures how overbought or oversold the equity markets are by analyzing the number of bull trends among the 45 major industry groups. The indicator ranges from +40, overbought, to -40, oversold. As you can see from the chart below, the indicator in a relatively short period of time has climbed to the present overbought +30 from an extremely oversold -40 at year end around the time the market rallied. That quick move from oversold to overbought is a clear warning for investors to lighten their portfolios.  It also is another indication of how volatile the markets have become.

Sector Sum Indicator Warning Market is Moving Toward Extremely Overbought Level  
Sector Sum Indicator Warning Market is Moving Toward Extremely Overbought Level

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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