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.