Wrapping my head around the sectors

Investorsintelligence has a nice bell curve display which lists the 46 sector categories that they track. It notes their position relative to their Bullish Percent Index (BPI) and their current P&F chart bear or bull status. The trouble is that they do not list the ETFs in the same categories as their are only ten ETF categories.

For example, banks. Banks has 7 sub-categories by US region. I can view the constituent stocks. I would expect that banks and finance might be tied together somehow, they are not as financial has five sub-categories and they are more lending leasing and index tracking funds.

I have a separate listing but it has quite a bit of overlap in vaguely related groups.

Back to the bell curve. Overall the curve is peaking in the 60% range, there are none under 20% and three over 80%. This leads me to believe that the market is nearing a terminal overbought stage. Given the run up we have seen in the last months that would be expected, at least a correction of sorts is due but tough to predict. I would say that the top heaviness at least provides an indication that the risk of a correction is high and anyone long in all but buy and hold plans (although I think even they should be aware) should be setting tighter stops or scaling out of positions about now.

Having said that, if everyone decided to scale out right now that would trigger a massive sell off as the buyers would not offer decent bids knowing that the market was going to fall off. This is why I would rather be trading options or inverse ETFs than short selling stocks.

But I digress.

Selecting the sector on the chart brings me to a P&F chart of the BPI for that sector. Right now there are none under the 30% mark but there are four poised to pullback under for some possible setups. Seeing as it takes little time to setup a sector comparative ETF performance chart I will wait until one or more do head south.

On the other side there are 9 in the 70% - 80% range and 3 in the 80's. I am not sure that I want to try getting into playing the bearish side just yet...but I will choose one of the bunch that is in the most ideal position for a bear trade and at least track it. The trouble is that I cannot do a sector comparison easily with stockcharts.com as they do not have most of these indices available. I don't like using an ETF to simulate the index either as all ETFs are used for possible trading and using one as a benchmark could throw the while study into question.

Jeff.