Of all the indicators you can choose from to assess the current market conditions, one in particular stands out – and it is sending a clear warning. It’s a warning that it has flashed before, and was followed by a big drop in the market.
It’s my Composite Liquidity Indicator (CLI).
The CLI is telling us that the market is as overextended now as it was in January, just before the big February “adjustment.”
That correction looked like the beginning of a bear market.
Since then, the market has crawled all the way back.
On Wednesday, and again today, the S&P 500 has momentarily exceeded its January high by a few pennies.
But the CLI is now telling us that market risk is as great, or greater, now than it was in January.
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