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Other than the financial sector, which is extremely oversold, the only other major sector in the market approaching such levels right now is the transports.
After participating in the Dow Theory buy signal in late April, the transports powered to an all time high last month (5487). But even as this sector was climbing into thin air territory, its bullish percent index was falling.
This sort of divergence is usually a bad omen as it means that less and less stocks in the sector are participating and fewer and fewer are responsible for pushing the index higher.
Anyway, historically, when the bullish percent index for this sector reaches 30% it is a good time to hunt for longs and eschew the short side.
You can see details of how this signal worked out last summer.
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