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An ominous stock market measure is at its most dangerous level in 70 years - here are 7 ways traders can guard against a crash

Sep 4, 2018, 19:17 IST

A trader reacts as he watches screens on the floor of the New York Stock Exchange in New YorkReuters/Brendan McDermid

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  • The Leuthold Group has developed a five-part methodology for assessing how much upside the stock market has at any given time.
  • The firm's latest findings show that this measure is at its most extended level in more than 70 years.
  • Leuthold offers seven recommendations for what investors can do to get ahead of any subsequent market meltdown.

It takes more than one big development to crush a bull market.

But what happens when five areas become problematic? Well, that's when things start to get dicey.

Recent analysis from The Leuthold Group suggests we've already reached this point and are staring down a potential meltdown.

The firm has formulated a new, stock-market-specific twist on a concept called capacity utilization, which it uses to assess the age of an expansion. The logic behind it is simple: The fuller capacity is, the less upside in something.

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Leuthold's stock-specific assessment uses five components. And once they're all weighed, the firm finds that utilization is at a more than 70-year high. That's dangerously extended territory, no matter how you look at it. ...

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