Bulls Get Another Reason to Worry as Sentiment Gauge Flashes Red

Stock bulls have another reason to worry that the blistering rally in American equities may be about to cool.

The Bloomberg Intelligence Market Pulse Index pushed to a “manic” reading last month, a sign that investor exuberance may be running too hot. The measure combines six metrics like market breadth, volatility and leverage to deliver a reading on investor sentiment. When it gets into overheated territory, returns tend to weaken in the following three months.