The 'sanity check' if you will can be found by looking at the extremes. You would expect the ETF's with the lowest ICC to have had relatively large appreciation of price relative to EPS forecasts. For example ( XBI ) the biotech ETF, ( XHE ) health care equipment ETF, and ( XPH ) the pharmaceutical ETF have seen their share prices advance significantly over the past several months. At the other end of the spectrum you would expect the opposite and for the most part you see that too. ( XME ) the metals and mining ETF, ( XES ) the oil and gas equipment & services ETF have seen their share prices crushed. And as a barometer of the market overall you would expect to see ( SPY ) somewhere in the middle perhaps towards the lower end of ICC estimates due to the continued appreciation of the US stock market overall. Guess what? If you examine the data you find ( SPY ) where we would expect it, modestly priced at 13.5% somewhere in the lower middle range.
Where the metric is interesting is in the edge cases. For example ( KIE ) the insurance ETF has a relatively large ICC measure. However, a quick glance at the chart shows a relatively volatile range with a clear positive trend channel. So what gives? That implies the sector overall may be undervalued as EPS forecasts are either unchanged or still relatively optimistic in comparison to the modest stock gains of the ETF. If you are fundamental investor/value investor the relative ICC can give you insight into where you should focus your search.
I'm considering posting this metric either weekly or bi-weekly. I'll think on it some more. Until then, feel free to comment, question or provide feedback.