Capacity utilization won’t signal when the stock market has topped out, but it is a very accurate gauge of overall economic health. And right now, it’s a pretty sickly looking indicator, Tony Sagami, Editor of the Rational Bear. 'Capacity utilization has been dropping like a rock in 2015 and hit 78% in July for the industrial companies,' said Sagami, adding that a reading below 80% is 'terrible' and that U.S. factory output is now lower than it was prior to the financial crisis. Those seeking to profit from what Sagami sees a prolonged downturn in U.S. manufacturing activity should purchase the ProShares UltraShort Industrials ETF (SIJ), which is up almost 10% so far in 2015. The ProShares Ultra Short Industrials seeks daily investment results, before fees and expenses that correspond to two times the inverse of the daily performance of the Dow Jones U.S. Industrials Index. To further his bearish case, Sagami points to the fact that business inventories increased at the fastest back-to-back quarterly rate on record. Inventories increased 0.8% in the second quarter, following a 0.3% increase in the first quarter, and now sit at $586 billion. In his view, this 5.4% year-over-year increase in inventory due to a lack of sales, instead of a positive restocking of the shelves. Another bearish maneuver suggested by Sagami is to short, or buy put options on the iShares Transportation Average ETF (IYT), which is down almost 14% year-to-date. TheStreet's Gregg Greenberg has details from New York.