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CITI: PANIC RESURFACES


by Sam Ro

One of our favorite stock market sentiment indicators is the Citigroup Panic/Euphoria Model.  Indeed, it’s the favored metric of Tobias Levkovich, Citi’s top U.S. equity strategist.

The model is a contrarian indicator, which means high levels of panic mean it’s time to buy.

In his latest Monday Morning Musings report, Levkovich notes “sentiment has shifted rapidly from complacency in March to panic in the latest readings on our unique Panic/Euphoria Model.”  More from his note:

“Panic” resurfaces. Admittedly, markets rarely get that “cataclysmic crescendo of capitulation” to call for buying stocks, but proprietary measures such as the Panic/Euphoria Model now are intimating that upside opportunity has re-emerged. Meetings with institutional investors do not anecdotally demonstrate that people are “freaked out,” but the sharp decline over the past six weeks has caused significant deterioration of sentiment (even amongst credit investors). Other metrics still are not providing the requisite buy inflection such that a more positive view for stocks is appropriate but that nuance does not imply a willingness to grow long bull horns yet.

Read more: businessinsider

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