Citi’s Tobias Levkovich is out with his latest update to the firm’s proprietary Panic/Euphoria model.
In a nutshell, panic is high, and that’s extremely bullish of stocks. From Levkovich’s note to clients:
The Panic/Euphoria Model is in panic territory currently versus edging into euphoria back in 2007 and 2008, implying that investors are positioned far more defensively at present. While the euphoria readings several years ago signaled an 84% probability of a falling S&P 500 in the following 12 months, there is now a better than 96% chance of making money in the next year.
The Panic/Euphoria model is Levkovich’s favourite indicator. Last October, it predicted a 98 per cent chance of a double-digit return in stocks, and it was right.
Photo: Citi Investment Research & Analysis
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