Tobias Levkovich has been highlighting for some time now that Citi’s sentiment indicators have been diving. Previously one of two, their ‘Cyclical Expectations Model’ (CEM) showed the market getting oversold. Now, their second sentiment model, the ‘Panic/Euphoria Model’, which uses a different methodology, is confirming the sentiment crash shown by the CEM.
As Mr. Levkovich said, ‘Sentiment drops into panic, convincingly’:
Here’s the CEM, which lead the PE model above.
(Via Citi, PULSE Monitor, Tobias Levkovich, 28 May 2010)