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Saturday, June 23, 2018

Citigroup Panic-Euphoria Sentiment Indicator Update

Chart of Citigroup's Panic/ Euphoria Model  vs SPY as of June 23, 2018:
Today, Citigroup's Panic/ Euphoria Model is at 0.16, showing neither panic or euphoria.  If you look at my "Dow vs Oscillators" chart below that suggests a market turn next week, it looks like the Panic Euphoria model is making another higher low before the start of the typical "Summer Rally."
"The panic/euphoria model is a gauge of investor sentiment.  It identifies "Panic" and "Euphoria" levels which are statistically driven buy and sell signals for the broader market.  Historically, a reading below panic supports a better than 95% likelihood that stock prices will be higher one year later, while euphoria levels generate a better than 70% probability of stock prices being lower one year later.”   
Note:  Some articles I've found suggest  Citigroup's Panic/ Euphoria Model completely missed the financial collapse in 2008 so the model was "reformulated."  My guess is it is like most sentiment models in that its more useful to look at rate and direction of levels rather than absolute levels.
Dow vs Oscillators
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