Thursday , 17 August 2017


Panic/Euphoria Model Is In "Panic" Territory – So Where's the Fear?

With stocks declining in the last few weeks all the various sentiment surveys point to excessive bearishness/excessive fear. That’s in spite of the fact that market based indicators such as the VIX Index are not showing very much fear at all. While this market is deeply oversold and due for a relief rally, these readings are suggestive that there is more downside before we see an intermediate term bottom. [Let me explain.] Words: 290

So says Cam Hui (www.humblestudentofthemarkets.blogspot.ca) in edited excerpts from his original article*.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Hui goes on to say, in part:

As an example, the Citigroup Panic/Euphoria Model is in the “panic” territory. The model is a contrarian indicator, which means high levels of panic mean it’s time to buy stocks. The model isn’t screaming buy yet but it’s worth noting that it’s pretty reliable. Last October, it predicted a 98 percent chance of a double-digit return in stocks, and it was right.

Click to enlarge images

 

The Ticker Sense Blogger Survey, to which I contribute and voted “bearish” last week, also confirm the observation that there are too many bears.

 

The VIX Index, on the other hand, is not showing very much fear at all in spite of all these sentiment surveys pointing to excessive bearishness.

 

 

Conclusion

Remember, [it is] what they do, not what they say. While…this market is deeply oversold and due for a relief rally, these readings are suggestive that there is more downside before we see an intermediate term bottom.

*http://humblestudentofthemarkets.blogspot.ca/2012/05/not-enough-panic.html (To access the above article please copy the URL and paste it into your browser.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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