A Full Year of Panic ? (I don't think so)

Saturday, February 04, 2006 | 10:47 AM

Ever have a minor annoyance kinda hang around, not go away, like a pebble in your shoe? A pet peeve that finally reaches the point where you have to say or do something?

That's how I feel about the Citibank Panic/Euphoria model. Recall we first looked at his last May 2005. (Disclosure: I have Citibank Smith Barney accounts)

In its literature, Citi claims:

"Citigroup equity strategists’ proprietary measure of investor sentiment – the Panic/ Euphoria Ratio – is currently firmly in the “panic” zone, indicating weak sentiment. Historically, this has been a reliable contrarian indicator of stock market performance. They believe that recovering investor sentiment may drive continued global equity market gains over the coming six months."

Let's see if you can identify what the problem might be: 

Citibank_sentiment_

The issue that continues to annoy me about this is the so called panic level of Market Sentiment.

You see, Panic is a momentary phenomenon, a product of fear and adrenaline. Its what kept your ancestors from getting consumed by sabre tooth tigers. It is also what makes people reliably sell at market bottoms.

Panic is transitory.

So please explain to me how, according to the chart above, we have been at Panic levels for about a year now?

For the above chart to have any value beyond being a marketing device (hey, it does run every week in Barron's), it either needs to be relabled (i.e., Discomfort/Pleasure indicator), or the Panic "level" needs to be adjusted down to 0.6 or so.

That is all . . .

>


Source:
Global Markets Perspective
November/ December 2005
http://www.citibank.com/uae/gcb/invest/docs/mkt_global.pdf

What Happened to All the Easy Trades? -- Part II
THE TRADER
Mike Santoli
Barron's MONDAY, FEBRUARY 6, 2006   
http://online.barrons.com/article/SB113901415016664863.html

Saturday, February 04, 2006 | 10:47 AM | Permalink | Comments (13) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00d834a740d669e2

Listed below are links to weblogs that reference A Full Year of Panic ? (I don't think so):

Comments

'Bout time someone sheds light on this non-indicator... Doesn't Santoli have enough clout at the WSJ to choose the metrics that he would prefer to focus on?

Posted by: Jay Morrison | Feb 4, 2006 12:12:42 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner