Panic/Euphoria Model Now At Higher Level Than Pre-Crisis: Citi

“We continue to think that a 1Q14 correction (in the 5%-10% range) is possible given weakening EPS forward guidance trends and some softening in the Cyclical Expectations Model, not to mention euphoric sentiment levels,” say Citi's US Equity strategists Tobias Levkovich, Lorraine Schmitt and Christina Wood in their latest “PULSE Monitor” research note.

Sentiment (S) rules overly euphoric in PULSE

Sentiment is the only negative amongst Citi's PULSE group of market outlook components, as shown in the above graphic.

Euphoric reading continues to rise

We note from the chart below that the latest reading of 0.66 on Citi’s Panic/Euphoria Model is now higher than the euphoria level at pre-crisis...