Sentiment Pulls Back, But Still Euphoric

Sentiment pulled back slightly this week, but remains firmly in Euphoria territory making a downturn likely in the next year. While increasing equity net inflows provide some price support, there are also signs that investors need to watch out because anything from tapering acceleration to disappointing earnings could be enough of a catalyst for a 1Q correction. 83% historical chance of losses within 12 months “Our Panic/Euphoria model remained in euphoria territory,” writes Citi’s chief US equity strategist Tobias Levkovich. “This week’s Panic/Euphoria reading was 0.63; versus last week’s revised number of 0.65. Euphoria readings indicate the market may retreat…