Investor Courage Mounting Even As Sentiment Remains Negative: Citi

Below-expectation releases of economic data in recent weeks appear to have taken a toll on investor sentiment.

The recent PULSE report on US equity strategy from Citi analysts Tobias Levkovich, Lorraine Schmitt and Christina Wood points out worse-than-expected data released on jobless claims, manufacturing ISM and factory orders.

Investor sentiment on the back foot

‘PULSE’ is an acronym for Price-Unanticipated-Liquidity-Sentiment-Earnings, all crucial elements of Citi’s US equity strategy, and their current status is shown below in this figure.

The only element in negative territory is Sentiment.

Citi’s Panic/Euphoria and Cyclical Expectations Model

“Our Panic/Euphoria model retreated but remained in euphoria territory. This week’s Panic/Euphoria reading was 0.49 versus last week’s revised number of 0.57....