The proprietary Panic/Euphoria Model has been in panic territory since August 19th and the level generates a near 90% chance of higher equity prices in six months and a 97% probability of teen-like gains in the next 12 months (see Figure 3). Back in 2000 and 2008, there were indications of euphoria; not dour sentiment. Furthermore, the significant disavowal of equities as an investment asset class by the general public is obvious given the large US stock mutual fund withdrawals. Such a trend sends a fairly clear contrarian message of opportunity.
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May 08, 2013
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