Enter you email address and zip code to set up customized email alerts.
"Panic" in the emerging markets implies an strong chance of a positive 12-month return on the MSCI GEM index, according to a new indicator from Citi.
The GEM Weather Vane sentiment index looks at nine inputs, including the forward P/E ratio on the emerging market index, emerging market fund flows and the Swiss Franc/Dollar rate.
When the index gives a score above 0.6, it indicates "euphoria," which has a 74% chance of a positive 12-month return. When below -0.7, it indicates "panic," which has an 84% chance of a 12-month positive return. Right now the index is highly negative at -1.21.
Sounds pretty good, right? The only problem is that the index has been stuck in panic mode for longer than ever before, and that could throw off the model:
our sentiment indicator has already been in ‘panic’ mode for 19 (of the past 20) weeks. (Indeed, it moved into ‘panic’ territory even before that – in late-February 2011 – before pulling back to neutral soon after.) The current 19-week period of almost continuous ‘panic’ is the longest since our model began in 1993. The previous longest period of continuous ‘panic’ was 13 weeks from late-September 2008. We have already noted how our sentiment indicator was very early in delivering a buy signal during the 2007-8 bear market.
Please follow Money Game on Twitter and Facebook. Follow Gus Lubin on Twitter. Ask Gus A Question >
To embed this post, copy the code below and paste into your website or blog.
Active Users on BI right now...Click for more live stats »
| 6 Big Signs Of Market Capitulation 2
Why we might keep heading higher.
| GEORGE SOROS: It's Time To Think About Greece, Portugal And Ireland Defaulting 5
| Regarding The Market's Questionable Rally.... 5
| The Great American Economic Lie 15
| Where Did Thursday's Monetary Stimulus Go?
| Baby Boomers: Will Their Stock Market Exit Hurt Your Portfolio?
| Gold Investing: Why Value Investors Are Still Buying Gold
| Investing 101: Why Are These 5 Stocks Under $2 Being Dumped by Hedge Funds?
| Consumer Spending: Retailers Report Flat Sales Compared to July
| Extreme Fear: How to Identify "Capitulation" Stocks
| Investing 101: Short Squeeze Candidates with Insider Buying
Meet The Richest Person From Every Major Country In The World 478,483 Views
Here Are The Countries Most Likely To Default 162,472 Views
INFLATABLE ATHLETES: Before And After Steroids 145,698 Views
The Most Miserable Cities In America 140,222 Views
HERE IT IS: Bill Ackman's Presentation On His New Favorite Investment 128,007 Views
Obama Sends Out Creepy Email: 'Sometime Soon, Can We Meet For Dinner?' 306 Comments
RUMOR: Sarah Palin Had A One-Night Stand With A Future NBA Star When She Was A Sports Reporter In 1987 125 Comments
ROGUE: The 12 Most Shocking Revelations From The New Sarah Palin Book 90 Comments
KABOOM: WORLD CENTRAL BANKS ANNOUNCE BIG COORDINATED LIQUIDITY PUMPING 89 Comments
Now 62% Of Americans Think Obama Is Doing A Lousy Job On The Economy--And They Hate His Jobs Plan 83 Comments
* Copyright © 2011 Business Insider, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy. | Disclaimer
Powered by MongoDB | Hosted by Datapipe | Web analytics by Empirical Path
Read Full Article »