Citi Searches For Clouds In The Market’s Silver Lining

The latest media attention around the NYSE margin debt reaching a new high clearly shows that investor sentiment is extremely bullish. Rise in margin debt The chart below (courtesy of www.elliottwave.com) shows the evolution of margin debt over the years. A market fueled by margin debt becomes vulnerable because a small correction could trigger a much larger slide as panicked investors lack the wherewithal to wait it out and allow the market to resume its trend. Euphoria model A research note by Citi analysts Tobias M Levkovich, Lorraine M Schmitt and Christina Wood draws attention to their Panic/Euphoria Model, that…