Closelook at US Stock Markets - Post 02

The Citigroup market sentiment gauge is now near the euphoria level. A reading below "panic" supports a better than 95 percent likelihood that stock prices will be higher 12 months later.

"Euphoria" levels have generated a better than 80 percent probability of stock prices being lower a year later.

Euphoria levels are too high for the next bull leg

We would like to see this reading drop significantly with the current market decline to support our bull case. The current reading is a warning sign.
What would support the bear case from a sentiment point of view? If, during the current decline, the reading shows widespread complacency.

Support for the bull case

What would support the bull case? If some of the permabears that just turned bullish revoked their stance. And if the bear market stagflation narratives would gain the upper hand again. A bit more gloom and doom attitude in the trading rooms would be good for the bull to rise again during the fourth quarter.