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Sentiment and Positioning is Now in Panic Territory, Citi's Levkovich Index Shows

Stock Markets Sep 30, 2022 08:43AM ET
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© Reuters. Sentiment and Positioning is Now in Panic Territory, Citi's Levkovich Index Shows
 
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By Senad Karaahmetovic 

Citi strategists have maintained a 4200 price target on the S&P 500 as he believes that earnings risk is more of a 2023 concern. For the Q3 reporting season, Citi strategists still expect to witness some degree of resilience.

Still, expectations remain too high, hence Citi recently adjusted its Sector and Industry Group preferences. The firm's clients are now advised to go Overweight Health Care, Info Tech, and Materials and Underweight Consumer Discretionary, Financials, and Utilities.

"We are moving to a Growth style preference for managing 1H '23 recession risk," the strategists added in a client note.

The potential for a risk-on rally is building with the bank's Levkovich Index showing that sentiment and positioning are now in panic territory. The third bear market rally will likely take place "at some point during Q4," the strategists added.

"Factors such as Low Risk may perform well in a recessionary environment, but it has become very crowded."

In this context, Citi's analysis shows that stocks like Fortinet (NASDAQ:FTNT), T-Mobile US (NASDAQ:TMUS), and Thermo Fisher Scientific (NYSE:TMO) are "crowded."

Sentiment and Positioning is Now in Panic Territory, Citi's Levkovich Index Shows
 

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