At the close on 12/12/13 a buy signal was issued for Yelp (YELP). The stock has consolidated fro a few months and is now back above its 50 day moving average. When it reached that point sentiment from the Twitter stream broke above its down trend line. This confirms the current up move and increases the odds that the stock will move higher from here. One thing to note is that the uptrend line in smoothed sentiment isn’t very steep. This makes the signal a bit weak and also won’t provide a good exit point so be sure to calculate profit and loss targets.
The consolidation warning for Netflix (NFLX) issued on 12/6/13 has ended. Let this be another reminder not to trade against the market…especially with momentum stocks.
Here are a few things I’m currently watching to provide more early warning that the current draw down might get serious. The Cumulative Advance Decline line (NYAD) is probably the most important since it has provided good guidance all year. Remember when everyone was calling a top in September because of the negative divergence? I pointed out that it was painting a triangle and that the break would point the direction for the market. NYAD broke higher and the market rallied. Now NYAD is starting to roll over in a more serious way, however, it is still above the trend line created from the bottom of the previous triangle. As long as it stays above that level and the previous two valleys the market will most likely catch and drift higher into the end of the year. A break below those levels will get me concerned. As a side note, there are now several people mentioning the percent of stocks above their 200 day moving average diverging from price and
Below is a chart with the bullish intensity scores for the most bullish stocks on StockTwits for the week ending 12/10/13. Below are charts with the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 12/10/13.
Below are charts with the bearish intensity scores for the most bearish stocks on Twitter for the week and month ending 12/10/13. Oops. Just noticed that I dropped the Twitter data into the StockTwits chart…but it really is the bearish scores from Twitter. Sorry.
Below are charts with the intensity scores for the most active stocks on Twitter for the week and month ending 12/10/13. Oops. I dropped the Twitter data into my StockTwits chart…but it really is the most active score from the Twitter stream. Sorry for the bad label.
Breadth for the 50 most active stocks on Twitter has reclaimed the highs of the year. The recent strength is a result of the number of stocks in a clear down trend decreasing over the past three weeks. The number of stocks in a clear uptrend has been holding steady over that time period. Below is a breadth chart compared to the S&P 500 Index (SPX) and also chart showing a breakdown of the status categories.
Twitter sentiment for Netflix (NFLX) and Priceline (PCLN) issued consolidation warnings at the close on Friday. Sentiment for both stocks has been diverging from price and has broken their confirming uptrend lines. Please note these are not sell signals. Rather warning that the price may trade sideways to down to consolidate recent gains.
Over the past week several of the indicators I watch deteriorated. Our market health indicators that govern our core portfolio allocations compressed toward the zero line. They continue to paint a picture of cautious optimism, but with some jitters. The most concerning thing I saw was that a small move down in price brought with it a quick increase in the perception of risk. Investors are dancing close to the door. It appears that they don’t want to risk the gains from a very good year. Adding weight to the argument our Investor Contentment index has been negative and declining over the past three weeks while our Market Stability index, although positive, has been declining as well. Our Twitter sentiment index for volatility (VIX) has issued a buy signal indicating that traders on Twitter believe that volatility is likely to rise in the near future. This signal comes after four touches on the smoothed sentiment down trend line that was confirming lower volatility. Previous signals this year have been early,
Over the past week our core market health indicators compressed a bit. Some shuffling occurred with our measures of market quality moving from barely negative to barely positive while our measures of the economy fell from positive to negative. Our measures of trend and strength fell slightly. Perceptions of risk rose. The flip flop in the economy and market quality keeps our core portfolio allocations the same with the long/cash portfolios 80% long and 20% cash. Our hedged portfolio is 90% long stocks we believe will outperform the market and 10% short the S&P 500 index (using SH). The overall picture suggests that portfolio managers are holding, but could change their mind very quickly. Small moves in price are causing many of our core indicators to jump quickly both up and down. This is a sign of investors dancing close to the door and that they aren’t willing to sit through a consolidation at the moment. Much of the movement could simply be people protecting gains going into the end