Below are charts of the most active stocks on Twitter over the past week and month.
Recently I’ve seen a lot of people mention on Twitter and various blogs that the market doesn’t give you time to get out at tops. I have to politely disagree. If you’re an intermediate or long term investor the market will almost always give you warning that it is preparing to consolidate. As an example, here is one of our early warning posts from last October. Often the first warning signs are well ahead of the actual top, so the key to successful investing is in waiting for the weight of evidence to turn before making major changes to your portfolio. Here at Downside Hedge we move money slowly as market conditions change. From mid February we’ve been seeing signs of deteriorating market conditions. Our canaries in a coal mine post on 2/19 highlighted some of the deterioration that we’ve been seeing. The S&P 500 Index (SPX) was trading near 1520 at the time. SPX is now near 1565 and most of those conditions are still in place. For a
We’re starting to see a few scratches on this Teflon market. Our core market health indicators fell significantly this past week even though the move in price was minor. We normally don’t see them with such negative readings when price has only fallen about 4%. None of them moved enough to change our portfolio allocations, but the amount of internal damage is disconcerting. Market Positives The S&P 500 Index fell below its 50 day moving average, but didn’t stay there. This is one more sign that buyers continue to step up when the market dips. Large moves down in price one day are met with a rally the next showing the conviction of people who are under invested. Our measures of market risk are still positive, but they deteriorated sharply this past week. Our market risk indicator isn’t close to a signal yet, which suggests complacency by market participants. Mixed Signals Measures of breadth such as the stocks above their 200 day moving average are starting to diverge from price.
Over the past week all of our core market health indicators fell sharply. Many of them have readings usually seen after a severe correction in price. This condition highlights the large disparity between market internals and price. We have a stock market that believes external forces (like QE) are the driving factor. Until that belief is shaken we suspect we’ll continue to see internals diverge from the market as a whole. Our measures of risk have finally started to show some weakness. Market participants are beginning to get concerned that this small consolidation could turn into something larger. Our market risk indicator is still quite far away from a signal, but our other measures of risk are getting fairly close. At the moment it appears that weakness over the next week might get our Long/Cash portfolios 100% in cash and or Hedged portfolio 50% Long and 50% short (using SH or an equivalent). While a rally would leave us positioned the same. It would take a very swift move down
Our Twitter Top 10 Portfolio is down slightly (-.17%) since the first Friday in April. It is slightly under performing the S&P 500 Index (SPX) which is essentially flat on the month. VMware (VMW) and Best Buy (BBY) are the biggest drags on the portfolio, while Ford (F) and Green Mountain Coffee Roasters (GMCR) are helping to provide some lift. So far this month four stocks are down while 6 stocks are up. A performance chart and details for the stocks in the portfolio are below. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 4/5/2013 $BBY 610 25.45 15524.50 23.37 14255.70 -8.17% $YHOO 482 23.3 11230.60 23.62 11384.84 1.37% $HOT 173 60.14 10404.22 61.34 10611.82 2.00% $NKE 190 58.97 11204.30 60.67 11527.30 2.88% $V 68 165.16 11230.88 163.9 11145.20 -0.76% $F 903 12.44 11233.32 12.91 11657.73 3.78% $GMCR 214 53.23 11391.22 55.29 11832.06 3.87% $VMW 146 76.91 11228.86 73.4 10716.40 -4.56% $UPS 130 83.54 10860.20 83.13 10806.90 -0.49% $MU 1207 9.31 11237.17
We’ve been following Apple’s sentiment among traders on Twitter from its bad earnings report in late July 2012. Here’s a blog post where we consolidate our commentary for AAPL across several months. Lately we’ve seen some developments in sentiment that are interesting. From the first of April when the stock was trading back down to 420 and bouncing the volume and intensity of tweets has fallen dramatically. This suggests that traders are giving up on the stock and can be the first sign of capitulation. The intensity of tweets continues to get quiet on rallies and rise when the stock falls which is a sign that traders although bullish, aren’t excited or confident in their opinions. On Wednesday when AAPL broke below 420 it printed -36 on the daily indicator. This is the lowest print ever for the stock which is another sign of capitulation. We’re finally seeing people give up on the stock en masse and confirm lower prices in their tweets on a daily basis. This is a
Thursday brings with it earnings reports from Morgan Stanley (MS), Google (GOOG), International Business Machines (IBM), and Microsoft (MSFT). Here’s what their Twitter sentiment charts look like ahead of the earnings reports. Morgan Stanley warned of consolidation in mid March and then cleared that warning last week. The consolidation warning was cleared near the stock’s upward sloping trend line coming out of the July 2011 lows. In addition, the 50 day moving average is in play. Smoothed sentiment is trying to paint a positive divergence with price, but we’d like to see it continue to diverge (or start to confirm any upward move) before making any calls on the stock. Overall we have a slight bullish bias. If the stock moves higher after the earnings report and the move is confirmed by sentiment it will provide a low risk entry for a trade on the long side. If the stock breaks lower we’ll be looking for a setup near the 200 day moving average. It took two consolidation warnings from
Below are charts of the stocks with the highest bullish intensity on Twitter. We take the top ten from the monthly list on the first Friday of each month to make our Twitter Top 10 Portfolio. On the weekly list we’re seeing consumer staples and health care stocks starting to creep in. If the trend continues it will be just another sign of a rotation to safety. At this point the monthly list still contains a mix of high quality and high flying stocks (as has been the pattern since the first of the year).
Below are charts of the most bearish stocks on Twitter for the past week and the past month. The weekly list is littered with precious metals stocks…which was to be expected. Notice the the energy ETF (XLE) is also in the weekly list. Back in 2008 energy and precious metals led the stock market downward. Is this a repeat?
Below are the charts of the most active stocks on Twitter over the past week and month. Notice that GLD beat Apple (AAPL) this week. This is the first time we’ve seen any stock out pace AAPL. However, we’ve seen activity for AAPL trend lower over the past few months.