The Twitter Top 10 portfolio is flat so far this month, being barely down .04%. It is under performing due to Amarin (AMRN) which is down 8% from last Friday and Walter Energy (WLT) which is down 5.11%. This is yet another flaw of mechanical investing, in that it picked stocks in a down trend. If you read all the posts in the Twitter Top 10 Portfolio category you’ll see more reasons why I don’t like straight mechanical investing. Here are a few posts that I gleaned from the category where I mention things I don’t like. Stocks that are peaking or have very recent bad news. Broken charts and low priced stocks. This portfolio is an illustration of what happens if you simply buy the most bullish stocks on Twitter. It is an attempt to prove that the most bullish list gives a better overall universe of stocks to begin your own analysis. I don’t recommend simply buying the list. Below is a performance chart of the portfolio. Here
General Electric (GE) cleared its consolidation warning generated by our computer system that reads the Twitter stream today (9/12/13) at the close. The consolidation warning was issued on 8/19/13 when the price was 23.85. The stock fell roughly 3.9% before recovering. When a consolidation warning is cleared it suggests that the stock should continue its up trend and most likely make new highs.
During the rally out of the late June low the gold ETF I track (GLD) has had confirmation from sentiment generated from the Twitter stream. Smoothed sentiment has had a good uptrend that has held on dips. It’s currently coming back to the trend line and attempting to turn up even as price has fallen over the past few days. This is a good sign, but GLD needs to bounce right here or there will be a high probability for a resumption of the down trend. Another factor that may bring heavy selling if a bounce doesn’t materialize is that GLD is sitting right on its 50 day exponential moving average. A break below that level will almost certainly trigger some stops. The gold shares ETF that I track (GDX) has a stronger sentiment pattern than GLD. Smoothed sentiment had a large positive divergence from the hard break down in price in April to the break down in June. Since that time sentiment has held its upward sloping (and confirming)
Below are charts with the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 9/10/13.
Below are charts with the bearish intensity scores for the most bearish stocks on Twitter for the week and month ended 9/1/13.
Below are charts of the intensity scores of the most active stocks on Twitter for the week and month ending 9/10/13. Here is a chart showing the status of the 50 most active stocks on Twitter.
Sentiment generated from the Twitter stream for the S&P 500 Index (SPX) closed above its recent down trend line today. That has cleared the consolidation warning issued August 14th. Smoothed sentiment had a positive divergence with price ahead of the break of the trend line which increases the likelihood that the uptrend in the market will now continue and go on to new highs. This isn’t an all out buy signal (used for making a trade). This is because the positive divergence didn’t last for at least three weeks. The result is that this is a slightly weaker signal because the shorter duration didn’t give as much time to shake out weak hands. I’ve drawn a new uptrend line under smoothed sentiment, but it will most likely need to be adjusted to the next dip so we’re following a trend at least three weeks in length. I wouldn’t be surprised to see a small consolidation at this level (near 1680). It has been a target area for many traders on
Over the past few weeks I keep seeing people mention market breadth as a reason this current rally will fail. A quick glance at a chart of the percent of stocks in the S&P 500 Index (SPX) that are above their 50 day moving average is a good illustration of the argument. It had a negative divergence with the May high in price for SPX, then went to lower lows when SPX did not. A recipe for disaster, right? Not so fast. Look back a little further and you’ll see that the current damage to breadth is not nearly as bad as the minor corrections in SPX over the past couple of years. What I’m seeing is the phase of a market that is getting closer to a top, but most likely not there yet. The percent stocks in SPX above their 200 day moving average are showing a similar picture. However, as a longer term investor I don’t get too worried until this metric falls below about 60%. When
Both Wal-Mart (WMT) and Intel (INTC) have cleared their consolidation warnings. The chart of INTC looks fairly indecisive at the moment so I’m not sure if this signal is notice of a resumption of the uptrend. I suspect it will move back above its 50 and 200 day moving averages if the S&P 500 Index (SPX) can recover its own 50 dma. WMT appears to have entered a clear down trend. I wouldn’t be surprised to see more weakness in WMT after a bit more consolidation below its 200 dma.
I’m going to start posting the signals generated from our Twitter sentiment indicator for individual stocks. As I noted in a post a few weeks ago that watching these signals can help you gauge the character of the market. Hopefully, you’ll enjoy the posts. International Business Machines (IBM) signaled at the close on Friday that a counter trend bounce was possible. Please note, this isn’t a buy signal. I don’t like buying stocks for a trade that are in a down trend so buy signals are only generated when a stock is in a clear up trend. If the general market (SPX) can get above its 50 day moving average then IBM will most likely bounce to its own 50dma. The last signal for IBM (in June) ended up with a .19% loss as the stock just couldn’t get any momentum, however it did manage to make it to its 50dma. Here are a few links that give more detail about trading stocks with Twitter and actual trading vs. signals.