At the close on 10/31/13 a sell signal was issued for Oracle (ORCL). This signal comes after smoothed sentiment has been squeezed between a triangle that matches the triangle painted in price. Price hitting and stalling at the prevailing down trend line and sentiment breaking below the bottom of its triangle creates the sell signal. Please note the signal comes with price slightly above both the 50 and 200 day moving averages so there isn’t as much room for price to fall. In addition, this signal is against the market as a whole which decreases the odds of price falling substantially.
A consolidation warning was issued for the Nasdaq 100 (QQQ) at the close on 10/29/13. Smoothed sentiment has been painting a negative divergence with price for over a month. The last rally in price did not bring with it significant tweets cheering the move. The selling in some of the momentum stocks has been weighing on QQQ as well. Please note, this isn’t a sell signal, rather fair warning that QQQ may need a bit of time to consolidate before moving higher. This consolidation warning comes a week after the small caps (IWM) warned. Since that time IWM has been trading sideways even as the S&P 500 Index (SPX) has continued to move higher. This adds weight to the other indicators I’ve been seeing that suggest rotation out of the stocks that rallied over the summer into stocks that consolidated during that time. Although SPX is moving higher it is painting a negative divergence with sentiment from both Twitter and StockTwits. They haven’t issued consolidation warnings yet, but the negative
A consolidation warning was issued at the close on 10/30/13 for Yahoo (YHOO). The warning comes as sentiment has diverged from price since YHOO’s last move higher from its 50 day moving average. Sentiment has now broken its uptrend line and as a result is warning of some consolidation. You know by now I don’t trade against the trend, but offer the information for those of you who do. All I can say is be careful if you like to short momentum stocks because that type of trading can destroy a portfolio. Here’s the chart.
Below are the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 10/29/13.
Over the past week breadth of the 50 most active stocks on Twitter edged up a bit. The move was mostly a result of a few down trending stocks getting counter trend bounce signals and some cleared consolidation warnings from up trending stocks. The number of negative divergences between price and sentiment has built to 18% of the most active stocks. This suggests that the market as a whole is facing some headwinds as stocks move higher. Below are charts with the breadth indicator and the status of the most active stocks.
A buy signal was issued for Bank of America (BAC) at the close on Friday (10/26/13). The stock has been consolidating for three months with sentiment quantified from the Twitter stream mostly confirming the move lower. As the stock was making its last low near the first of the month, sentiment painted a positive divergence. This suggests that traders and investors on Twitter were accumulating the stock as it moved lower. The current dip in price comes with much higher sentiment readings that have broken the prevailing down trend line (which creates the buy signal). This is the third financial stock this month to generate a buy signal. Wells Fargo (WFC) signaled on 10/8/13 and Goldman Sachs (GS) signaled on 10/11/13. This adds a bit of weight to the signal as it appears that the financial sector as a whole is being bought after a long consolidation. Below are the current charts for WFC and GS which are still on buy signals.
A counter trend bounce signal was issued for JC Penney (JCP) at the close on Friday (10/26/13). After a long positive divergence with price, smoothed sentiment has now broken above the prevailing down trend line. The bullish tweets are overwhelming the bearish ones suggesting the stock has the possibility of a bounce. It is very far extended from moving averages and trend lines which increases the odds for a bounce. But who wants to try and catch this falling knife? Most of you already know my opinion…I don’t like to trade against the trend, but show the signals for those of you who do.
The counter trend bounce signal for Coca-Cola (KO) that was issued on 10/11/13 has been closed on 10/25/13. Sentiment generated from quantified tweets has broken its up trend line and suggests that the stock should continue its downtrend in price. There is some hope for the stock in that it has broken above the intermediate term down trend line, its 50 day moving average, and its 200 dma. A small consolidation at this level and a move higher is needed to make the chart more constructive. Of course, I’d like to see sentiment confirm the move too.