Below are charts with the bullish intensity scores of the most bullish stocks on Twitter for the week and month ended 11/26/13.
Our Twitter sentiment indicator for the S&P 500 Index (SPX) is exhibiting whiplash size moves on the daily indicator. Small moves in price in either direction are causing daily prints in both the +20 and -20 range. These are extreme readings for SPX and indicate that many traders on Twitter are simply responding to moves in price rather than making projections and trading accordingly. The volatile readings are also accompanied by intensity spikes which shows large segments of the herd shifting direction at the same time. The underlying intensity scores show a base of committed bulls and another base of skeptical bears, then a third group representing an additional 25% of intensity that is jumping back and forth between bullishness and bearishness. Smoothed sentiment is responding by moving up and down in short vertical pops and drops. This indicates there is volatility in the actions of market participants that is not accompanied by large moves in price. This creates an unstable foundation for the market and brings with it
Our core market health indicators bounced around a bit this month. Perceptions of risk rose a little, measures of the economy fell, and the other categories strengthened. Overall it was an improvement, but our measures of market quality didn’t rise enough to change our core portfolio allocations. We’re still 80% long in the long/cash portfolios and 90% long 10% short in the hedged portfolio. Below is a chart of the current condition of each health category.
The Twitter Top 10 portfolio gave up a bit of profit from last week, but is still up 4.16% from the first Friday of the month and 32.28% from the first Friday of the year. It is still outperforming the S&P 500 index. The out performance this month continues to come from 3D Systems (DDD) up 16.36% and Zynga (ZNGA) up 25.14%. The largest drag on the portfolio is from Walter Energy (WLT) down 13.28%. Below is a performance chart and details of the current holdings. Please note: prices are from roughly 10:45 AM Pacific. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 11/1/2013 $F 721 16.89 12177.69 17.09 12321.89 1.18% $DDD 193 63.01 12160.93 73.32 14150.76 16.36% $ZNGA 3405 3.58 12189.90 4.48 15254.40 25.14% $JNJ 130 93.37 12138.10 95.26 12383.80 2.02% $GE 459 26.54 12181.86 27.03 12406.77 1.85% $FSLR 293 59.14 17328.02 60.43 17705.99 2.18% $GILD 171 70.97 12135.87 74.39 12720.69 4.82% $WLT 707 17.24 12188.68 14.95 10569.65 -13.28% $GLW 711
Today the Federal Reserve minutes suggested that they may start to taper bond purchases sometime in the future. The market sold off on the news. I’m ignoring the news and the market’s move until Friday. Over my 30 years of investing and trading I’ve observed that the real direction of the market after Fed announcement doesn’t usually appear until the Friday after the minutes are released. The algos take over the first day, then it takes a day or two for money managers to decide how they want to be positioned in light of the news. If the market rebounds by Friday then there is a good chance the uptrend will continue. While a continued sell off will most likely mean more selling ahead. One thing to note about general market sentiment is that small moves lower in price are once again causing large shifts in sentiment. The chart of the Nasdaq 100 (QQQ) below illustrates the point. The underlying numbers show the bulls getting quiet while the bears are
The consolidation warning that was issued for Amazon (AMZN) on 10/10/13 has been cleared. This signal was a huge miss and illustrates two points that I often mention. The first is that trading against the trend will lower your batting average. The second is that the execution of a trade is much different than trade signals. A person who tried to short AMZN on this signal would have got a warning the very next day as the stock moved higher. A week later the stock gapped to new highs. This should have told anyone short the stock that the signal was a miss and consequently it was time to take the loss and wait for another opportunity.
Small cap stocks (IWM) have cleared their warning as of the close today (11/19/13). I’m still seeing weakness in some of our other indicators and the underlying tweets, so I’d wait for a break to new highs before giving the all clear signal.
Below are charts with the bullish intensity scores of the most bullish stocks on Twitter for the week and month ending 11/19/13.
Below are charts with the bearish intensity scores for the most bearish stocks on Twitter for the week and month ended 11/19/13.
Below are charts of the intensity scores for the most active stocks on Twitter for the week and month ending 11/19/13.