A consolidation warning from Twitter sentiment was issued for Wells Fargo (WFC) at the close on Friday (1/17/14). The warning is a result of smoothed sentiment breaking its up trend line after diverging from price for over two months. The declining sentiment indicates a lack of support from traders and investors on Twitter as the price moved higher. Negative tweets have now overwhelmed the trend of positive tweets. If you have a long trade on this stock, now would be a good time to start watching it carefully and either take some profits or at least start managing the trade with stops. Please note: This is not a sell signal because the stock is above moving averages and is in a clear up trend. This is merely warning that price could consolidate before moving higher.
Over the past week our Investor Contentment index painted a very high reading. It is on par with the readings seen during the first three weeks of 2013 when investors were putting new money to work and saw no reason for the market to fall. Market internals are confirming the actions of investors with almost all of the technical indicators that I follow showing healthy signs. This paints a picture of a market where participants are content to hold current positions and see little reason to worry. Our Twitter Sentiment indicator for the S&P 500 Index (SPX) is showing a healthy number of bulls and mostly silent bears. When the market fell sharply on Monday the intensity of bullish tweets did not fall below levels of the previous week. Bearish tweets increased, but not enough to create a strong negative print on a daily basis. When the market rallied back on Tuesday and Wednesday, then held steady on Thursday, the bullish intensity rose only slightly. However, the bearish intensity dropped
Over the past week all of our core health indicators improved even as the market consolidated. The worst that can be said about this market is that some of our indicators are starting to show over bought readings. However, over bought conditions can persist for a long time so all we can do is watch for them to turn back down. Another interesting point is that perceptions of risk are very low. This is positive for the market. This is one of the things most market participants get wrong. They believe that if everyone is bullish and measures of risk like the Volatility index (VIX) are low the market should fall. The problem with this belief is that those signals are almost never timely. Sentiment can stay high and VIX can stay low for a long period of time before the market corrects. I look for dramatic changes in those types of indicators, not a specific value to warn that the market may fall. Below is a chart of our
The Twitter Top 10 Portfolio is squeaking out a small gain over the past two weeks while the S&P 500 index (SPX) is slightly up. The big winner in the portfolio is Solar City (SCTY) up 27.7%. The drags on the portfolio are Himax Technologies (HIMX) down 7.6%, 3D Systems (DDD) down 6%, and Groupon (GRPN) down 9.6%. Below is a performance chart and details of the current holdings. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 1/3/2014 $HIMX 925 14.63 13532.75 13.52 12506.00 -7.59% $MA 16 830.81 13292.96 823.31 13172.96 -0.90% $DDD 140 96.42 13498.80 90.68 12695.20 -5.95% $BIDU 77 168.71 12990.67 170.69 13143.13 1.17% $YHOO 335 40.12 13440.20 39.96 13386.60 -0.40% $SCTY 228 59.27 13513.56 75.71 17261.88 27.74% $CELG 79 169.81 13414.99 168.19 13287.01 -0.95% $LVS 172 78.35 13476.20 81.64 14042.08 4.20% $GRPN 1120 12.08 13529.60 10.92 12230.40 -9.60% $KNDI 1018 13.29 13529.22 13.70 13946.60 3.09% Cash 437.08 437.08 Totals 134656.03 136108.94 1.08%
The StockTwits Top 10 Portfolio picked up another percentage point this week. It is now up 3.37% for the month (and year). The gains are a result of strong runs by Solar City (SCTY) up 27.8% and Yelp (YELP) up 21.6% in the past two weeks. Groupon (GRPN) and Walter Energy (WLT) are the current drags on the portfolio down more than 9% and 11% respectively. Below is a performance chart and details of the current holdings. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 1/3/2014 $SCTY 168 59.27 9957.36 75.79 12732.72 27.87% $BAC 620 16.41 10174.20 17.08 10589.60 4.08% $YHOO 249 40.12 9989.88 39.98 9955.02 -0.35% $BIDU 57 175.28 9990.96 170.37 9711.09 -2.80% $GRPN 828 12.08 10002.24 10.97 9083.16 -9.19% $MA 12 830.31 9963.72 825.62 9907.44 -0.56% $WLT 626 15.98 10003.48 14.16 8864.16 -11.39% $CELG 58 169.81 9848.98 167.96 9741.68 -1.09% $YELP 148 67.66 10013.68 82.29 12178.92 21.62% $GMCR 132 75.75 9999.00 79.92 10549.44 5.50% Cash 56.5 56.50 Totals 100000.00 103369.73
Once again the market rallied up to a Twitter resistance level and then paused. Take a look at the chart below and you can see a clear resistance level at 1850 on the S&P 500 index (SPX). It has been in place since November of last year which makes this level very important. Below the market the 1825 and 1800 levels have a layer of support, but not as solid as the resistance at 1850. Now that the market has sold off and recovered the 1800 level the odds favor a break higher because the small dip relieved some selling pressure. One thing to note is that there are very few tweets calling for prices above 1850 or below 1800. Traders are still waiting in the range (or playing it). They need a reason to move above or below it. Over the past week there have been a couple of reasons to break lower, but the bears couldn’t get it done. The way the market is reacting to bad news
The counter trend bounce signal that was issued for JC Penny (JCP) has been closed. This is a good illustration for traders that like to try to catch bottoms. Both of the bounce signals over the past year for JCP ended with small gains (5.5% and 2%) when tracked from signal to signal. However, during the signal period the stock rallied more that 20% in the first instance and over 30% on the second before rolling back over. Counter trend bounces are often strong, but the trade has to be managed to capture large gains.
Below are charts with the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 1/14/2014.
Below are charts with the bearish intensity scores for the most bearish stocks on Twitter for the week and month ending 1/14/2014.
Below are charts with the intensity scores of the most active stocks on Twitter for the week and month ending 1/14/14.