Below are charts with the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 3/18/14.
Below are the bearish intensity scores for the most bearish stocks on Twitter for the week and month ended 3/18/14.
Below are charts with the intensity scores for the most active stocks on Twitter for the week and month ended 3/18/14.
Below are charts with the bullish intensity scores for the most bullish stocks on Twitter for the week and month ended 3/18/14.
At the close on 3/14/14 the buy signal for Google (GOOG) that was issued on 8/20/13 was finally closed. This was a trade that just kept on giving and ended with a 35% gain. Sentiment has now broken below the trend that created the buy signal which officially closes the trade. We currently have only two buy signals left open which is another sign that the market may be forming a top. When long positions are being closed, consolidation warnings are starting to show up, and very few new long signals are being generated it suggests that traders on Twitter and StockTwits are getting cautious. The two open signals are Yelp (YELP) and Bank of America (BAC). Both of them are showing weakness and will need to rally quickly to save them from closing.
At the close on 3/14/14 a consolidation warning was issued for Netflix (NFLX) from the StockTwits stream. Smoothed quantified messages have been painting a negative divergence with price for several months and now it has broken below zero and a confirming up trend line. The signal comes when the stock is already 5% off its recent high so it may be late. Please note, this is not a sell signal. It is merely warning that the stock may need to consolidate before moving higher.
Over the past several weeks the StockTwits community, the Twitter stream, and market internals have been sending signs of weakness that suggest the market may be in the process of topping. As you know, I don’t like to make predictions about the future. Instead I make portfolio adjustments based on the current condition of market internals and other technical indicators expecting favorable odds over the long term. Here are some things I’ve noticed over the past three weeks that have indicated caution is warranted. On February 26th I posted a chart showing a lack of trade signals coming from the Twitter stream as the market was moving strongly out of a short term bottom. That was unusual behavior and suggested that traders weren’t supporting the most active stocks on Twitter. On the next day I posted a chart to Twitter and StockTwits that indicated volatility (VIX) should move higher based on quantified messages from StockTwits. After several weeks of confirming lower volatility the StockTwits community broke the trend with new
Over the past week our market health indicators dropped significantly. Most importantly our measures of market quality fell below zero. As a result, the Long/Cash portfolios will be raising cash by the end of the day. They will both be 40% long and 60% cash by the end of the day (3/14/14). Our hedged portfolio will be 70% long stocks we believe will out perform the market in an uptrend and 30% short the S&P 500 Index (or simply buy the ETF SH). There is small chance that we’ll raise even more cash or add a larger hedge if the market accelerates lower in the last hour of trading. Our measures of market trend are still positive, but could go negative before the end of the day. If that happens I’ll update the site and do a new post with the details. Below is a chart of our allocation changes over the past year. The green lines represent adding long exposure to the portfolios. The yellow lines represent raising cash
For the first time since tracking the Twitter Top 10 Portfolio it has dipped below the performance of the S&P 500 index (SPX). It had a very bad week and is down 5.86% over the period which was enough that SPX now out performs from the first Friday in 2013. The picks in the portfolio have had a hard time sustaining momentum since the beginning of the year. This could be giving us a signal about the market as a whole. When the most loved stocks can’t continue their march higher it suggests that traders and investors are raising cash or waiting for better prices before buying. I expect a momentum/relative strength/sentiment screen to outperform on up trends, but under perform at the beginning of down trends. As a result, the current weakness in the portfolio could be warning about a longer term top in the market. It will be interesting to see how it plays out. Below is a perfomance chart and details of the current holdings. Start Date