Over the past week the StockTwits Top 10 Portfolio took a pretty big hit. It was down 3.53% compared to the S&P 500 Index which only fell 1.7%. This is fairly normal behavior for a portfolio based on a relative strength / momentum / sentiment indicator and makes picks based on data that lags up to a month. Each month the picks are selected from the stocks that have the most support from the StockTwits stream over the previous month. As a result, stocks making short term tops are often selected. This is why I don’t recommend mechanical trading/investing. Instead, this portfolio is designed to illustrate that stocks with a lot of support in the StockTwits community are a good starting point for possible trades and portfolio selection. Below is a performance chart and details of the current holdings. The portfolio is up 3.3% from the first Friday of the month. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 3/7/2014 $ZNGA 1919
The sell signal issued for Emerging Markets (EEM) on 3/12/14 has ended. Because this signal was issued so close to the end of the apex of a triangle in smoothed sentiment it didn’t have much room to navigate. This is the type of trade that highlights the difference between a trading signal and real life trading. After the sell signal the ETF has chopped around and hasn’t picked a direction yet. As a result, if I had conviction that emerging markets are likely to fall then I’d wait until EEM points clearly higher before closing the trade. As of the close on Wednesday the trade was up 2.2% so there is some room to wait without risking much money. But as always it’s your money so you must make the decision on your own.
At the close on 3/11/14 a consolidation warning was issued for Yelp (YELP) from quantified StockTwits messages. Please note, this is not a sell signal. Merely warning that the strong support from the StockTwits community for YELP is waning. As the stock moved higher support diverged from price and has now fallen below the uptrend line in quantified messages that had been confirming the higher prices. This warning suggests that YELP needs some time to consolidate recent gains before it can continue its up trend. As a side note, the buy signal issued for YELP on 12/12/13 based on quantified tweets from the Twitter stream is still open…but just barely. I suspect it will end at the close tomorrow unless YELP recovers strongly.
Below are charts with the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 3/11/14.
Below are charts with the bearish intensity scores for the most bearish stocks on Twitter for the week and month ended 3/11/14.
Below are charts with the intensity scores for the most active stocks on Twitter for the week and month ending 3/11/14.
Below are charts with the bullish intensity scores for the most bullish stocks on StockTwits for the week and month ending 3/11/14.
Over the past week I saw improvement in almost all of the indicators I follow. However, the improvement was somewhat tepid. The indicators paint a picture of market participants willing to nibble and take small risks, but not expecting a lot of upside over the near term. Market breadth continues to improve on the headline numbers, but individual charts show a much more delicate picture. This isn’t a problem for now, but something to watch closely if the market pauses or dips. If a retracement back to the 1850 to 1800 level on the S&P 500 Index (SPX) brings with it a sharp decline in the percent of stocks above their 200 day moving average and the bullish percent index it will be a warning sign that the intermediate term trend is changing. A retracement without a sharp decline in breadth will indicate that the weak hands were shaken out during the dip in January and buyers are stepping up. Breadth is the indicator I’m watching most closely this coming
Over the past week all of our market health indicators strengthened except for our measures of the economy. None of them moved enough to change our core portfolio allocations. Our measures of market strength are increasing fast enough that there is a good chance of adding more exposure if the trend continues into next week. Below is a chart with the normalized values of our indicator categories.