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Lack of Trade Signals Shows Uncertainty

140430spx

Since the first of the year the number of long trade signals from Twitter and StockTwits sentiment trend have dropped dramatically.  On the chart below the green lines are long signals and red lines are short signals. For those of you who haven’t seen it here’s a post that outlines how we trade the trend of sentiment from Twitter and StockTwits.  Generally we see long signals after the market has fallen and starts to rebound, but the two dips this year haven’t created them (the signal at the bottom in April was for silver (SLV) so it can’t really be counted as a good sign for the market). The lack of long signals indicates that stock charts are being broken and also that traders on Twitter and StockTwits are chasing rather than anticipating trades as stocks are falling.  With the number of momentum stocks that are extended far below their moving averages I’d expect to at least start to see some counter trend bounce signals.  But for the most part

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Strongest Stocks on Twitter

Published on April 29, 2014 by in Market Comments
140429TwitterStrongWeek

Below are charts with the strength scores for the strongest stocks on Twitter for the week and month ending 4/29/14.  

 
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Strongest Stocks on StockTwits

140429StockTwitsStrongWeek

Below are lists with the strength scores of the strongest / most bullish stocks on the StockTwits stream over the last week and month (ending 4/29/14).  

 
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Social Media Breadth Remains High

140428TwitterBreadth

Last week breadth from both Twitter and StockTwits bounced around a bit, but continues to remain at fairly high levels. However, the underlying numbers are starting to show some cracks. Breadth from Twitter rose, but the increase comes from a falling number of stocks in the strongest/bullish list and a decrease in the number of weak/bearish stocks too.  This suggests that traders on Twitter are getting more selective on both the long and the short side. Breadth from StockTwits fell a bit as a result of the number of stocks in the bullish list falling and the number of stocks in the bearish list rising.

 
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Chasing and Whipsaws

140427VIXrVXVdaily

Over the past week we got more of the same from the indicators I follow.  The market chopped around and our indicators had a slight decline.  Market participant appear to be chasing price and being whipsawed by choppiness.  This action is showing up in market internals.  An example  is the ratio between near term volatility (VIX) and mid term volatility (VXV).  On a daily chart it moved above 1.0 signalling caution right at the low of the last dip.  Then when it moved back below .9 (usually signalling “all clear”) the market lost momentum and looks to be rolling over again. The weekly chart of VIX vs. VXV shows two caution signals (above 1.0) since the first of the year that occurred on small dips in price. In addition, both VIX and VXV are making lows above all of the 2013 lows.  This indicates not only increased caution by market participants, but a bit of skittishness.  It is reacting much the same as measures of breadth that I’ve mentioned since

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Slight Dip in Market Health

Published on April 25, 2014 by in Featured
140425MarketHealth

Over the past week we had a slight deterioration in our core market health indicators. The only improvement came from our measures of the economy.  Those indicators are very close to moving above zero so further improvement in the economy will most likely have us decreasing our hedge and adding long stock exposure next week. One thing to note about the current consolidation is that our measures of market risk are staying quite a ways away from a warning signal.  This indicates that market participants aren’t making decisions out of extreme fear. Instead, what I’m seeing is a move away from risky stocks to safety.  The rotation is the cause of the current choppy consolidation in the S&P 500 Index (SPX).  As I’ve mentioned before, the current status of our indicators has a high probability (65%) that the market will fall or continue to chop for an extended period of time.  As a result, we’ve got a moderately large hedge in place. The cash portfolios are 80% cash and 20%

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Twitter Top 10 Still Falling

140425Twitter10

The Twitter Top 10 Portfolio continues to fall. It is down 3.82% this month lagging the S&P 500 Index (SPX) badly. The under performance is a result of three momentum stocks in the portfolio that are getting hit hard. They are Himax Tech (HIMX) down 24%, Kandi Tech (KNDI) down over 14.5%, and Green Mountain Coffee (GMCR) down over 10%. Baidu (BIDU) is the only stocks out performing this month, up nearly 9%. 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 4/4/2014 $MSFT 292 39.87 11642.04 39.95 11665.40 0.20% $HIMX 1021 11.43 11670.03 8.69 8872.49 -23.97% $GTAT 761 16.90 12860.90 16.00 12176.00 -5.33% $QCOM 148 78.53 11622.44 77.45 11462.60 -1.38% $BIDU 73 149.35 10902.55 162.69 11876.37 8.93% $KNDI 687 14.08 9672.96 12.02 8257.74 -14.63% $F 724 16.13 11678.12 15.78 11424.72 -2.17% $AA 925 12.63 11682.75 13.27 12274.75 5.07% $K 183 63.77 11669.91 66.61 12189.63 4.45% $GMCR 113 102.99 11637.87 92.40

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StockTwits Top 10 Recovers

140425Twits10

The StockTwits Top 10 Portfolio recovered this week. It is now even with the S&P 500 Index (SPX) for the year. The recovery is mostly a result of the out performance of Micron Technology (MU) up over 12% and a good bounce in SunPower (SPWR) up nearly 7% this month.  Currently the only laggard is JPMorgan Chase (JPM) down over 6.5%. 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 4/4/2014 $AMD 2712 4.01 10875.12 4.11 11146.32 2.49% $MSFT 237 39.87 9449.19 39.98 9475.26 0.28% $MU 419 22.58 9461.02 25.43 10655.17 12.62% $AA 881 12.63 11127.03 13.3 11717.30 5.30% $F 587 16.13 9468.31 15.82 9286.34 -1.92% $Z 104 91.00 9464.00 94.91 9870.64 4.30% $T 282 33.55 9461.10 34.5 9729.00 2.83% $JPM 158 59.81 9449.98 55.85 8824.30 -6.62% $GE 410 26.13 10713.30 26.65 10926.50 1.99% $SPWR 296 31.93 9451.28 34.08 10087.68 6.73% Cash 56.56 56.56 Totals 98976.89 101775.07 2.83%

 
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End of Consolidation Warning for S&P 500

Published on April 23, 2014 by in Market Comments
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The consolidation warning for the S&P 500 Index (SPX) on 4/14/14 has been closed. As I mentioned in the 4/14 post the warnings have been coming late over the past several months due to chasing and uncertainty from traders on Twitter. The 2013 theme where market seems to get right to the edge and then rallies looks like it might be continuing. A move above the recent highs would be a big positive for the market.

 
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End of Counter Trend Bounce Signal for Silver

140422slv

The counter trend bounce signal for Silver (SLV) issued on 4/14/14 has been closed. This is another recent long signal that just couldn’t get any momentum.

 
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