Since mid April we’ve seen a bit of bottom fishing among the 50 most active stocks on Twitter. We currently have four stocks with counter trend bounce signals in place. Each of those stocks have rallied to moving averages (50 and 200 day) and also down sloping trend lines. This is a point where people who are bearish on the stocks should be selling them short. This creates a battle between the longer term investors who are picking up the stocks as they fall and bears who sell every bounce off the underside of moving averages. By watching these battles we can learn about the underlying strength of the general market. If the current rally is near a turning point we would expect to see more short selling in the market. In addition, the stocks that are being sold should fall and continue their long term down trends. For a general view we like to compare a short of the S&P 500 Index (SH) against an actively managed bear fund
Over the past week our core market health indicators fell slightly, but we made no changes to our core portfolios. The details are in this post. We’re seeing a battle between event risk and market internals. Overall our measures of market health and internal structure are constructive, while our measures of risk are signalling skittishness by investors. The S&P 500 Index (SPX) held up fairly well last week in the face of several market scares. It seemed like every day brought some new rumor that drove the market up and down. But when the dust settled SPX only gave up a little over one percentage point. Meanwhile measures of intermediate term breadth like the percent of stocks above their 200 day moving average and the bullish percent index still have very healthy readings. Looking at market internals this appears to be a garden variety consolidation. We’re not seeing any real damage under the covers as price pulls back. SPX has held a critical support level near 1600 and bounced twice
Over the past week our core market health indicators slipped a bit. The most notable weakness came from market risk. On Wednesday and early Thursday our market risk indicator got fairly close to a signal, then pulled back as the market rallied. As noted earlier in the week, all but one of its components is now negative and any acceleration in the market to the downside (probably through 1600 or 1575 on a weekly basis) will most likely trigger a signal. Our measures of the economy are staying flat, but trying to recover. Our measures of quality dipped slightly, measures of trend are showing weakness, and measures of strength are holding up. Overall, the market looks healthy to us, but the skittishness showing up in market risk puts us in a position where we’re watching closely. We still suspect that if we raise cash or add hedges it will be a result of our market risk indicator rather than market internals. We made no changes to our core portfolios over
Just as we suspected when we saw the picks for the portfolio this month, a thinking person would have skipped Celsion Corp (CLSN). It is down 21.43% in just a week. This is a great example of one of the limitations of mechanical investing and the reason we try to warn about stocks we’d skip for our own portfolio. It is a good reminder for you to always think for yourself…and never follow any investment strategy blindly. Overall the portfolio is down 4.74% for the month, but it is still up 20.8% from the first Friday of the year. Below is a performance chart and details for the current holdings. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 6/7/2013 $BAC 940 13.38 12577.20 13.08 12295.20 -2.24% $GS 75 166.01 12450.75 164 12300.00 -1.21% $F 903 15.73 14204.19 15.45 13951.35 -1.78% $CSCO 513 24.49 12563.37 24.18 12404.34 -1.27% $C 243 51.6 12538.80 48.49 11783.07 -6.03% $KORS 200 62.69 12538.00 60.81 12162.00 -3.00% $CLSN
On Twitter @DownsideHedge we tweet all the trade signals generated by our Twitter sentiment indicator for individual stocks. We tweet long signals, when a long position is closed, short signals, and when the short is closed. In addition, we also mention any consolidation warnings and when they’re cleared as well as counter trend bounce signals and their corresponding signal that the down trend is likely resuming. For official tracking purposes we use the closing price of the day we get a signal. However, in real life we don’t rigidly follow the signals. As we’ve mentioned many times before you must use your own judgement and not blindly follow the trade signals…ours or anyone else. Today we had an example of a signal that closed a long position on Citigroup (C). However, in real life we wouldn’t sell our stock simply based on the Twitter indicator. When we posted the signal we tweeted that we’d give the trade more room. Please note the market and Citigroup were pretty close to being
As intermediate to long term investors we often ignore the daily gyrations of the market. We don’t pay a lot of attention to what happens during the day because most of the time it just doesn’t matter. In fact, a lot of times we’re flat out bored and have difficulty finding things to talk about. Our days are usually filled with waiting for weeks on end for something that changes the underlying technical structure of the market enough to change our portfolio allocations. Those changes are usually in small increments so they’re boring events too. I’ll even make the confession that I don’t have CNBC or Fox Business on TV during the day. I have Fast Money in my DVR, but only because it runs an hour after the market closes so it covers earnings announcements. Long story even longer, most of the time what we see on a daily basis is irrelevant. However, once in a while we get near an inflection point where things can get exciting very
We mentioned over the weekend that our smoothed sentiment indicator for the S&P 500 index (SPX) would create a buy signal if it moved above its current down trend line. That criteria was met today suggesting that the market should continue to move higher. We see this as confirmation of the clearing of the consolidation warning from late April. Basically, the signal in late April (blue vertical line) suggest a resumption of the uptrend after a period of consolidation (red vertical line). Please note that we weren’t encouraged by today’s price action in SPX so we’re a bit leery that this may be a whip saw. However, our intent is to show all signals even if we’re frightened by them. At the time of this writing we have a very low reading on daily sentiment for 6/12 which will turn smoothed sentiment down at the close on 6/12 if it doesn’t improve. So far this week traders aren’t predicting prices below 1597 so it appears people are looking for
Below are charts of the bullish intensity scores for the most bullish stocks on Twitter for the week and month ending 6/11/13.
Below are charts with the bearish intensity scores for the most bearish stocks on Twitter for the week and month ending 6/11/13.
Below is the status of the most Active stocks on Twitter. Here’s a post that explains our Stock Status Categories. The next two charts show the intensity scores for the the most active stocks on Twitter for the week and month ending 6/11/2013.