When markets rally strongly almost everything goes up with them. That has certainly been the case with this current rally. Over 90% of stocks in the S&P 500 Index are above both their 50 and 200 day moving averages. So if you’ve been making long trades you probably feel like a genius. Of the stocks well follow and trade with Twitter sentiment almost every long trade with the trend over the last two months is in positive territory. This is what happens in fast moving up trends so we’re not patting ourselves on the back. We know that a pull back will happen eventually and the success of our trade signals will eventually be tested by lower prices. Today’s price action in the major indexes hints that we might finally be getting the price reversal that many bears have been waiting for. With that in mind we thought it would be a good time to show some of the long trades that we’ve mentioned on Twitter @DownsideHedge over the past
Below are the bearish intensity scores for the most bearish stocks on Twitter over the past week and month.
Once a week we take a close look at the fifty most active stocks on Twitter and determine the status of their chart patterns relative to Twitter sentiment. Going forward we’ll show the results in a pie chart in our Tuesday posts about the most active stocks on Twitter. Today we’ll do it early and show you some example stock charts so you can see what each category in the pie chart means. Please note that we don’t show every chart here at Downside Hedge. However, if the status of a stock changes we almost always post it to Twitter @DownsideHedge so if you’re interested in every change all you have to do is follow us. Currently 72% of the top 50 active stocks have bullish chart patterns. The positive chart patterns are categorized as follows: Confirmed Uptrend, Counter Trend Bounce Possible, and Negative divergence. We consider a negative divergence a positive chart pattern because stocks often clear over bought readings by having sentiment diverge while the stock trades sideways
Over the past week all of our core market health indicators improved, however, none of them improved enough to change our core portfolio allocations. Market Positives We continue to see price move higher in the S&P 500 Index (SPX) while perceptions of risk go lower. Our measures of risk are signalling that investors and traders have little long term concern. Our measures of the economy, market quality, trend, and strength all improved late this week, while measures of market breadth are at historical levels. This signals that even reluctant buyers are entering the market. Our investor contentment index shot substantially higher over the past two weeks which is another sign of money flowing into stocks. Our Twitter sentiment indicator for the S&P 500 Index (SPX) is painting moderately high readings on up days and fairly flat reading on down days. This is a positive sign for a market making new highs. Even though there continues to be a very large number of tweets concerned with overbought conditions there are enough
Our Twitter Top 10 portfolio had another good week. It is up 4.62% from the 3rd of this month and up 28.34% from the beginning of the year. 3D Systems (DDD) and Ford (F) are the big winner so far this month with gains of 16% and 9% respectively. All the other holdings are up between 1% and 4%. Below are a performance chart and details of the current holdings. Prices as of about 2:45 Eastern on 5/17/2013. Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss 5/3/2013 $LNKD 71 175.59 12466.89 182.65 12968.15 4.02% $DDD 315 39.88 12562.20 46.56 14666.40 16.75% $F 903 13.83 12488.49 15.07 13608.21 8.97% $UPS 130 86.09 11191.70 88.49 11503.70 2.79% $HOT 173 65.21 11281.33 67.38 11656.74 3.33% $JNJ 146 85.75 12519.50 87.81 12820.26 2.40% $SBUX 203 61.87 12559.61 63.78 12947.34 3.09% $COH 216 58.25 12582.00 59 12744.00 1.29% $KO 298 42.24 12587.52 42.68 12718.64 1.04% $V 68 179.54 12208.72 183.52 12479.36 2.22% Cash 229.54 229.54 Totals 122677.50
Over the last three months we’ve seen nothing but chasing by traders in Apple (AAPL). Our Twitter sentiment indicator for AAPL has almost exactly mirrored the movements in the price of the stock. When this happens it is usually a result of the the majority of the Tweets simply referring to the movement in price rather than some “rational” reasons that the stock should move either up or down. In addition, we see a lot of tweets from traders stating that they’re buying or selling in the direction the stock is moving. Today was one of those days where AAPL started to sell off and sellers just piled on as the day went by. The intensity of tweets spiked as people talked about their selling and made other negative comments about the stock. This isn’t a good sign as it is continuing the pattern of the entire down trend where twitter intensity dries up when the stock rallies and spikes when the stock moves down. Short story, people are more