We’re pleased to announce that the Twitter and StockTwits indicators that have been featured on Downside Hedge over the past two years are now available to everyone at Trade Followers. The new site allows you to search among nearly 700 individual stocks and and ETFs then view the sentiment indicator (renamed Trade Followers Momentum) in easy to read charts. In addition, there are various lists that show the most bullish and bearish, upward and downward momentum, and more that are calculated from both StockTwits and Twitter. You can see the features the site offers here. One fun feature of the site is our ranking of the best people in finance to follow on Twitter. It has a search feature so you can see if you rank! Just put in the first few characters of your name or Twitter handle and press search. Even though the advanced features of the site are for premium members only, we’ll still do commentary on things we find interesting in the social media stock data
The consolidation warning issued on 7/11/14 for the S&P 500 Index (SPX) from quantified StockTwits messages has ended. This suggests that the worst is probably behind us and the path of least resistance is up. Please note the consolidation warning for SPX from Twitter is still open, but will most likely close in the next few days.
This week we saw more of the same. Our core indicators strengthened while ancillary indicators weakened. The only core indicator that got worse was our measures of risk. Early in the week they were showing more concern from market participants even as the market moved higher. Thursday did some serious damage to them and Friday only saw a partial recovery. So far they’re providing early warning, but no signals. It will most likely take another few weeks to shake out. One thing I follow that suffered a lot of damage this week is the relationship between high quality bonds (LQD) and junk bonds (JNK). While LQD appears to be painting a bullish flag, JNK is falling sharply. This suggests that bond owners are shifting money from risk (JNK) to safety (LQD). The events in Ukraine and Gaza on Thursday had LQD rising while JNK fell. Watch this relationship going forward because a shift in bonds often occurs before a flight to safety in stocks. Speaking of stocks, the symbols I
At the close today (7/15/14) a consolidation warning was issued for Microsoft (MSFT) from Twitter sentiment. Please note: this isn’t a sell signal simply warning that support from traders on Twitter is falling.
Last week’s market action didn’t affect our core health indicators too much, but many of the ancillary indicators I watch suffered some damage. While the market looks healthy on the surface there are enough indicators warning to suggest the worst isn’t behind us yet. Currently we have a tale of two markets. Although our core health indicators are positive most of them have weak enough readings that they could turn negative over the next few weeks. However, this would be very unusual given the fact that many of them turned positive just last week. Generally, when all of them move above zero they stay there for at least two months. Weakness in these indicators will provide significant warning. Another indicator that is telling two stories is our core measure of risk. It is still showing low perceptions of risk, but just came out of an overbought condition. This often marks the beginning of corrections larger than 10%. Momentum stocks are also acting indecisive. Many of them have had good runs over
The Twitter Top 10 portfolio fell with the market this week. Many of the momentum names fell, but Apple (AAPL), Facebook (FB), and BlackBerry (BBRY) held up. There are still a lot of good looking charts so it’ll take another week or two before we’ll know if this was simply some profit taking or the beginning of something more serious. 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 7/3/2014 $AAPL 120 94.03 11283.60 95.08 11409.60 1.12% $TWTR 279 41.33 11531.07 38.54 10752.66 -6.75% $FB 174 66.29 11534.46 66.48 11567.52 0.29% $TSLA 50 229.25 11462.50 218.53 10926.50 -4.68% $BBRY 1087 10.61 11533.07 11.41 12402.67 7.54% $GOOG 20 584.73 11694.60 578.27 11565.40 -1.10% $SCTY 161 71.34 11485.74 66.56 10716.16 -6.70% $DDD 187 61.62 11522.94 57.24 10703.88 -7.11% $PLUG 2551 4.52 11530.52 4.24 10816.24 -6.19% $GMCR 90 125.24 11271.60 122.04 10983.60 -2.56% Cash 136.03 136.03 Totals 114986.13 111980.26 -2.61%
Over the past week the StockTwits Top 10 portfolio fell sharply. The drop was a result of heavy selling in momentum stocks. It looks like traders are very quick to take profits. This should be taken as warning that market participants are still reeling from large losses in momentum names during the early months of the year. On the bright side, many of the stocks in the portfolio this month look like they’re simply consolidating after very strong runs or breaking out to new highs. Many of the charts still have very constructive patterns. 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 7/3/2014 $TWTR 254 41.33 10497.82 38.46 9768.84 -6.94% $SCTY 147 71.34 10486.98 66.34 9751.98 -7.01% $DDD 170 61.62 10475.40 57.1 9707.00 -7.34% $MU 355 33.73 11974.15 32.77 11633.35 -2.85% $AMD 2586 4.24 10964.64 4.37 11300.82 3.07% $GMCR 83 125.24 10394.92 121.35 10072.05 -3.11% $SPWR 296 39.90 11810.40 38.44
Sentiment (soon to be renamed momentum) from both Twitter and StockTwits for the S&P 500 index is currently painting a negative divergence from price and at the same time staying above a confirming uptrend line. A break from the resulting triangle should point the next short term direction for the market.
If you think this is the start of a larger correction now is the time to start looking at stocks that have been weak on StockTwits and Twitter. Below are the stocks with the most weakness over the past week.
Just a quick update this weekend. As the market pushes higher sentiment from the Twitter stream continues to diverge. We’ve got a good upward sloping confirming trend line in smoothed sentiment that if broken will warn of possible consolidation ahead. But as long as smoothed sentiment stays inside the triangle currently being painted or breaks above it odds favor higher prices. Support and resistance didn’t change as traders have gone pretty quiet this summer. Support is at 1925 on the S&P 500 Index (SPX). Resistance is at 2000, but almost no one is talking about that level any more. Sector sentiment is finally showing some weakness in Consumer Staples which suggests some of the rotation to safety is over. This is another positive for the market. Overall, it’s the same story I’ve been telling for weeks so we can expect more marginal new highs followed by a period of chop.