In early May I mentioned that the conditions of our indicators gave a 60% chance that the sideways consolidation in the S&P 500 Index (SPX) was “normal rotation and profit taking that will result in higher prices when it’s done”. They also gave a 40% chance that an intermediate term top was in the works. In that post I also mentioned that various measures of breadth and risk “will need to break down if the market is going to correct”. These measures held up and SPX moved on to new highs. It looks like the odds played out correctly this time and market internals are getting back to normal…although reluctantly. One thing many bears have been mentioning is the number of new highs on NYSE being very low during May even though SPX was within a few percentage points of all time highs. That condition resolved itself this week. The one sign of breadth that has shown the most weakness over the past month is the ratio between SPX equal weight
Below is a chart with the bullish intensity scores for the stocks that have been able to maintain momentum with Twitter followers over the past three weeks. Here’s a chart of the stocks with the weakest (most bearish) intensity scores on Twitter.
Below are charts with the bullish and bearish intensity scores for the strongest and weakest stocks on StockTwits over the past two weeks.
Over the past week our Twitter Sentiment Indicator for the S&P 500 Index (SPX) rose sharply. The rise was a result of bears giving up once SPX had a strong close above 1900. In fact the move in price caused the intensity of bearish tweets to drop by half. The bullish tweets didn’t increase much which signals that the bears aren’t turning bullish, merely stepping aside. Until the bears turn bullish the market won’t have the fuel to push prices significantly higher. Support and resistance levels are slowly moving up with the market. However, the break above 1900 on SPX still isn’t bringing with it substantially higher price projections from traders on Twitter. Most of the bullish tweets are clustered between 1925 and 1930, with some fun being had by bears stating the highs of the year will be 1929. There are also a few scattered tweets near the 2000 level. Below the market 1910 is the only significant support. This is further evidence that the bears have stepped aside
The consolidation warning issued on 5/9/14 for the S&P 500 Index (SPX) from the StockTwits stream has closed. This suggests that the uptrend will continue. Smoothed StockTwits messages are reaching a fairly high level so we should be due for a pull back over the next week or two that will help us reestablish a trend in sentiment.
On 5/28/14 at the close a counter trend bounce signal was issued for Twitter (TWTR) from the Twitter stream. Please note because the stock is in a down trend this isn’t a buy signal. It merely suggests that TWTR is due for a bounce. Here are more details on how we use Twitter and StockTwits to trade stocks. The StockTwits community is also getting much more positive on TWTR and will most likely signal a counter trend bounce today (5/29/14) at the close.
The consolidation warning issued for the Nasdaq 100 index (QQQ) on 5/12/14 has ended. This was another bad signal for QQQ and continues to show how resilient the general market has been since the beginning of 2013.
Here’s some quick charts of QQQ and SPX with Twitter and StockTwits sentiment readings. QQQ is most likely going to close its consolidation warning today. The StockTwits community still has SPX on a consolidation warning and doesn’t like the sideways action over the past few months. Sentiment from the Twitter stream isn’t too impressed with the recent action either. However, the break above 1900 today is bringing some strong readings. As a result, sentiment will probably break its downtrend line and signal the resumption of the uptrend in the next day or two.
Today at the close a counter trend bounce signal was issued for Amazon (AMZN) from quantified StockTwits messages. The signal comes after a steep down trend in price that has a positive divergence from the StockTwits community. As you know, we don’t trade against the trend so if you give this a try you’ll need to be very quick to take profit.
The buy signals for Visa (V) and MasterCard (MA) over the past month were closed today (5/20/14). Both of them suffered small losses. The fact that there have been a lack of buy signals since the first of the year and the ones we’re getting are failing suggests that there isn’t momentum to push the market higher. Every buy signal from the first of the year has had a small loss (from -.37% to -4.66%). Meanwhile, three of the four short signals have been winners. Just another sign of how weak the underlying market is.