Currently, 70% of the 50 most active stocks on Twitter are showing bullish chart patterns, while only 14% are showing bearish patterns. This is in contrast to last month when we saw the highest number of stocks ever warning of consolidation. Please note that the most active stocks on Twitter should have a positive bias simply because people tend to talk more about winners than losers.
Although the vast majority of charts looked good and had sentiment confirming in one way or another, we did see quite a few stocks that are still well below their last high. This is a bit troubling considering the S&P 500 Index (SPX) is sitting at a new high today. Michael Kors (KORS), Morgan Stanley (MS), and Ford (F) are some examples.
Yesterday we posted a video about how we trade stocks using Twitter sentiment along with a chart of Goldman Sachs (GS) as an example. Here are a few more examples from recent days.
eBay (EBAY) provides a good example of a consolidation warning that was cleared within just a few days. This is the reason we only tighten stops or take profit from stocks in an uptrend that are warning of consolidation.
Michael Kors (KORS) is an example of a stock in a long term uptrend that provided a buy signal near its 200 day moving average. In addition, it show how far some stocks are away from their last peaks when SPX is trying to break above 1600.
Qualcomm (QCOM) is a good example of a stock with a consolidation warning. It currently has the potential to flip to a buy setup with a positive divergence in sentiment near an uptrend line for price. It still needs some time to complete the pattern as we like to see sentiment diverge from the stock price for over 3 weeks or a month before sentiment breaks higher.