During the recent consolidation in the market we became concerned that we weren’t seeing a lot of positive divergences or buy signals from Twitter sentiment. Unlike the small dip in April which created several good long setups, the larger consolidation and retracement rally in May and June didn’t produce any. Our concern was that the general market was moving higher, but actively traded and momentum stocks weren’t being bought with conviction (as evidenced by sentiment on the Twitter stream).
That situation now appears to be resolving itself. Over the past few days we’ve had three long setups. Those setups come just behind a reconfirmation of the uptrend from sentiment for the S&P 500 Index (SPX) and the Russell 2000 index (RUT). This is a positive sign for the market going forward as it shows widely held individual stocks supporting the rally.
Below are charts of the three recent buy signals (green vertical lines indicate the setup date). All of them are now getting extended and close to their all time highs at the same time as SPX is closing in on all time highs as well. There is a good chance they’ll stall for a few days or a week near present levels (along with SPX). For those of you who are traders, this could provide an opportunity. As always do your own homework. Don’t just buy these stocks because we posted them. Remember, our buy signals are meant to be a starting point for your own research. We mean for them to provide you with notice that the people who are bullish on the stock are starting to overwhelm the bears. When this occurs it increases the probability that the stock has finished consolidating and the prevailing trend is continuing.
Please note, we don’t post every sentiment setup here, but we do put all the buy and sell signals on Twitter @DownsideHedge. In addition, we also post random observations about the market during the day on Twitter. You don’t have to know anything about Twitter to see those comments. Just click the @DownsideHedge link.
Walt Disney is the first chart (DIS).
Google (GOOG) is next.
And last is Exxon Mobile (XOM).