I’ve finally collected enough data from the StockTwits stream to create a StockTwits Top 10 portfolio. It is similar to the Twitter Top 10 portfolio, but has a few differences.
First, (and most obvious) it only uses quantified StockTwits messages to select the stocks each month. The Twitter portfolio uses quantified tweets that can contain messages pushed to Twitter from some StockTwits members.
Second, I use a smaller set of about 100 stocks as the starting point for the StockTwits portfolio. The Twitter portfolio selects from about 1000. As a result, the StockTwits portfolio will be weighted to more well known stocks.
The rules for stock selection are simple. On the first Friday of every month the ten stocks with the highest bullish intensity scores from the previous month are placed in the portfolio. Basically, the system picks the stocks that people on StockTwits are buying, messaging bullish fundamental or technical analysis, or mentioning in a positive way. The underlying theory is that these stocks should provide a good starting point for stock selection. The Twitter portfolio beat the S&P 500 Index by 9% last year.
Here are the symbols that will be in the portfolio at the close today (1/3/2014).
SCTY, BAC, YHOO, BIDU, GRPN, MA, WLT, CELG, YELP, GMCR
Here are the next five symbols that had high bullish intensity scores.
ZNGA, CLF, SPWR, C, GILD
One final note, I’m not recommending this as a strategy. Mechanical investing makes almost every mistake possible for a trader (buys stocks in clear down trends, buys stocks extremely extended from moving averages, buys sectors that are peaking, and more) so please don’t follow it blindly. This is intended to be an illustration of how beneficial social media can be to a trader or investor in stock selection…not the timing of purchases.