Monthly Archives: July 2014

Weakest Stocks on StockTwits 1 Week

Below is a chart of the stocks with the least support and most negative comments on StockTwits over the past week. If you think the market is going to fall further this list is a starting point for short candidates. Premium members will also want to look at our list of the stocks with consistent negative momentum on StockTwits and Twitter where you’ll find a lot of stocks in long term down trends for short candidates. For stocks breaking down from highs look at the watch list of stocks entering most bearish lists (1 day, 1 week, 2 weeks, etc).

140731StockTwitsWeak

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Strongest Stocks on Twitter

Below is a chart of the strongest and most bullish stocks on Twitter for the three weeks ending 7/29/14. Notice that momentum stocks are back in the list. This is one positive sign for the market as traders are starting to take risk again. Also notice Alcoa (AA), Chipotle (CMG), Goldman Sachs (GS), and Intel (INTC) getting a lot of attention. These stocks represent a good cross section of the economy and also adds some positive influence to the market.
140730TwitterStrong

 

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Green Mountain Coffee On The Edge

The StockTwits and Twitter streams are showing a serious divergence in their respective support for Green Mountain Coffee (GMCR). In both the short and intermediate term traders on Twitter are showing very strong support for GMCR. However, that support is lacking on StockTwits. In fact, the StockTwits community is negative on the stock in the short term.

140728gmcr

7 Day momentum for GMCR from StockTwits has broken below its confirming up trend line, but Twitter momentum is still holding trend. If it breaks it will signal that GMCR will need some time to consolidate.

gmcr

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Gold at Inflection Point

Gold (GLD) leads the list of the weakest stocks on StockTwits over the past two weeks. This weakness is a result of a consolidation after a rally out of long term lows. Friday’s daily print of StockTwits momentum removed GLD from the 1 Day Weakest list. This is a positive sign and puts GLD at an inflection point.

140728STWeak

 

In early June I posted an update of our gold chart at Downside Hedge. In that post I suggested that the worst may be over for GLD. After that post GLD rallied above its long term down trend line, and both the 50 and 200 day moving averages. It is still above the 200 dma and the long term down trend line as well as a newly formed intermediate term up trend line. StockTwits daily momentum has been falling and 7 Day momentum is turning back up from the same level that marked the last low in price. Twitter 7 Day momentum is still confirming the new up trend. These momentum indicators need to hold their recent lows or it will suggest that traders on StockTwits and Twitter have given up on the rally.

140728gld

Over the next week, keep an eye on daily momentum for a break above its downtrend line. It will be the next sign that traders have stopped selling and are starting to support GLD. A good upturn in 7 Day momentum will create a buy setup.

Below is an updated long term chart of GLD.

140728gldLT

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Social Media Breadth Still Strong

Breadth from both Twitter and StockTwits continues to make high prints indicating underlying strength in the market. I’m seeing the same thing in almost all the other breadth indicators I follow. The outlier is the under performance of small cap stocks, which shows up in the relationship between the S&P 500 Equal Weight Index and the S&P 500 itself. Although, small cap under performance often precedes market declines I’ve found that substantial corrections don’t usually occur until broad measures of breadth like the advance decline line (NYAD) or the percent of stocks above their 200 day moving average deteriorate.

Neither StockTwits or Twitter breadth has fallen below zero since we’ve been calculating it. What this means is that there has consistently been more stocks with strong support from the StockTwits and Twitter communities than those with strong negative comments. I doubt the market will enter a serious correction until those on social media stop finding stocks to buy. Currently, both breadth indicators are painting small negative divergences, but nothing serious.

140727Breadth

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Consolidation Warnings Diverge

The Downside Hedge Twitter Sentiment Indicator for the S&P 500 Index (SPX) has moved to TradeFollowers.com and been renamed Trade Followers Momentum. When we first conceived the idea to capture stock market information from the Twitter stream we thought we’d mostly find opinions and future projections. As a result, we thought we were creating a sentiment indicator. After two years of studying the underlying data we’ve come to the conclusion that we created a momentum indicator that captures a herding effect by market participants.

The Trade Followers algorithm looks for actions, events, fundamental analysis, technical analysis, observations, and opinions from market participants who use many different investment and trading techniques. When market participants tweet positive messages from their own analysis of the stock market or individual stocks the momentum indicator moves up. As more people tweet constructive information an uptrend in momentum is created. Conversely, as negative analysis builds it turns the momentum of the herd lower.

We use the trend of seven day momentum to create short term signals for the stock market and individual stocks. Currently, momentum from the Twitter stream for the S&P 500 Index is signaling a consolidation warning. This warning came after an uptrend in momentum that lasted over two months. The recent rise in price has brought momentum back to a down trend line. As long as the down trend in momentum stay intact the consolidation warning will remain open.

Momentum from the StockTwits stream has broken its downtrend line which shows more optimism from the StockTwits community and clears its consolidation warning. So we currently see a divergence from traders on Twitter and those on StockTwits.

140726spx

Support and resistance levels generated from the Twitter stream for the S&P 500 index (SPX) have compressed to a 50 point range. There are many calls for SPX to climb to 2000, but very few above that level. This makes 2000 on SPX a resistance level. Below the market the recent low at 1955 is getting almost all of the attention which makes it support.

Sector relative strength is confirming the StockTwits community with leading sectors showing support from market participants and defensive sectors lacking support.

140726Sectors

The overall picture from social media is mostly positive. Although Twitter Momentum is still on a consolidation warning, it is above zero and close to breaking a down trend line (which will clear the warning). Traders are mostly tweeting about the 2000 level on SPX so it should act as a magnet and then serve as short term resistance.

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Twitter Top 10 Closing Gap

The Twitter Top 10 portfolio is closing the gap with the S&P 500 Index (SPX) this month even as we’re seeing a large split between high performers and laggards. Twitter (TWTR), down over 7% and 3D Systems (DDD), down 14% are the largest drags on the portfolio. Facebook (FB), up nearly 14% and Plug Power (PLUG), up 19% are the biggest winners. The rest of the portfolio is basically flat.

One interesting point is that half the stocks are up and half are down. The disparity in gains vs. losses is the largest since we’ve been tracking it. Usually the majority of the stocks move in the same direction. The split suggests that market participants are getting more selective. I take it as a warning to get more selective as well.

140725TwitterTop10

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
7/3/2014 $AAPL 120 94.03 11283.60 97.49 11698.80 3.68%
$TWTR 279 41.33 11531.07 38.28 10680.12 -7.38%
$FB 174 66.29 11534.46 75.40 13119.60 13.74%
$TSLA 50 229.25 11462.50 225.28 11264.00 -1.73%
$BBRY 1087 10.61 11533.07 10.29 11179.80 -3.06%
$GOOG 20 584.73 11694.60 588.54 11770.80 0.65%
$SCTY 161 71.34 11485.74 72.35 11648.35 1.42%
$DDD 187 61.62 11522.94 53.00 9911.00 -13.99%
$PLUG 2551 4.52 11530.52 5.38 13724.38 19.03%
$GMCR 90 125.24 11271.60 120.43 10838.70 -3.84%
Cash 136.03 136.03
Totals 114986.13 115971.58 0.86%
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StockTwits Top 10 Recovers a Bit

Over the past week the StockTwits Top 10 portfolio recovered a few percentage points as the S&P 500 Index (SPX) remained relatively flat. For the month the portfolio is still down over 3% and lagging SPX. We’re continuing to see most of the stocks falling, but Baidu (BIDU) is fighting the trend, up over 16% on the month.

The continued under performance by momentum stocks this month gives concerns for the general market. As I’ve mentioned at Downside Hedge, too many stocks that had large corrections during the first half of the year are now stalling. BIDU and a few other stocks like Facebook (FB) are recovering strongly, but the market needs wider participation from momentum stocks or it will experience more chop.

Below is a performance chart and details of the current holdings.

140725StockTwits10

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
7/3/2014 $TWTR 254 41.33 10497.82 38.19 9700.26 -7.60%
$SCTY 147 71.34 10486.98 71.72 10542.84 0.53%
$DDD 170 61.62 10475.40 52.91 8994.70 -14.14%
$MU 355 33.73 11974.15 33.57 11917.35 -0.47%
$AMD 2586 4.24 10964.64 3.755 9710.43 -11.44%
$GMCR 83 125.24 10394.92 120.34 9988.22 -3.91%
$SPWR 296 39.90 11810.40 37.97 11239.12 -4.84%
$FSLR 151 69.50 10494.50 63.68 9615.68 -8.37%
$BIDU 55 191.20 10516.00 222.35 12229.25 16.29%
$LNKD 60 173.71 10422.60 176.49 10589.40 1.60%
Cash 322.55 322.55
Totals 108359.96 104849.80 -3.24%
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