Monthly Archives: August 2014

Apple Showing Positive Momentum

StockTwits momentum for Apple (AAPL) is breaking above a down trend line that warned of consolidation at the end of July. The move higher comes after 7 day momentum dipped and held the long term trend. This shows support from traders on StockTwits and increases the odds AAPL will move to new 52 week highs.

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Chasing and Indecision for 3D Systems

Social media is flashing a caution sign for 3D Systems (DDD). The pattern painted by both Twitter and StockTwits momentum show indecision by traders, which leads to chasing price. Take a look at the wild swings in the daily indicator. Each move in price is accompanied by momentum chasing it. Stable stocks that have support from social media aren’t whipped around by moves in price. Instead, they experience small moves when price moves counter to the intermediate term trend. This results in a slowly rising pattern from 7 day momentum. For DDD we’re seeing steep moves up and down (not a sign of stability).

Another indication of uncertainty is the StockTwits and Twitter streams 7 day momentum are moving opposite directions. This suggests that a prudent trader would stand aside and let the stock and social media shake out before taking action.

Subscribers can find more stocks with chasing patterns by looking at the daily lists of strongest and weakest stocks on Twitter and StockTwits. The stocks that bounce back and forth between bullish and bearish on a daily basis are showing volatility that can destroy a good trade.

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Buy Setup for Starbucks

At the close on 8/8/14 a buy setup was signaled for Starbucks (SBUX) from Twitter momentum. The signal is generated by 7 Day momentum from the Twitter stream breaking above its down trend line after a positive divergence lasting three weeks. It comes as SBUX is bouncing from its 50 day moving average. The stock has consolidated gains after a rally out of the April lows and appears to be continuing the uptrend with support from traders on Twitter.

A break below the newly established uptrend line will close the signal.

You can see more info about trading with social media and how the indicator is calculated here.

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Social Media Positive Divergence for S&P 500 Index

Twitter Momentum for the S&P 500 index (SPX) is still warning of consolidation, but showing some positive signs. As the market drifted lower the daily indicator didn’t record extreme negative prints. This was a result of many people on Twitter believing the events in Ukraine wouldn’t impact the market substantially. In addition, many tweets mentioned over sold conditions and made calls for at least a short term bounce.

Another bullish indicator is a positive divergence from 7 Day momentum and price. Twitter momentum is being compressed in a triangle created by the positive divergence and the confirming down trend line. A break of the triangle will likely point the next direction for the market. A break higher will clear the warning and suggest a move to all time highs, while a break lower will indicate a failure of the rally and suggest further weakness in price.

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Breadth calculated from the stocks with the most and least support on Twitter continues its slow decline as stocks fall from the strong list and new stocks are added to the weak list.

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Support and resistance levels generated from Twitter show traders reluctant to target higher prices. In the past, this condition resulted in grinding higher rather than swift moves. Current resistance is near 1955. There were a lot of calls for lower prices as fear crept into the market this week. The largest number of tweets targeted 1890, 1880, and 1860 making them support.

Sector strength is mixed with some leading sectors showing strength and others showing weakness. The same condition exists for the defensive sectors. It paints a picture of investors dipping their toe in the water with recently weak sectors and taking profit from recently strong sectors.

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Overall momentum from social media is suggesting that it’s time for a bounce, but without a lot of enthusiasm. The positive divergence is constructive, but without tweets for higher prices the market will most likely grind rather than rush higher, which would paint a bear pennant. The nature of any bounce should tell the tale. I’ll be looking for a bounce that brings confirmation from 7 Day momentum and renewed tweets for the 2000 level on SPX to indicate the rally has legs.

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Twitter Top 10 Holding Up

The Twitter Top 10 portfolio is holding up relatively well to start the month. Most of the stocks have small losses or small gains. El Pollo Loco (LOCO) is the big loser down over 11%. LOCO’s price swings this week is another reason why we don’t recommend simply buying any list of stocks, including this one, blindly. Since this is a totally mechanical screen LOCO was included, but personally I like to let IPOs shake out before making any decisions. Although traders on Twitter love the stock, it takes time and price movement to settle their emotions so a prudent investor would wait for the wild swings to end and then make an evaluation.

Below is a performance chart and details of this month’s holdings.

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Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
8/1/2014 $FB 174 72.36 12590.64 72.87 12679.38 0.70%
$TWTR 279 44.13 12312.27 42.89 11966.31 -2.81%
$PLUG 2551 5.38 13724.38 5.62 14336.62 4.46%
$GILD 118 91.50 10797.00 92.19 10878.42 0.75%
$GOOG 19 566.07 10755.33 565.42 10742.98 -0.11%
$BIDU 51 212.38 10831.38 214.95 10962.45 1.21%
$INTC 320 33.75 10798.40 32.89 10524.80 -2.53%
$CMG 16 675.14 10802.24 668.14 10690.24 -1.04%
$AA 657 16.44 10801.08 16.02 10525.14 -2.55%
$LOCO 262 41.20 10794.40 36.64 9599.68 -11.07%
Cash 166.52 166.52
Totals 114373.64 113072.54 -1.14%
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StockTwits Top 10 Rolls Over

Over the past week the StockTwits Top 10 portfolio got caught in the market drop. Most of the stocks have small losses, but JC Penney (JCP) is down over 4% and Groupon (GRPN) is down over 9%. So far most of the charts look like normal draw downs in a falling market.

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

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Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
8/1/2014 $BIDU 55 212.38 11680.90 215.02 11826.10 1.24%
$MU 355 31.09 11036.95 30.1 10685.50 -3.18%
$INTC 303 33.75 10224.74 32.81 9941.43 -2.77%
$CMG 15 675.14 10127.10 667.41 10011.15 -1.14%
$AA 622 16.44 10225.68 15.95 9920.90 -2.98%
$GS 60 170.25 10215.00 170.14 10208.40 -0.06%
$JCP 1061 9.63 10217.43 9.24 9803.64 -4.05%
$GRPN 1582 6.46 10219.72 5.87 9286.34 -9.13%
$SINA 219 46.53 10190.07 47.34 10367.46 1.74%
$BIIB 31 329.83 10224.73 322.39 9994.09 -2.26%
Cash 147.66 147.66
Totals 104509.98 102192.67 -2.22%
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Looking for the Next Leaders

The time to build a buy list is when the market is falling. One way to find stocks that will be the next leaders is to keep track of stocks that maintain support on social media when the rest of the market is falling. Below are lists of the stocks that had high support from the Twitter and StockTwits communities today as the S&P 500 Index (SPX) fell nearly 1%. Keep an eye on these lists as well as the one week and two week lists if the market continues to fall. The stocks that stay on the list on down days will likely be leaders coming out of the next low. Of course you want to ignore stocks that are in long term down trends that are simply having one day pops.

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Stocks that have Held Up Against the Market

Today on StockTwits one of the moderators asked the question “What stocks have held up over the past two weeks?”. Using the social media stock momentum lists on Trade Followers it took me just a few seconds to grab a list of stocks that held consistent support from the streams over the past two weeks.  Below are the lists from both StockTwits and Twitter.

Premium members can view momentum over time frames from two weeks to 1 year. The longer term lists (3 months to a year) are great places to find stocks that a lot of market participants continue like and make good portfolio ideas.

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Facebook Still Has Strong Support on Social Media

Facebook (FB) still has very strong support from both Twitter and StockTwits. There is a small negative divergence from StockTwits momentum suggesting that FB will consolidate a little longer, but as long as momentum stays above zero the intermediate term trend should be up. The trend line in momentum needs to hold or the consolidation will probably last longer and be a bit deeper.

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