Monthly Archives: November 2014

Tyson Foods Trade Survived October

Back in late August, subscribers to Trade Followers were able to see this setup for Tyson Foods (TSN). The stock had a good rally from November 2013 then peaked and started consolidating in April of this year. It fell to its 200 day moving average and as it traded sideways along it Twitter momentum confirmed the support with higher lows. When the triangle in momentum was broken the upside in late August it triggered a buy signal. This is one of the few trades that survived the October dip with momentum holding above its trend. Now it faces resistance near 52 week highs so I’ll be watching momentum closely to see how strong that resistance is.

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Continued Drift

Our Twitter momentum indicator for the S&P 500 Index (SPX) continued to drift this week as the market posted a small gain. It is attempting to turn down, but lack of confidence from the bears on Twitter is holding 7 day momentum up. The StockTwits indicator moved up into what is normally an over bought condition that has caused the market to pause in the past. Both streams are indicating that we should see some consolidation or sideways movement over the next week.

141116spx

Support and resistance levels gleaned from the Twitter stream show slight optimism from the bulls, with scattered tweets calling for prices between 2050 and 2080 on SPX. The most tweeted levels are 2050 and 2070. Below the market support has virtually vanished. There are a small number of tweets calling for 2010 and an even smaller number targeting 1955 and 1825. It appears that the bears have been beaten up so badly that they’re reluctant to even predict lower prices. When this occurs it can cause instability due to the fact that bulls don’t expect a dip and almost no bears are short the market. When selling starts it often accelerates if it breaks the first support level (2010 on SPX).

Breadth between the most bullish stocks on social media and the most bearish is starting to show some improvement in the short term, but continues to diverge from price over the last several months. The divergence is mainly due to an increase in the number of bearish stocks making the lists.

141116breadth

Sector strength is starting to look more healthy with leading sectors (with the exception of energy) showing the most strength and defensive sectors lagging in support from the Twitter stream. This is an encouraging sign given the fact that last week the sectors were indicating a short term top. There still appears to be some rotation to safety, but not at the pace of the previous week.

141116sectors

Overall social media is suggesting optimism from the bulls and silence from the bears. This should allow the market to continue to drift sideways or higher. If there is any weakness it will be critical for SPX to hold the 2010 level or selling could accelerate quickly as bulls who aren’t expecting a dip take profit and bears start to short.

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Twitter Top 10 Can’t Recover

The Twitter Top 10 Portfolio hasn’t been able to gain any traction after the severe damage done in the first four months of the year. This month is shaping up to be another loser due to a huge decline by Plug Power (PLUG) which is down almost 30%. The screen has been picking too many stocks at the top of a counter trend bounce during a down trend over the past several months. It paints a picture of a market where people are trying to find value in beaten down stocks rather than looking for stocks in sustained up trends.

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

141114Twitter10

 

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
11/7/2014 $BABA 99 114.56 11341.44 114.92 11377.08 0.31%
$YHOO 234 48.55 11360.70 51.50 12051.00 6.08%
$PLUG 2485 5.30 13170.50 3.77 9368.45 -28.87%
$MSFT 247 48.68 12023.96 49.71 12278.37 2.12%
$BAC 710 17.36 12325.60 17.17 12190.70 -1.09%
$CELG 106 106.45 11283.70 103.45 10965.70 -2.82%
$BIDU 48 236.54 11353.92 250.81 12038.88 6.03%
$V 45 252.43 11359.35 249.84 11242.80 -1.03%
$BBRY 1078 10.53 11351.34 11.57 12472.46 9.88%
$AA 695 16.33 11349.35 16.81 11682.95 2.94%
Cash 91.26 91.26
Totals 117011.12 115759.65 -1.07%
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StockTwits Top 10 Lagging Again

The StockTwits Top 10 portfolio is lagging again this month. The under performance is due to Walter Energy (WLT) which is down over 11%. The monthly picks this year seem to find at least one stock that blows up. I see it as just another sign of a thinning market where investors and traders are quick to take profit.

Below is a performance chart and details of this months picks.

141114ST10

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
11/7/2014 $BABA 93 114.56 10654.08 114.93 10688.49 0.32%
$YHOO 221 48.55 10729.55 51.43 11366.03 5.93%
$MSFT 231 48.68 11245.08 49.71 11483.01 2.12%
$AA 657 16.33 10728.81 16.76 11011.32 2.63%
$WLT 3365 3.19 10734.35 2.83 9522.95 -11.29%
$CELG 111 106.45 11815.95 103.05 11438.55 -3.19%
$V 42 252.43 10602.06 249.77 10490.34 -1.05%
$HPQ 295 36.38 10732.10 36.93 10894.35 1.51%
$GMCR 70 152.90 10703.00 156.19 10933.30 2.15%
$XOM 111 96.59 10721.49 94.92 10536.12 -1.73%
Cash 272.93 272.93
Totals 108939.40 108637.39 -0.28%
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Most Bearish Stocks on Twitter

The market has bounced for a month with a very strong price rally and is now overbought by many measures. This morning we’re seeing some weakness that could last several days or more. If you like to short the market, then the weakest (most bearish) stocks on StockTwits and Twitter is a good place to find short candidates. The list below contains the stocks that had the least support over the past month (the length of the rally). These stocks didn’t participate in the run or they are likely painting a dead cat bounce pattern.

141112TwitterWeak

 

Subscribers to Trade Followers can view the status of each stock on the chart page to see if it had a strong enough rally to make the short term most bullish lists. In addition, they can see if the stock has longer term bullish sentiment that would indicate the weakness is most likely consolidation (rather than the start of a downtrend).

141112ko

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Social Media Momentum Drifting

Our social media momentum indicators for the S&P 500 Index (SPX) have been drifting sideways over the past few weeks. This drift comes near levels that have often meant some consolidation in price is warranted. However, traders on Twitter are now tweeting higher price targets. This gives the market a chance to drift to the 2040 or 2050 area while 7 day Twitter and StockTwits momentum move up into overbought readings.

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Resistance from the Twitter stream for SPX is at 2040 and 2050. Support comes in at 2010 and 2000. This is a fairly tight range which suggests traders are waiting rather than taking strong positions. The lack of tweets above 2050 and below 2000 is another indication that traders lack conviction in either direction. One thing of concern is the absence of tweets between 1905 and 2000. It appears that traders are drawing a line in the sand at the 2010 level, with a bit more support at 2000, but nothing below. When this happens it creates an air pocket that can lead to a waterfall decline if the line in the sand doesn’t hold. This same condition occurred in late September at the 1905 level. On the next dip the bulls want to see several levels of support tweeted rather than one must hold level.

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Sector strength scores are all positive for the past week. Almost every time this has occurred since we’ve been tracking it (more than 2 years) it has marked a short term top. The few instances where a short term top didn’t happen resulted in one more week of higher prices with every sector positive again…then the short term top occurred. Basically, this condition indicates a rotation to safety (defensive sectors) helping to fuel the rally.

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Breadth from StockTwits and Twitter continue to diverge from price, but are still at healthy levels.

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Overall social media is suggesting that the market is drifting. Currently that drift is higher, but sector strength indicates we’re due for a short term top. Watch for an increase in support levels on the next dip and a higher low in 7 day momentum for signs that the dip will be short in both time and price.

 

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Twitter Crushes Twitter Top 10 Portfolio

Over the past month the Twitter Top 10 portfolio was down over 1% even though the S&P 500 Index was up. Ironically, the largest drag on the portfolio was Twitter (TWTR) which was down over 25%. Another thing of note for TWTR is our trading strategy called a sell signal for TWTR in mid September based on a loss of momentum from traders on Twitter. This illustrates a few points I try to make often. First, the trend of momentum is the thing that is most important when timing the purchase of stocks. The second is that you should never buy this list blindly on the first Friday of the month. The Twitter Top 10 portfolio is intended to be an illustration of a mechanical momentum portfolio and how it performs during different market conditions. The strongest (most bullish) lists are intended to be a starting point for your stock selection, then the trend of momentum should help you time your purchases and profit taking or selling. If you had been watching the trend of momentum for TWTR you would have waited until it indicated that the consolidation was likely over.

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Today is the first Friday of the month so we replace the portfolio with the 10 stocks with the strongest support on the Twitter stream over the past month. Here’s a list with the candidates.

141107Twitter10Picks

 

Below is a performance chart and details of last month’s holdings. I’ll update the list with today’s closing prices sometime over the weekend.

141107Twitter10

 

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
10/3/2014 $TWTR 279 53.94 15049.26 40.31 11246.49 -25.27%
$BAC 710 17.29 12275.90 17.36 12325.60 0.40%
$FEYE 403 28.19 11360.57 30.62 12339.86 8.62%
$NKE 126 90.29 11376.54 93.78 11816.28 3.87%
$MSFT 247 46.09 11384.23 48.68 12023.96 5.62%
$LULU 270 42.07 11358.90 43.76 11815.20 4.02%
$FDX 70 162.74 11391.80 171.22 11985.40 5.21%
$MU 335 33.94 11369.90 33.01 11058.35 -2.74%
$HIMX 1173 9.70 11378.10 7.81 9161.13 -19.48%
$PLUG 2485 4.56 11331.60 5.30 13170.50 16.23%
Cash 68.35 68.35
Totals 118345.15 117011.12 -1.13%
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StockTwits Top 10 Lags Market

Over the past month the StockTwits Top 10 portfolio lagged the market. The under performance was mostly a result of a nearly 20% decline from First Solar (FSLR). Celgene (CELG) was the only outstanding winner up 12%. For the month the portfolio was up just over 1%.

141107ST10

It’s the first Friday of the month so it’s time for new picks for the following month. The portfolio takes the top 10 strongest stocks on StockTwits from the previous month.

141107ST10Picks

 

Below are the details of last month’s picks. I’ll update them with today’s closing prices sometime over the weekend.

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
10/3/2014 $MU 355 33.94 12048.70 33.01 11718.55 -2.74%
$BAC 616 17.29 10650.64 17.36 10693.76 0.40%
$NKE 118 90.29 10654.22 93.78 11066.04 3.87%
$LULU 272 42.07 11443.04 43.76 11902.72 4.02%
$CELG 111 95.21 10568.31 106.45 11815.95 11.81%
$MSFT 231 46.09 10646.79 48.68 11245.08 5.62%
$FDX 65 162.74 10578.10 171.22 11129.30 5.21%
$C 203 52.32 10620.96 53.75 10911.25 2.73%
$GS 56 188.07 10531.92 190.71 10679.76 1.40%
$FSLR 149 64.10 9550.90 50.29 7493.21 -21.54%
Cash 283.78 283.78
Totals 107577.36 108939.40 1.27%
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