Monthly Archives: February 2015

Most Bullish Stocks on Twitter Grinding Higher

Over the past three weeks the most bullish stocks on Twitter have ground higher with the market. Most of the stocks in the portfolio are up between 2% and 5%. The two stand out performers are FireEye (FEYE) up 25% and Skyworks (SWKS) up over 8%. The only loser is Alcoa (AA) which is down 10%.

One thing of note is that gold stocks (GDX) had a bullish run out of a long term low in November then a retracement of about one third of the run. It is now moving back up slowly. On the chart below you can see strong bullish sentiment accompanying the January rally which could signal a durable low if the new short term strength in bullish sentiment continues. Basically, gold stocks are at a make or break point. This is similar to the action we saw in Lululemon (LULU) last summer.

Gold Stocks Bullish on Twitter

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

Performance of most bullish stocks on Twitter

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
2/6/2015 $TWTR 238 48.01 11426.38 48.90 11638.20 1.85%
$FEYE 370 36.05 13338.50 45.23 16735.10 25.46%
$DIS 112 102.02 11426.24 104.56 11710.72 2.49%
$CELG 106 118.75 12587.50 121.68 12898.08 2.47%
$GDX 536 21.33 11432.88 21.33 11432.88 0.00%
$SBUX 141 89.00 12549.00 93.87 13235.67 5.47%
$BA 77 148.00 11396.00 151.39 11657.03 2.29%
$SWKS 140 81.44 11401.60 88.47 12385.80 8.63%
$AA 690 16.57 11433.30 14.86 10253.40 -10.32%
$BIIB 28 402.00 11256.00 409.97 11479.16 1.98%
Cash 247.28 247.28
Totals 118494.68 123673.32 4.37%
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Most Bullish Stocks on StockTwits Catching Up to S&P500

From the first Friday of the month the most bullish stocks on StockTwits is slightly outperforming the S&P 500 index. They are up just over 2.5%. The largest gainer is JC Penney (JCP) up over 13%. The gains in JCP are being tempered by a 4% drop today so it remains to be seen if the stock will hold up into next Friday (when we give a new set of stocks to follow). Alcoa (AA) is the largest loser this month down over 10%. Overall the portfolio has a bunch of slow and steady gainers as the market grinds higher…which is what we should expect during these conditions.

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

Bullish Stocks on StockTwits Performance

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
2/6/2015 $DIS 100 102.02 10202.00 104.54 10454.00 2.47%
$JCP 1312 7.80 10233.60 8.86 11624.32 13.59%
$XOM 111 91.50 10156.50 89.14 9894.54 -2.58%
$BIIB 30 402.00 12060.00 410.36 12310.80 2.08%
$AA 617 16.57 10223.69 14.87 9174.79 -10.26%
$SBUX 125 89.00 11125.00 93.7 11712.50 5.28%
$YELP 226 45.11 10194.86 48.01 10850.26 6.43%
$CELG 111 118.75 13181.25 121.98 13539.78 2.72%
$X 441 23.19 10226.79 23.87 10526.67 2.93%
$GM 284 36.00 10224.00 37.41 10624.44 3.92%
Cash 158.43 158.43
Totals 107986.12 110870.53 2.67%
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Look to Take Profit in Apple

On 1/23/15 subscribers were able to see a buy signal for Apple (AAPL). Since that time AAPL is up almost 15% and is extended well above its 50 day moving average. Trade Followers momentum from both StockTwits and Twitter are still confirming the uptrend, but is getting close to over bought levels. By taking a third of the position off the trade you protect some profit, but still give most of the position a chance to move higher.

Twitter sentiment for Apple AAPL

On the next dip in the stock keep a close eye on 7 day momentum. If its confirming uptrend line is broken it would be prudent to take at least another third off the trade.

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Twitter Sentiment for S&P 500 Overbought

7 Day momentum for the S&P 500 Index (SPX) computed from Twitter is moving into overbought territory. The recent readings are at levels that the market has at least paused in the past. As a result, there is a good chance we’ll see some sideways or choppy action before the market can move significantly higher.

150223spx

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Make or Break Time for Gold Stocks

At the first of January our Twitter momentum indicator for gold stocks (GDX) gave a buy signal. If you’ve followed our trade plan for GDX you have either closed the trade or are still holding one third of the position. Momentum broke the uptrend on the 28th of January. This was the signal to close the trade or take more profit.

150219gdx

GDX is now setting up for another potential long trade. After consolidating gains from the rally out of the December lows GDX has retraced back to its 50 day moving average without serious damage from sentiment on Twitter. 7 day momentum is painting a somewhat weak triangle pattern so you should be cautious on the trade. If momentum breaks higher then a buy signal will be triggered where you can initiate a new trade or add to your current holding.

150219gdx1

On the other hand, if you still have a third of the position I’d close it if the new up trend line in momentum is broken to the downside. Especially if the 50 day moving average is broken at the same time. If you’re committed to GDX, believing that it is making a long term trend change, and have followed our trade plan then you have enough profit to let the trade retrace 50% to 67% of the prior rally before abandoning it (the current retracement is 40%). Bottom line, it’s make or break time for GDX so keep a close eye on it.

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Long Watchlist

As the market is starting to break out to new highs there are a lot of stocks entering the long watchlists. Below are the stocks that entered the most bullish stocks of the past two weeks list at the close yesterday. These stocks have had recent events that have turned them bullish or are attempting to make bottoms or end a period of consolidation. Basically the Twitter stream has moved from neutral to bullish on these stocks over the past two weeks.

150218EnterLong

Subscribers should start tracking these stocks (and ones from the other watchlists) for newly created momentum trends. Here’s an example of a potential trade for Expedia (EXPE). After a period of consolidation it is now painting a positive divergence with price from the last two short term lows. It is getting close to breaking the short term down trend line in 7 day momentum. If it can break that line it will be a buy signal. This signal will stay in effect until the newly created uptrend in 7 day momentum is broken to the down side. There are a lot of other stocks showing positive signs like EXPE so be sure to take a quick look at all of the charts for the best setups to trade on the next leg higher in the market.

150218epxe

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Traders on Social Media Expecting Higher Market

As the S&P 500 Index (SPX) made a new closing high this week momentum and sentiment from both Twitter and StockTwits confirmed the move by making a print above their prior peaks. 7 Day momentum from Twitter also has a higher low which indicates a new uptrend is most likely under way. The recent consolidation for SPX has taken the froth out of sentiment readings that were extremely over bought at the end of the year. Market participants became bearish as the market traded sideways, but now it appears that they’re willing to accept a break to new highs.

150215spx

Another sign that traders are expecting new highs comes from support and resistance computed from the Twitter stream. Our computer system is finally picking up tweets that contain price targets above the recent range and above the December high. The vast majority of tweets are for higher prices. The most tweeted level above the market is near 2140 on SPX. There is some small resistance at 2120. Support comes in at the top of the recent range near 2065, then 2040 and 2020.

150215spxSR

Last week we posted this chart of VIX on Twitter. It showed traders still protecting portfolios and expecting volatility.

150211vix

The market moved higher and VIX broke below its uptrend line but, 7 Day momentum from Twitter is still inside a triangle. This indicates that there is still some indecision and caution. I suspect that a clear break above 2100 on SPX will remove the doubt.

150215vix

Breadth between the most bullish and bearish stocks on Twitter and StockTwits is still painting a negative divergence with SPX. The number of strong stocks on Twitter have recovered to levels seen in November and December. The problem is the number of stocks breaking down with a stream of tweets containing decidedly negative sentiment is still fairly large. What we’re seeing is a thinning market as it pushes higher.

150215breadth

Sector sentiment is healthy with most leading sectors positive and utilities negative. The weakness in utilities shows an expectation of higher interest rates due to an improving economy. One thing of concern for the sectors this week is strength in consumer staples. This indicates that a bit of rotation to safety is still underway.

150215sectors

Overall social media sentiment is suggesting traders want higher prices, but are still cautious. On a break to new highs we’ll want to see a sharp drop in 7 day momentum for VIX as this will indicate market participants are once again taking risk.

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Apple Buy Signal

We posted this chart of Apple (AAPL) on StockTwits and Twitter earlier this week. It shows a buy signal for AAPL that subscribers were able to see during its recent consolidation. Momentum from both Twitter and StockTwits are currently confirming the break to new highs in price. If you made the trade then you’ll want to take profit (or close the trade) when momentum breaks its confirming uptrend line.

150212aapl

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Strongest Stocks on Twitter Slightly Up

Over the past week the strongest and most bullish stocks on Twitter were up just under 1.5%. FireEye (FEYE) was the only stock with outstanding performance. Most of the stocks showed lackluster gains or small losses. Alcoa (AA) was down over 5% which makes it the only significant loser.

You can see more bullish stocks on Twitter here.

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

150213TwitterPerf

Start Date Symbol Shares Start Price Start Total End Price End Total % Gain / Loss
2/6/2015 $TWTR 238 48.01 11426.38 48.32 11500.16 0.65%
$FEYE 370 36.05 13338.50 42.22 15621.40 17.12%
$DIS 112 102.02 11426.24 104.13 11662.56 2.07%
$CELG 106 118.75 12587.50 115.08 12198.48 -3.09%
$GDX 536 21.33 11432.88 21.44 11491.84 0.52%
$SBUX 141 89.00 12549.00 91.19 12857.79 2.46%
$BA 77 148.00 11396.00 149.51 11512.27 1.02%
$SWKS 140 81.44 11401.60 81.33 11386.20 -0.14%
$AA 690 16.57 11433.30 15.73 10853.70 -5.07%
$BIIB 28 402.00 11256.00 389.65 10910.20 -3.07%
Cash 247.28 247.28
Totals 118494.68 120241.88 1.47%
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