Monthly Archives: November 2016

Last week, I mentioned that the bulls still had a normal volume and intensity of tweets, but that the bears got extremely vocal. This week, I’m seeing a mirror image where the bears are still quite vocal, but the bulls are on a rampage. The net result, is fairly muted daily prints in sentiment readings for the S&P 500 Index (SPX). It will probably take another week for one side or the other to give up.

The rally in SPX blew right through every resistance level tweeted by traders until it hit recent highs at 2080. The next resistance level is 2200, but there is a dearth of tweets calling for any higher levels. This suggests that traders are still waiting for a clear resolution of the range between 2100 and 2200.

Breadth strengthened this week as the number of bullish stocks on Twitter ticked up slightly. One thing to note is that the strong rally didn’t repair the damage done to breadth during the decline. The bulls want to see this rectified for a broad based rally to ensue.

Conclusion

The bulls have come out in force, but the bears haven’t retreated yet. There is little hope for prices above 2200 on SPX. And the number of bullish stocks is lagging the indexes. This suggests that traders and investors are still waiting for a break above 2200 before deploying cash.

Last week when the S&P 500 Index (SPX) broke below 2120 and then 2100 our sentiment indicator calculated from the Twitter stream took a nose dive. The decline came mostly from a surge in bearish sentiment. The bulls however, did not decrease their volume or intensity of tweets. What happened is the bears got extremely vocal. 7 day momentum has fallen to the level registered at the August 2015 lows and also at the February 2016 lows. This puts the indicator squarely in bear market territory.

Breadth calculated between the number of bullish and bearish stocks on Twitter is declining, but not at a rapid pace. The number of bullish stocks is still at normal bull market levels, but just barely. This is encouraging for the bulls given the length of time the market has been in decline.

Support and resistance numbers gleaned from Twitter for SPX show market participants chasing price. Tweets for price targets are coming after a price is reached rather than ahead. The 200 day moving average on SPX is the level everyone is now watching.

Conclusion

The bears are getting vocal on the general market, but the bulls haven’t given up yet. Individual stock sentiment as measured by the number of bullish stocks is still holding above bear market levels. Meanwhile, traders are noting price, rather than predicting it. Added all together, it paints a picture of hopeful bears, but everyone else is waiting to see if the 200 dma is broken to the downside.