A few weeks ago sentiment for the S&P 500 index (SPX) calculated from the twitter stream broke out higher from a triangle pattern. I mentioned that this usually indicates higher prices ahead. It took some time, but the market finally responded. Now we’re watching the confirming uptrend in sentiment. If it breaks expect a larger consolidation.
I also mentioned in that post that there is a line of resistance at 2300 for SPX. The market approached that level on Wednesday and has now paused. This is just what we’d expect when the tweets have been coming sporadically for a few months. If the market can clear 2300 then 2330 is the next level of resistance. A downturn here should hold 2250 unless we start to see tweets for a much lower level.
Breadth is indicating enthusiastic buying with a surge higher in the number of bullish stocks on Twitter.
Sector sentiment is showing just what we’d like to see too. Positive reading in all but the defensive sectors of Consumer Staples, Utilities, and Health Care.
The market finally broke out of its range. All sentiment readings suggest this is a healthy move that should resume after a bit of consolidation at the 2300 resistance level.