Monthly Archives: May 2017

Not Much Hope

Last week, we were looking for a break higher in 7 day momentum and sentiment to signal a resumption of the rally.  We got that break and the S&P 500 Index (SPX) finally made a clear move above 2400. Unfortunately, most of the bullishness was observation of new highs and not excitement for even higher prices.

 

The move higher stopped right at the 2420 resistance level tweeted by traders. The next resistance area is 2450, but there aren’t many tweets calling for higher prices so it may be a slow slog higher.

 

Another drag on the market is the number of bearish stocks on the Twitter stream is rising. This isn’t a good sign when the market is at all time highs because it indicates a thinning market.

 

Conclusion

The market made new highs, but without much hope. Higher price targets are sparse, the count of bearish stocks is rising, and individual tweets don’t have a lot of enthusiasm for higher prices. It’s likely that any price gains will come sluggishly.

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Waiting for Signs of Bullishness

I’m busy this weekend, but here are some updated charts with a conclusion to follow.

 

 

The S&P 500 Index (SPX) is in a well defined range of 2300 to 2400 with minor support at the last lows near 2320. 7 day momentum and sentiment from Twitter for SPX is in a clear short term downtrend. If that trend is broken to the upside it should confirm a resumption of the rally. The number of bullish stocks on Twitter is rising, but is still diverging from price. Put all together, we’re waiting for more bullishness to show up in 7 day momentum and the bullish count so we can finally make a clear break above 2400 on SPX.

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Thinning Breadth Near All Time High

On Friday, the S&P 500 Index (SPX) made it back to challenge 2400, but the number of bullish stocks on the Twitter stream is diverging from price. This indicates that traders are buying fewer stocks as the market pushes higher. Other signs of sentiment from Twitter suggest that SPX should move above 2400, but won’t have broad based support. Bulls want to see the number of bullish stocks increase if the market breaks out significantly.

 

7 day momentum and sentiment calculated from tweets for SPX has painted a healthy pattern where sentiment turned up ahead of price and is now consolidating at an expected resistance level. This pattern suggests the market should break higher, but may need another few days of consolidation.

 

Support and resistance gleaned from Twitter for SPX shows a clear range between 2300 and 2400. There is also strong support at 2320. If the market can get above 2400, it should move fairly quickly to 2450 as that area is getting calls from a large number of traders.

 

Conclusion

Sentiment for the market is indicating we should get a clear break above 2400 on SPX, but breadth is thinning. This puts the market in danger of a larger decline when the rally concludes. Bulls want to see the bullish count rise if the market breaks out.

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