Author Archives: TradeFollowers

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.

facebooktwittergoogle_plusredditpinterestlinkedinmail

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.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Still Looking Healthy But Risky Too

Even with last Thursday’s drop in price, sentiment for the S&P 500 Index (SPX) is still showing healthy signs. Take a look at price targets tweeted by traders on Twitter. Notice that the first time SPX dipped near 2320 traders were tweeting price targets as low as 2200. On the current decline, traders aren’t so fearful. Instead, they’re tweeting support in the 2320 and 2300 areas. This is both good and bad. The good news is that the market should attempt a rally at one of those two levels. The bad news is that there is no support below 2300 so if that level breaks it could get ugly very quickly.

 

Another good sign comes from the number of bullish stocks on the Twitter stream. It continues to rise even as the market is falling. This is a positive sign that suggests traders are buying the most bullish stocks during this decline.

 

7 day momentum and sentiment for SPX is now at the bottom of its normal bullish range. This is another good/bad sign. The good news is that the market should rally soon if we’re still in bull mode. The bad news is that any further deterioration in sentiment will likely be accompanied by a large move downward in price.

 

Conclusion

Sentiment from Twitter is still healthy, but there are danger signs too. The healthy signs are less fear in price targets, 7 day momentum still inside the bullish range, and an increase in the number of bullish stocks. The risk comes if the market can’t hold 2300 or 7 day momentum breaks below its bullish range. You can see the daily chart here.

facebooktwittergoogle_plusredditpinterestlinkedinmail

So Far So Good

I’m seeing some positive signs this week from stock market sentiment on Twitter. First, 7 day momentum and sentiment for the S&P 500 Index (SPX) has broken its downtrend line. This often results in price moving higher because sentiment has turned bullish. Price is trying to move higher, but isn’t quite there yet. As long as 7 day momentum can hold the newly established uptrend line we should expect to see an attempt at new highs.

Stock Market Sentiment From Twitter

 

Breadth calculated between the most bullish and bearish stocks on Twitter is also improving. Most of the improvement comes from an uptick in the bullish count. This is what we want to see because it suggests traders are pushing the most bullish stocks higher as SPX is struggling. It should lead SPX higher.

 

Another good sign comes from traders price targets for SPX that are gleaned from the Twitter stream. We’re seeing scattered calls for 2450. However, 2400 is still showing as a strong resistance level. Expect the market to at least pause there before moving higher.

Support and Resistance for the Stock Market from Twitter

 

Conclusion

The consolidation on SPX is showing good support from sentiment on the Twitter stream. The number of bullish stocks is rising, 7 day momentum has started an uptrend, and traders are calling for prices above all time highs. So far, so good, but keep an eye on the newly established uptrend in 7 day momentum. If it breaks, we will likely need more consolidation before attacking new highs.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Warning Signs

We’re seeing some signs warning that sentiment for the S&P 500 Index (SPX) gleaned from Twitter is at a make or break point. The thing that is most concerning is that price is so close to an all time high as sentiment is deteriorating toward bearish levels. First let’s look at 7 day momentum and sentiment. It put in a low a few weeks ago that was at the bottom of the normal bull market range. Now it is attempting to turn down from zero. If it does turn down and break below the last low it will be very bearish for the market. On the bright side, price is lower, but 7 day sentiment is higher. This gives this indicator a tiny positive divergence, which could mean the low in sentiment is in place. If that is the case, price should follow higher. Bulls should be looking for a clear break back above zero on this chart.

 

Breadth calculated between the count of bullish and bearish stocks on the Twitter stream is also deteriorating. The bullish count is sitting barely above the normal bottom of the bullish range. Once again, it’s happening without much price weakness in SPX. A break lower in the bullish count will likely be associated (or followed) by a big break lower in price for the major indexes. You can see the daily chart here.

 

Price targets for SPX gleaned from Twitter show a cluster of support in the 2320 to 2330 area. These targets, all at different prices, have a fairly even distribution for the number of traders calling for each of them. This means that price could hold in that area, but it isn’t strong support. We prefer to see everyone calling for the same price. Notice how we had a straight line of resistance at 2400 that started in early February. When price reached that level everyone who wanted to sell or take profits did so at the same time. If price falls into the 2320 to 2330 range, the buyers will show up at different times which might not be enough to stop the slide.

 

Conclusion

We’re seeing several warning signs that the market needs to turn back up right now or suffer a much larger drop. 7 day sentiment and the count of bullish stocks are both at the bottom of their normal bull market range. Support below the market is scattered rather than solid. All of this is happening with price very close to all time highs, which suggests that any move lower in price will be a large one.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Not Much Change

Over the past week, there isn’t a lot new to report regarding sentiment from the Twitter stream. The most significant item comes from the number of bullish stocks. It continues to fall even though the market moved up a bit. This indicates that traders aren’t aggressively buying the most bullish stocks near a market high. This isn’t a good sign for the bulls.

 

7 day momentum and sentiment for the S&P 500 Index (SPX) has moved back up to the zero line. The bulls want to see this break higher. The bears want it to turn down from the zero level as it will likely result in a larger decline in SPX than we’ve seen so far this year.

 

Support and resistance levels stayed the same. 2400 is strong resistance. 2350 and 2300 are support.

 

Conclusion

A weak response from the bullish count and 7 day sentiment sitting at zero suggest there aren’t very many committed bulls. Keep an eye on 7 day sentiment, because a turn down from here will likely have serious consequences.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Buying Stalls

Over the past few weeks the number of bullish stocks on Twitter have fallen sharply. This indicates that buyers of the most bullish stocks dried up as the S&P 500 Index (SPX) pushed up into the 2400 area. Although buyers are slowing down, the sellers of bearish stocks haven’t materialized. That condition is keeping overall breadth at healthy levels.

 

Sentiment for SPX calculated from the Twitter stream has finally made a decisive break of the confirming uptrend line we’ve been watching. It corresponded with a break down in price as we expected. Now we’re watching for an upturn as the first indication that a low may be in place.

 

In our February 20th post we noted that 2400 on SPX was a strong resistance level. At the time, we thought the market would pause and then move to the 2400 level. Instead, the market made two quick jumps in price to touch 2400 and then backed away. There is small support at 2350 on SPX and larger support at 2300. Resistance is still above at 2400.

 

Conclusion

We’ve finally got the dip we’ve been expecting due to the flagging sentiment and lack of enthusiasm from buyers of the most bullish stocks. Now we’re watching to see if 2350 on SPX holds or if we’ll get a trip to 2300. Keep an eye out for an upturn in 7 day momentum that is accompanied by a resurgence in the bullish stock count for the first clues that a bottom has been put in place.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Short Term Top Ahead

Last week, sector sentiment from the Twitter stream gave a warning. It is showing an overbought condition where every sector has positive sentiment. When this has occurred in the past, it has almost always been followed by a short term top within a few days.

 

At Downside Hedge I highlighted another indicator that has a good track record of calling short term tops or consolidation periods. It is also warning.

Sentiment for the S&P 500 Index (SPX) is showing a bit of lag in the trend. As price is moving higher, sentiment is stalling.

 

On the bright side, the count of bullish stocks is rising at a steady pace. This indicates that the breakout to new highs is being met with widespread optimism.

 

Another sign of optimism comes from traders price target tweets for SPX. The Twitter stream is starting to see a lot of calls for 2400.

 

Conclusion

We’re likely due for a short term top. Sector sentiment is overbought and sentiment for SPX is stalling. Once a bit of consolidation occurs, it appears the market should move higher due to widespread buying and calls for higher prices.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Buying the Dip

This past week saw traders buying the dip (well if you can call it a dip). If you look at the count of bullish stocks on the Twitter stream you can see that traders were buying more stocks as the market reacted to resistance near the 2300 level on the S&P 500 Index (SPX). This is a very good sign for the market going forward.

Stock Market Breadth From Twitter Sentiment

 

You can see the stocks that are being bought by looking at the most bullish list. You can use this bullish sentiment list to sort by timeframe.

Bullish Stocks on Twitter

 

Another positive sign comes from 7 day momentum for SPX. It is still confirming the uptrend in price. If the sentiment uptrend stays intact the market should be able to break above 2300.

Twitter Sentiment for the Stock Market

 

One note of worry is that traders aren’t calling for prices above 2300 on SPX. The hope from the last attempt to break higher has disappeared. With support at building a fairly solid line at 2250 we may be seeing the first signs of a rangebound market (as traders go into wait and see mode).

Stock Market Support and Resistance from Twitter

 

Conclusion

Sentiment for the market is still showing positive signs. We’ve had the pull back we predicted in mid January so now the market should be able to break 2300. The only fly in the ointment is the lack of tweets calling for higher prices.

 

facebooktwittergoogle_plusredditpinterestlinkedinmail

Healthy Rally

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.

170129spx

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.

170129spxSR

Breadth is indicating enthusiastic buying with a surge higher in the number of bullish stocks on Twitter.

170129breadth

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.

170129sectors

Conclusion

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.

facebooktwittergoogle_plusredditpinterestlinkedinmail