Author Archives: TradeFollowers

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.

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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.

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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.

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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.

 

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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.

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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.

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

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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.

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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.

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Bullish Sentiment on Twitter – But Resistance Just Above

Sentiment for the S&P 500 Index (SPX) on the Twitter stream broke its triangle pattern to the upside. This suggests that this rally has more steam in it. Keep an eye on the confirming uptrend line from 7 day momentum. If it is broken then some consolidation will likely occur.

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Unfortunately, traders are tweeting 2300 on SPX as an upside target. This indicates the market only has another 25 points to rally before pausing.

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Breadth calculated between the most bullish stocks an Twitter and the most bearish is still holding up. The bearish count isn’t rising and the bullish count is falling slightly. This suggests a wait and see mode by traders.

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Conclusion

Market participants expect higher prices, but traders are only looking up to 2300 on SPX. We’ll likely see a rally to 2300 that stalls before moving higher again.

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Not Much Hope at a Critical Point

Over the past several weeks, sentiment for the S&P 500 Index (SPX) has been slowly deteriorating as the market traded sideways to down. This week the market turned back up, and with it sentiment. This has painted a triangle pattern in 7 day momentum. When this occurs it creates an inflection point where the market picks a direction that usually lasts for a few weeks. When the triangle pattern in sentiment is broken, it points the next direction in SPX.

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Unfortunately, price targets tweeted by traders don’t show any hope for higher prices. This indicates that traders aren’t yet convinced the current rally will hold.

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Breadth is holding up fairly well even in the face of the number of bullish stocks declining. This is because the number of bearish stocks is declining too. It indicates that traders are nibbling at longs, and not shorting much.

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One hopeful sign comes from the most bullish stocks on twitter list over the past week. It is starting to broaden out among sectors again. Here’s a comparison of the one week, one month, and three month bullish lists.

Conclusion

7 day momentum is painting a triangle. When it breaks, the market will likely trade the same direction for a few weeks. Unfortunately, traders price targets don’t hold much hope for higher prices. Looks like everyone is in wait and see mode.

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2300, But No More

Traders are still only looking up to about 2300 on the S&P 500 Index (SPX). There is little fear for prices below the market. You can use the menu above to see the most bullish and bearish stock lists. Have a good holiday week!

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Support and Resistance

Posts from now through the holidays will be light… too much fun to be had, but we’ll try to at least update the support and resistance chart for the S&P 500 Index (SPX). Right now there is strong resistance at 2300. A cluster of support lies between 2240 and 2250. Below that is 2200.

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You can still see the sentiment chart for SPX here and the breadth chart here. The bullish list is here. The bearish list is here. Have a good holiday season!

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Time for a Rest?

Last week, we mentioned that we were finally seeing hope for higher prices in the S&P 500 Index (SPX) with tweets calling for 2220 and 2250. This past week the market blew right through both price targets and now traders are starting to call for 2300 as the next stop.

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As the market pushes higher, sentiment is starting to wane. Daily sentiment is falling with each move higher as more traders are either calling for a top or the need to consolidate recent gains. Seven day momentum is painting a lower peak and diverging from the market, which is another signal that this rally is getting tired in market participants minds.

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Breadth isn’t moving sharply higher due to the count of bullish stocks lagging price. This indicates that the move higher in the indexes isn’t being supported by a large number of individual stocks.

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Conclusion

Although there are scattered tweets calling for 2300 on SPX, sentiment for SPX is starting to diverge from price and sentiment for individual stocks is lagging sentiment for the indexes. It looks like a good time for the market to consolidate recent gains.

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