Last Monday the momentum stocks took a big hit on a mild down day in the market. Yesterday the market sold off harder, but momentum names didn’t get hit as hard as last week. This is an encouraging sign for the market as a whole because it indicates that profit taking in high fliers is slowing and that buyers are stepping when price falls. Subscribers should watch the daily, weekly, and 2 week most bearish lists on social media over the next few weeks. If they are filled with momentum names it will indicate caution. A lack of momentum names will indicate higher prices for the market.
Here’s an example of the weakest stocks on Twitter from yesterday. Notice that other than the obvious Alibaba (BABA) and Yahoo (YHOO) the list doesn’t contain a lot of momentum stocks. That’s what we want to see for the market to move higher.