At the close yesterday (4/30/15) a consolidation warning was issued from 7 day momentum calculated from the Twitter stream for the S&P 500 Index (SPX). The warning comes from a negative divergence that lasted more than three weeks which was followed by a break of the confirming uptrend line that began in January. This suggests that sentiment on the Twitter stream is falling and likely turning from bullish to bearish.
As a reminder, a consolidation warning doesn’t mean the market is making a long term top. It merely means bulls are stepping aside and the bears are asserting themselves. When this occurs the market struggles to move higher and often dips more than 5%. Long story short, the odds favor lower prices in the short term.
Another sign of weakness in the market is leading stocks starting to show up in the daily most bearish list. When the bearish list contains mostly leading stocks it warns of a larger decline ahead as in September of last year. Currently, only a few are showing up so it is just a small warning that the market is thinning. You can track the daily most bearish list here. I’m also watching the weekly lists and breadth between bullish stocks and bearish. If the number of bearish stocks starts to rise quickly it will add more weight to the warning.