Over the past couple of days our Twitter and StockTwits breadth indicators dipped below their October lows. In the case of StockTwits it is now back to readings last recorded during the consolidation and rotation in May of 2014. The reading from Twitter is the lowest since September 2013 when it almost went negative.
The reason for the dip in breadth is due to both and increase in the number of bearish stocks and a decrease in the number of bullish stocks. This is a strong indication of bulls sitting on the sidelines rather than opening new positions. Meanwhile some traders are starting to add shorts.
Take a look at the most bearish stocks on Twitter over the past month and you’ll see that financial and consumer stocks are being hit. This isn’t what we want to see in a healthy market.