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Bearish Stocks on Twitter

Bearish Stocks on Twitter

Most Bearish Stocks

The Trade Followers algorithm generates lists of the most bearish stocks on Twitter over time frames ranging from one day to one year.

The stocks with the weakest sentiment and support from traders and investors on the Twitter stream are great candidates for short stock trades.

We identify high probability short trades by using a combination of the weakest stocks list and Twitter momentum for each individual stock.

At the first of December 2014 emerging markets (EEM) started showing up on the most bearish lists from one week to one month. We watched a short trade setup develop with a war between the bulls and the bears on Twitter. Then on December 7th, 2014 a short trade was triggered for (EEM) which we posted on our public blog.

Stock Sell Signal for Short Trade

Short Signal

By looking at the detail chart of EEM with Twitter momentum subscribers to Trade Followers could see both long and short trades for EEM during 2014.

The short trade setup started in early November when price was rising out of the October low, but 7 day momentum on Twitter was compressing in a triangle. The triangle was created by a short term up trend in sentiment and a longer term confirming down trend.

This indicated that traders were selling and distributing the ETF during a short term up trend. Their bearish tweets kept a negative divergence in place from October through November.

On December 5th, 2014 a sell signal for EEM was triggered when momentum broke below the short term uptrend line. This indicated that the bulls had given up on the ETF and the bears were initiating new shorts.

Close Stock Short Trade

Take Profit

This trade was against the trend of the general market so in our blog post we indicated that a price target was the place to take profit.

By mid December our target of the February lows was met intra day and was a good place to take profit or close the trade.

Bearish Stocks on Twitter stream

Events and Down Trends

By viewing the weak stock list with multiple time frames it is easy to see bearish events contrasted with stocks in a down trend.

On September 15th, 2014 the most bearish stocks on Twitter had a lot of momentum stocks listed. This indicated that a risk off event had occurred. As a result, we posted on the public blog that it would be prudent to take some profit. Many of the names on this list were much lower three months later.

Stocks in a down trend often show up on the most bearish list over long time periods. These stocks provide short opportunities when they bounce.

Trade Followers occasionally posts lists of the most bearish stocks on Twitter and short trade signals on our public blog.

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