Path Of Least Resistance Is Up

On May 25th sentiment from Twitter finance was calling for a short term top or choppy markets. Last Thursday that condition was cleared with 7 day momentum on Twitter for the S&P 500 Index (SPX) breaking above its confirming down trend line after painting a triangle that lasted more than three weeks. Triangle patterns in 7 day momentum represent a  battle between bulls and bears that is compressing like a spring. When they break the odds for the next market move tilts in favor of the direction of the trend line break. In this instance it was up and as a result the path of least resistance for SPX is up. Of course, Greece could change things, but at this moment Twitter sentiment is expecting a move back to the old highs with a little hope for new highs.

 

The hope comes from support and resistance levels gleaned from trader’s tweets. We’re starting to see more calls for 2140 and 2150 on SPX. There is a strong level of support between the 2065 and 2070 area.

 

Breadth between the most bullish and bearish stocks on Twitter continues to be healthy. This indicates the long term direction is still up.

 

The only fly in the ointment this week comes from sector sentiment that shows some favor for the defensive stocks as the market is rising. If this trend continues it will indicate investors are getting more cautious.

 

Overall the odds favor higher prices. We have a new confirming uptrend line in 7 day momentum, traders are starting to tweet higher prices again, and breadth continues to be healthy. You can track Twitter sentiment for the S&P 500 Index during the week with this interactive chart.