Patiently Waiting

Two weeks ago the Twitter stream was warning of a short term top in the market. Today it appears that market participants are waiting patiently as the market declines. The daily prints for Twitter momentum and sentiment have been moderate lately. This indicates the chasing I was seeing has slowed. As the chasing slowed the volume and intensity of tweets has started to increase a bit. This generally occurs at a time of uncertainty. If the intensity continues to rise it will indicate fear is starting to rise.

Last week the market fell to our minor support level of 2085 on the S&P 500 index (SPX). This level held, but is being retested again today. There are virtually no tweets calling for prices below 2085 so if it breaks the 2040 area comes back into play. One thing of note is that there were also very few tweets calling for higher prices either. This is a sign that traders are uncertain and are sitting instead of taking action.

Breadth calculated between bullish and bearish stocks continues to print healthy long term readings. Last week the number bullish stocks increased and the number of bearish stocks decreased even as the market declined. This suggests some buying is occurring under the covers.

Sector sentiment is also painting a healthy picture with leading sectors positive and defensive ones negative.

Overall sentiment from Twitter is showing signs of waiting as evidenced by moderate prints on daily momentum and very few tweets outside the current range. The waiting is occurring with a healthy backdrop from breadth and sentiment.