Over the past two months while the S&P 500 Index (SPX) has been grinding sideways to higher momentum and sentiment from Twitter finance has produced several extreme negative daily prints (below -20). This is a very unusual condition so close to new highs. A series of extreme negative prints is generally associated with a protracted decline. The last string of deep negative readings was near the lows in June of 2010 after the market had declined 10% over a span of two months. The current readings suggest that market participants are very skittish. It doesn’t take much price deterioration to bring out the bears.

The recent weakness has caused 7 day Twitter momentum for SPX to stall. It has a confirming uptrend line that is six weeks long, but now has a three week short term down trend line in place. The triangle created by the two trend lines shows a building of pressure between the bulls and the bears. When it breaks (either up or down) it will likely point the next intermediate trend for the market.

Support and resistance numbers gleaned from the Twitter stream for SPX indicate that traders are still indecisive and waiting for a reason to deploy cash or sell. Last week saw almost no tweets calling for higher prices. The tweets for lower prices clustered in a range between 2065 and 2085, which are the last few recent lows in the market. When the support and resistance range tightens it suggest market participants are waiting for the current range to be broken before taking action. The range has support at 2065 and resistance at 2120 for SPX.

Sector sentiment is still showing a fairly positive bias in the leading sectors.

Breadth between bullish and bearish stocks is also still healthy, but has seen a deterioration in the number of bullish stocks over the past month.

Overall sentiment from Twitter shows market participants dancing close to the door. They’re waiting for a break of the current range before taking action. Watch for a break of the triangle in 7 day momentum for SPX as it will likely point the next direction. You can see an interactive chart here.