Last week, sector sentiment from the Twitter stream gave a warning. It is showing an overbought condition where every sector has positive sentiment. When this has occurred in the past, it has almost always been followed by a short term top within a few days.

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At Downside Hedge I highlighted another indicator that has a good track record of calling short term tops or consolidation periods. It is also warning.

Sentiment for the S&P 500 Index (SPX) is showing a bit of lag in the trend. As price is moving higher, sentiment is stalling.

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On the bright side, the count of bullish stocks is rising at a steady pace. This indicates that the breakout to new highs is being met with widespread optimism.

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Another sign of optimism comes from traders price target tweets for SPX. The Twitter stream is starting to see a lot of calls for 2400.

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Conclusion

We’re likely due for a short term top. Sector sentiment is overbought and sentiment for SPX is stalling. Once a bit of consolidation occurs, it appears the market should move higher due to widespread buying and calls for higher prices.