Positive Signs

I’m seeing continued positive signs for the market from the Twitter stream. First, is that daily momentum and sentiment for the S&P 500 Index (SPX) is showing mostly positive prints again. This is the first time that it’s happened since the beginning of July (just before the August collapse). If the trend continues as the market consolidates under 2100 it will be a very positive sign and signal that the break should be higher.

Another good sign comes from breadth on Twitter. It continues to crawl sideways while the market is consolidating. Most importantly the number of bearish stocks is falling again, while the number of bullish stocks is holding up. This is another sign that the market should break higher.

Fear has left the market as evidenced by traders price target tweets. The two big declines in 2014 left lingering fear for several months. Subsequent price dips brought out calls for substantially lower prices on SPX. Notice that the last two dips (after the waterfall decline in August) weren’t accompanied by fear of a big decline. Market participants have left their fear behind and are now waiting for the current consolidation to end.

Sector sentiment is mixed this week. Financials, technology, and consumer discretionary are showing strength, but materials and industrials are weak. In addition, the defensive sector of consumer staples is positive.

Conclusion

We’ve got a mostly positive view coming from sentiment on the Twitter stream. Daily momentum prints are mostly positive, the number of bearish stocks is falling, and market participants have left their fear behind. The odds favor prices breaking out to new highs.