Character of the Market

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One of the most beneficial uses of the daily most bullish and bearish lists is to get a feel for the character of the market. This is especially true when the market is making a short term bottom or top. Yesterday the market rallied sharply out of a one week decline. By looking at the stocks that had the strongest support on the Twitter stream yesterday you can see that the rally was fueled by beaten down stocks. This tells us that short covering and/or value buying was taking place. In a healthy market this list should have been filled with leading stocks (not beaten down stocks) as people add to their winners coming out of a dip. This puts yesterday’s rally in doubt.

150729bullish

So where were the leaders? Take a look at the most bearish list for yesterday. Lots of leaders. This indicates that people are selling their winners into this rally. Another problem for the current rally. Unless this trend changes I’ll be suspicious of further gains by the indexes.

150729bearish

Another way to judge the damage done by a short term dip is to view the list that aligns with the duration of the decline. The current decline was about a week. Here’s the most bearish list over the past week. Again, too many leaders for my comfort. You can see the most bullish stocks on Twitter here. Use the “frequency” links (1 Day, 1 Week, etc.) to see different time frames. The bearish list is located here.

150729bearish1w
Source: Character of the Market

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.

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