Forget the Losses, Bring Me a Pizza! Another Week in Stock Sentiment
Sentiment continued to remain broadly negative in $SPY despite the overall rally in US equity markets. After weeks of pretty consistently negative sentiment flow in $SPY, its becoming quite possible that the community is using it as an object of speculation on the downside: when $SPY rallies their is a marked tendency for sentiment flow to turn Bearish. On the other hand, the price-sentiment dynamic is more complicated during down moves in the equity markets, characterized by bursts of both Bullish and Bearish sentiment that coincide with extremes in price.
Our weekly Stock Sentiment Screener caught another big haul of stocks experiencing swings in both price and sentiment that are worth watching for the week ahead.
Group RR: Rising Sentiment + Rising Price
This group filters the market for stocks which have a combination of rising price and rising Bullish sentiment.
Shares in SolarCity ($SCTY), a solar energy equipment manufacturer chaired by Elon Musk, rose around 20% this week on strongly optimistic sentiment: almost 40% of the message volume expressed a Bullish attitude against only 3% on the downside. The rally represents a rebound of sorts: $SCTY fell over 50% from August to mid-November.
Similarly, FitBit ($FIT) saw its share price rise 20% on extremely Bullish sentiment:
$FIT also peaked back in August and experienced a halving into the recent rally. With the broader indices back near highs, the community seems like its looking to buy companies that have been discounted by the market turbulence but have not yet rallied back to their highs.
Group RF: Rising Sentiment + Falling Price
This group detects stocks which are experiencing falling price and increasing Bullish sentiment.
This week, Group RF was dominated by Biotechs including $VLTC, $AEZS, $KITE, $INSY, and $KBIO. All of these stocks were typified by strongly rising sentiment in the face of significant price declines. The sector, especially micro-cap biotech, has received a lot of attention since November when a group of investors announced they had acquired a majority stake in the KaloBios ($KBIO), igniting a fire which sent the stock up 30-fold. Stocks like $VLTC and $AEZS received sympathy bids in the days after $KBIO’s pop, but have begun to fall earthward as $KBIO has fallen from a high of around $40 / share.
Group FR: Falling Sentiment + Rising Price:
This group finds stocks which have risen in price in the face of falling sentiment.
Shares in streaming video service NetFlix ($NFLX) rallied slightly this week despite a slight majority of messages on the Bear side. The price-sentiment dynamics experienced a number of gyrations this week as the stock attempted to mount a rally higher. The sentiment flow is characterized by bursts of both positive and negative sentiment. There was a concentration of negative sentiment on Tuesday, with a shock of Bullish sentiment on Wednesday’s and Thursday’s failed rallies. Friday’s sentiment was more balanced but with a decreasing magnitude: the strongest opinions were expressed in the middle of the week.
Group FF: Falling Sentiment + Falling Price
This group screens for stocks which have a combination of falling prices and increasingly Bearish sentiment
Investors in retailer Urban Outfitters ($URBN) have gone through quite the roller-coaster this year. The company’s share price hit an all time high as recently as March of this year at $47 / share. It would seem that the liquidation began immediately after that and the stock has declined by more than half since. While I have not done a deep dive into their financials, its hard not to be concerned about the company’s management: in November $URBN announced the acquisition of a line of pizzeria’s as part of a turnaround plan. Its hard to see how a history of selling faux-vintage T-shirts has uniquely prepared the company for the many challenges of running a quick service restaurant…
Group POLAR: Sentiment Divergence
This group screens for stocks which have a large number of Bullish and Bearish messages occurring at the same time.
– For the Quants you can get access to data like this using the StockTwits API.
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