Morning Preview: Will Momentum Stocks Bounce, and Comparing P/E 10 Ratios

In today’s Monday morning preview we are examining 3 key market themes to watch throughout the week. Each theme was selected using StockTwits’ social analytics. This includes message volume, and also bullish and bearish sentiment:

1.) Momentum tech stocks were on everyone’s radar last week. Most of them got absolutely destroyed, too. $YELP, for example, dropped 14% and made a new low for the year. On StockTwits, message volume for stocks like $YELP, $FEYE, $SPLK, and $WDAY more than quadrupled on a week-over-week basis. Will momentum stocks bounce this week? Or will the sell-off continue? Here are 3 messages that caught our eye on StockTwits:

Massive changes in $YELP sentiment & message volume. Happened to all momo tech names. Example: http://stks.co/b0Pgg

— stefan cheplick (@scheplick) Apr. 7 at 08:33 AM

$DATA $SPLK $DWRE $NOW $TWTR $YELP $Z >$2B cap names still >80X forward P/E even after their crashes http://stks.co/b0PUW

— JLL IV (@TXplunger) Apr. 5 at 01:01 PM

$AMZN $FB $TWTR $NFLX % from highs. How much longer can indices shrug this off? http://stks.co/r0BBi

— Michael Batnick (@TheIrrelevantInvestor) Apr. 4 at 02:15 PM

 
 

2.) Last Friday, the largest Nasdaq-100 ETF $QQQ fell more than 2.5%. It was its largest drop in nearly a year. It was also the top trending ticker for the entire day, and is already trending this morning. The big worry right now is that a large basket of tech stocks, like the ones mentioned above in point 1, have become increasingly overvalued. This could be the catalyst for a major correction in the Nasdaq:

Mo mo and support breaks…lets party like its 1999! $QQQ $IWM $SPY $STUDY $RWM $PSQ http://stks.co/h0THL

— Chris Kimble (@KimbleCharting) Apr. 5 at 09:50 AM

$QQQ If Nasdaq was to repeat a 2007-2009 sell off (the 2000 high was too volatile); a comparable swing low is ~2,100 http://stks.co/s0BKN

— Declan Fallon (@fallondpicks) Apr. 7 at 06:33 AM

 
 

3.) Over the weekend an interesting chart caught our attention. The stock market as a whole could be nearing an extreme level in terms of its valuation. The chart comes from Dshort.com and it compares the stock market’s current P/E 10 ratio to the the 1929 Crash, 2000 Tech Bubble, and 2008 Financial Crisis. It’s somewhat surprising to see where we are on this chart:

$SPY, $QQQ bshort as good an weatherstation as any for predicting direction and time to recession: http://stks.co/e0PcP

— dsd (@Undecided) Apr. 5 at 05:17 PM


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