StockTwits $SPY Sentiment: Foreboding Divergence?

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Smart members of our community have taken notice of a curious trend in arguably the broadest gauge of investor sentiment on StockTwits – the $SPY stream.

It might be tempting for some to cite caution surrounding recent events in (THE) Ukraine, but $SPY sentiment has been trending lower since before the Winter Olympics in Sochi began.

Is it possible that traders and investors are losing confidence and their cautious stance is signalling trouble ahead for stock indices? Or on the flip side, is this further evidence of an ocean of capital awaiting signal to be deployed which might usher in another epic upside run?

Here are some of ideas being thrown around as possible contributors to this foreboding divergence:StandpointCapitalLLC shared an idea on StockTwits

$SPY is so ripe for sellers to come in right here…but they’re just not. They just don’t exist anymore

— J. Scales (@Scaletrader) Mar. 5 at 10:28 AM

$SPY no significant buyers left in this market…the ones that want in are already making $$$…only option left is to take profits $$$…

— Karan M (@chronikl) Mar. 5 at 10:29 AM

$SPY Many believe taper halt to be bullish.. but fact is.. it’s not. It proves the only thing propping up the mkt is fed dollars.

— Alex (@tweetinghard) Mar. 5 at 11:57 AM

Gametrader shared an idea on StockTwits
etfdigest shared an idea on StockTwits

@chicagosean I’m puzzled by that myself, cause it looks like most traders are bullish. actions speak louder than words.

— 6killer (@6killer) Mar. 5 at 01:49 PM


In related news, three must-read blog posts by Barry Ritholtz (@ritholtz), Ryan Detrick (@RyanDetrick) and Josh Brown (@reformedbroker) today that may shed further light on why we’re seeing this sentiment v price divergence:

No, Market Highs Are Not a Bad Sign via @ritholtz

Was Yesterday’s Move to New Highs Really a Hidden Warning? via @RyanDetrick

The Relentless Bid, Explained via @reformedbroker

And I’ll leave you with this small lesson:

$SPY lesson for this week. Careful with news, what you’re sure is right probably isn’t. Big new calls for defense, not always for trading

— joshua (@clt83) Mar. 5 at 08:30 AM

Trade ’em well,

~Sean McLaughlin (@chicagosean)

P.S. Please excuse formatting wonkiness with some of the above messages, working to get that straightened out :)



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