Stocktwits is overtaking Zerohedge
Posted by Danny on March 7, 2017
Stocks are pulling back a bit since their March 1 peaks, but nothing dramatic so far. The S&P 500 has now gone 99 trading days without a 1% down day, so if stocks don’t drop today this move will join the 100 day club. That hasn’t happened since 1995.
Let’s have a look at the Nasdaq chart:
All my indicators have turned down, so March 1 may have been a major peak. But we have to watch carefully what happens next here. If the current pullback stays short and shallow or sideways then it will probably be followed by another 5% surge higher. Such a shallow pullback could see Nasdaq test 5800, but not much lower than that.
This market has been doing all the right things, as described in my December post, and that means a final strong advance is quickly becoming the base scenario. One of the main conditions is an S&P push to 2500-600 before summer and that doesn’t look so crazy anymore.
If we get that kind of blow-off peak scenario then we should start seeing the typical symptoms that come with it. Look for reports that a lot of new investors are opening brokerage accounts and buying stocks for the first time. And a much more buoyant mood on popular investor hangouts like Stocktwits. At the same time look for known bearish sites to become less popular. Once retail investors cave in and put more of their savings into stocks their appetite for bad news, bubble warnings and bearish commentary goes down. I like to use Google Trends to keep an eye on it. For years I have been expecting that Stocktwits would become more popular than Zerohedge by the time this market peaks. And that seems to be happening now:
The surge for Stocktwits shows that retail investors are quickly warming up to this market. Meanwhile Zerohedge seems to have lost about 20% of its audience in recent months. If those trends continue and Stocktwits clearly overtakes Zerohedge then it will be a very significant indication. And then the difficult job will be to determine when and where this love affair with stocks will end. Such a final surge typically lasts between 8 and 18 months.