Social Media Sentiment on the Market – 3QTR 2015 Report

HedgeChatter: Social Media Market Sentiment 3rd-QTR 2015

By: James Ross | HedgeChatter | CEO | August 31st, 2015

Last week we ran a report to show the Downside Risk Alerts on the SPDR S&P 500 (SPY) for the past two years. As previously noted, by monitoring the SPY we're able to see an indication of the markets pulling back within 24hrs - 3 weeks.

Findings: As the number of Downside Risk Alerts increase, the Total S&P 500 Return decreases.

The report below was generated for the past two years.

Here is what's VERY interesting about this data when you break it apart by Year/QTR as done below:

In 2013 we started collecting the SPY data for the remainder 8 months of 2013. (We did not collect the first 4 months as we we're in build mode for Ver2.0)

  • For the Year 2013 there were only 2 Downside Risk Indicators - How did the Market Perform? Total S&P500 Return 22.11%

In 2014 we had the following:
  • For the Year 2014 we had a total of 12 Downside Risk Indicators - How did the Market Perform? Total S&P500 Return 12.72%
  • Q1 - 3 Alerts
  • Q2 - 3 Alerts
  • Q3 - 3 Alerts
  • Q4 - 3 Alerts
  • Between August 2014 and December 31st 2014, there were 4 Downside Risk Alerts generated

In 2015 we've had the following:
  • For the Year 2015 we've had 21 Downside Risk Indicators - and How has the Market performed so far? Total S&P500 Return -2.82%
  • Q1 - 2 Alerts
  • Q2 - 14 Alerts (June itself had 7 Downside Risk Alerts - think about when Volatility started)
  • Q3 - 5 Alerts
  • Q4 - 3 Alerts
  • August alone has had 2 Downside Risk Alerts

  • Today, at the end of August Q3 2015, where are we now?
  • The Dow Jones Industrial Average has plummeted more than 1,200 points for the month of August -- a fall of 6.8%. That's the biggest percentage drop for this collection of 30 stocks since a nearly 8% plunge in May 2010.
  • The broader S&P 500 index too has fallen 6.5% in August, its worst month since a 6.3% decline in May 2012.
  • Generalized "expert" public facing opinion is that we are not entering a bear market, rather that stocks are taking a breather.

  • Based on the trending data analysis and increase in Downside Risk Indicators, we would be hard pressed to agree with the generalized "expert" public facing opinion .

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