Our social media momentum indicators for the S&P 500 Index (SPX) have been drifting sideways over the past few weeks. This drift comes near levels that have often meant some consolidation in price is warranted. However, traders on Twitter are now tweeting higher price targets. This gives the market a chance to drift to the 2040 or 2050 area while 7 day Twitter and StockTwits momentum move up into overbought readings.

Resistance from the Twitter stream for SPX is at 2040 and 2050. Support comes in at 2010 and 2000. This is a fairly tight range which suggests traders are waiting rather than taking strong positions. The lack of tweets above 2050 and below 2000 is another indication that traders lack conviction in either direction. One thing of concern is the absence of tweets between 1905 and 2000. It appears that traders are drawing a line in the sand at the 2010 level, with a bit more support at 2000, but nothing below. When this happens it creates an air pocket that can lead to a waterfall decline if the line in the sand doesn’t hold. This same condition occurred in late September at the 1905 level. On the next dip the bulls want to see several levels of support tweeted rather than one must hold level.

Sector strength scores are all positive for the past week. Almost every time this has occurred since we’ve been tracking it (more than 2 years) it has marked a short term top. The few instances where a short term top didn’t happen resulted in one more week of higher prices with every sector positive again…then the short term top occurred. Basically, this condition indicates a rotation to safety (defensive sectors) helping to fuel the rally.

Breadth from StockTwits and Twitter continue to diverge from price, but are still at healthy levels.

Overall social media is suggesting that the market is drifting. Currently that drift is higher, but sector strength indicates we’re due for a short term top. Watch for an increase in support levels on the next dip and a higher low in 7 day momentum for signs that the dip will be short in both time and price.