Since the low in late June the S&P 500 Index (SPX) has made a lot of small moves followed by small consolidations. Each one of these consolidations has occurred at support or resistance levels generated from the Twitter stream. Take a look at the chart below and you can see where Tweets for the following levels started ahead of price and predicted where the market would consolidate. 1700, 1675-1680, 1650, and 1630 were all areas that generated a lot of tweets. Each red dot on the chart indicates multiple tweets for the same price on the same day. 1700 acted as resistance out of the June low, while 1675-80, 1650, and 1630 all acted as support. Just for fun here are the weekend posts over the last month. Take a look at the commentary in the “Twitter support and resistance” section of each post and you can see how the traders on Twitter telegraphed potential moves. 8/10/13 1675 to 1700, 8/17/13 1650 to 1675, 8/25/13 1630 to 1680, 9/2/13 1630 to 1650.
Currently there is still a large number of Tweets in the following areas on SPX 1600, 1630, 1650, 1680, and 1700. If the market continues to move up then 1680 and 1700 should add some difficulty. It’s too early to tell if 1650 is support or resistance yet, but it was a logical area for the market to pause today. If this level fails then watch 1630-1625 and 1600 for the next short term bounce possibility.
The lesson to be learned from Twitter support and resistance is that when a lot of traders are tweeting the same area it means that money is waiting for that level before it moves (either in or out of positions).
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