Table of Contents:
- Markets at A Glance
- What’s Making Headlines
- Sentiment Winners and Losers + 💡 $AMC Sentiment Spotlight
- Market Mood Outlook
1. Markets At A Glance
Stocks: NASDAQ, S&P, and DOW are all UP!
May has historically been the fourth-worst month of the year for the stock market. Last week brought the month to a close, and proved that this year may be an exception; the S&P 500 finished May up 1% (now positive in six of the last seven months) and the DOW ended the month up 2%. While the NASDAQ will finish May down slightly more than 1% (snapping a six-month parade of gains), last week provided ample optimism for traders as growth stocks continued their recovery, adding to their recent uptick relative to value stocks by a wide margin.1 The NASDAQ finished the week higher than both the S&P and DOW for the first time in over a month. Though value stocks have dominated the markets year-to-date, the Babbl sentiment algorithms detected a significant increase in conversation last week surrounding growth, tech, and short-heavy meme stocks like $CLOV, $GME, $SPCE, $FUBO, and particularly $AMC. This jump in sentiment, (driven primarily by Reddit and FinTwit) paired with the recent rise in price seems to signal that growth stocks may have already touched bottom; perhaps just in time for a summer rally...👀
Economy: Inflation Reassurance, Bonds Rise
Outside of stocks, we’d be remiss to not mention that oil prices climbed more than 4% last week to their highest levels since 2018. This jump can be attributed to a flux of demand from consumers as COVID-19 restrictions being drawn back. The U.S. continues to reopen post-pandemic, and recent data indicates that economic growth rates are peaking, which suggests that inflation rates are also reaching a peak.2 News conversation last week focused on statements from the Fed and Janet Yellen stressing that inflationary pressures will only be temporary and that inflation levels should recede by the end of 2021. The corporate bond market reacted positively to this news and the yield on the benchmark 10-year U.S. Treasury note decreased over the week.3
Cryptos: Coins Recover from Crash, Volatility Remains
Finally, the global cryptocurrency market recovered considerably last week from the Crypto Crash of two weeks ago. The aggregate crypto market cap added 20% value over the past 7 days (though it remains down nearly 40% from its all-time high on May 11th). Despite the recovery, Bitcoin and Ethereum soured again Saturday, dropping near their $30K and $2K benchmarks respectively. By our sentiment algorithms, the conversation around $BTC in particular was highly polarized last week (ie. high degrees of optimism AND pessimism). Though there’s no saying where the price will be a month from now, one thing seems pretty clear: cryptos are highly volatile, and institutions and retail investors alike are still unsure how to hold ‘em.
2. What’s Making Headlines
Overall: Average Article Sentiment
Each week we analyze impactful sentiment metrics expressed in the news to gain insight into each stock and cryptocurrency’s outlook. Compared to two weeks ago, the market conversation last week was slightly less optimistic (0.07 vs. 0.11), and significantly less pessimistic (0.03 vs. 0.10). This decrease in polarization was accompanied by a considerable increase in reactionary language (0.25 vs 0.36). The average degree of speculative language in the market conversation remained high, though it did decrease slightly compared to the previous week (0.40 vs 0.43). This sentiment signature is representative of the light trading volumes we saw in the market last week. The increase in reactionary language may be tied to the rise in growth stock prices, and as earnings season is virtually over, the decrease in speculative language makes sense.
Individuals: Tickers in the News
Looking at the plot of the top-25 most mentioned tickers in last week’s news, we see the majority of tickers clustering in the bullish first quadrant (ie. highly optimistic and speculative). This is the third straight week that tickers have moved further towards the bullish top right corner of the chart, showing a continued trend of rosy reporting and indicating that analysts feel good about stocks as a whole in the near future.
While FAANG stocks remain large in the market discussion, two key areas saw significant increases in conversation volume last week. First, growth/tech/meme stocks such as Beyond Meats ($BYND), AMC Theatres ($AMC), Palantir Technologies ($PLTR), and Invitae Corp ($NVTA). Second, industrial stocks such as Indian steelmaker Jindal Steel & Power Limited ($JSPL) and the iShares Silver Bullion ETF ($SVR). As growth stocks reach the tipping point of attractive prices and inflationary pressures remain top of mind, it feels justified that these two groups would be juxtaposed near the top of last week’s headlines.
Sentiment Spotlight💡: Grab your popcorn… $AMC is BACK! 🎥
In our analysis of last week’s news articles, over 6% of them mentioned AMC, most of them in a positive light. You don’t have to search far for a reason to respect $AMC this week, as share price closed +127% for the week. To put it lightly, short-sellers got burned and Reddit is excited. Twitter is excited too, with HODLers banding together in hopes of another stellar week:
Trey’s Trades @TradesTrey
May 28th 2021
1,564 Retweets9,058 Likes
With the 6/18 $AMC $40C coming in as the most traded option on Friday (according to barchart.com), traders don’t expect this to cool off quite yet. Honestly, it’s hard to find the bear case in our news sources or social media, but you can rest assured that it’s being discussed in emergency hedge fund meetings across the globe.
3. Sentiment Winners and Losers
Each week we also analyze which tickers ended up with the most extreme sentiment scores. Here’s a look at which tickers scored the highest (and lowest) across the sentiment metrics we currently track in the news.
Most Optimistic😀 and Pessimistic😒 Tickers
In terms of mood, here are the most optimistic and most pessimistic tickers discussed in last week’s news. The most optimistic ticker in last week’s news was Indian tech giant HCL Technologies ($HCL) after correcting nearly 15% from its recent high and setting itself up for a near-perfect long-term entry. Other highly optimistic tickers in last week’s news were MGM (no, not the gaming company, but MGM Studios after reaching a deal to be bought by Amazon), Root Insurance ($ROOT), and Blink Charging Inc. ($BLNK).
Last week’s most pessimistic ticker in news conversation was easily the British FTSE 100 Index ($FTSE). Despite finishing the week relatively flat, poor performance from energy and mining stocks dragged the index in the midst of a correction from its May 10th high. Other highly pessimistic tickers in last week’s news include the Dow Jones Industrial Average ($DJIA^), Etsy ($ETSY), and Twitter ($TWTR). The complete visualization:
Most Speculative🤔⏩ and Reactive😮⏮️ Tickers
In terms of time sense (ie. future- and past-tense words expressed), here are the most speculative and reactive tickers in last week’s news. In terms of speculation (both relative to reaction and in absolute measure) the most speculative ticker last week was arguably General Motors ($GM) as the company begins to reopen vehicle assembly plants as the global chip shortage appears to be receding. Other highly speculative tickers last week (both relatively and absolutely) include AirBnB ($ABNB), capital markets company JMP Group ($JMP), and pot stock Sundial Growers ($SNDL).
The most reactive ticker last week was definitively Best Buy Co. Inc. ($BBY) after posting beautiful earnings that beat estimates and raising their full-year sales forecast on expectations of increased consumer spending. Other highly reactive tickers last week include real estate marketplace Compass Inc. ($COMP), the British FTSE 100 Index, and iShares Silver Bullion ETF ($SVR). The complete visualization:
Biggest Mood Swings and Changes 🎭🔀
Last but not least, we’ll break down which tickers experienced the biggest changes in sentiment last week (compared to the previous week). In terms of article volume, the tickers with the biggest increase in headlines were Invitae ($NVTA), Micron Technologies ($MU), and Beyond Meats ($BYND).
The tickers with the greatest improvements in mood last week (ie. optimism vs. pessimism) were NIO Inc. ($NIO), HP Computers ($HP), and the ARK Innovation ETF (ARK Innovation ETF (ARKK) Stock Price, News, Quote & History - Yahoo Finance, while the tickers that faired the worst in the news over the week compared to the previous were farm supply company GrowGeneration ($GRWG) as well as Adobe ($ADBE) and Twitter ($TWTR).
Finally, the tickers with the greatest increases in speculative (vs. reactive) language last week were Walmart ($WMT), HP Computers ($HP), and Shopify ($SHOP), while the tickers with the greatest increases in reactive (vs. speculative) language was Best Buy Co. Inc. ($BBY), Virgin Galactic ($SPCE), and Boeing Inc. ($BA).
4. Market Mood Outlook
After a rocky May, we’re left a lot to look forward to in June and beyond. Wide-market indexes finish the month +1% on average, and some rallying commodities like lumber signal that they may have found their top. We’ll be watching the jobs report coming out next week to gauge the strength of the reopening economy, and we continue to keep a finger on the pulse of the Fed’s inflation targets and reports.
Special Edition (Coming Soon)
This week, we’ll interview analysts about what they see happening over the next month, and what names they’ll be watching. We’ll write up what they say, and get you solid intel to keep in mind for June. Keep an eye out for that in your inbox this week in lieu of a monthly roundup.
Babbl takes an analytical approach to reading the news. Our goal is to bring better market sentiment to retail investors to help automate some of the legwork around investment research. We analyze finance media to detect "mood" signals such as optimism and pessimism, as well as “time-sense” signals such as reaction (ie. past-oriented sentences) and speculation (ie. future-focused). Every week and month, we summarize these findings into a newsletter for our subscribers. Our goal is to make it easier for retail investors to make confident, well-rounded decisions by quantifying finance news.
This roundup was written by Ramsey Shaffer and Sam Cartford, with help from the Babbl Discord and the MoneyMen group. Please note: all information reported here is for informational and educational purposes. We are amateur investors, not financial advisors.
We redid our website landing page this week, check out the new look below! We are also very close to releasing a beta version of our stock market sentiment website; follow us on Twitter @babbldev or visit babbl.dev for details and to join the waiting list for our v1.0 launch!