Divergence Opportunities

July 22, 2018

When social-data and stock price are moving sharply in opposite directions, we call that divergence.  It’s a signal to us that Wall St is could be incorrect (or looking backwards) in its assessment of the company.

There are two ways that divergence can happen:

1.  Bullish divergence –  this occurs when the social volume and social sentiment numbers for the company are improving in a significant way while the stock is falling or near lows.

LikeFolio Purchase Intent Data showed a divergence opportunity on Weight Watchers when the stock was trading at $28/share!!

2.  Bearish divergence– this occurs when social data is moving negatively as the stock rallies or stalls near highs.

When users revolted against the Snapchat redesign, LikeFolio members knew first -- before the stock tanked from $20 to under $10!

How to find divergence plays

  1.  Get access to the LikeFolio research dashboard and Opportunity Alerts with a membership.
  2.  Get your feet wet and some free lessons via the LikeFolio Letter.

It’s important to note that divergence plays can take time to develop and can go against you for a while. Keeping an eye on social data to make sure it’s still confirming your hypothesis is critical.

Remember, social data tells us what’s going on at the Main Street level.  What consumers are actually doing and buying.  It’s fantastic signal for the company’s fundamentals, but it can take time to manifest its way into sales/earnings reports and the company stock price.

Get more insights by signing up for The Vault

Related Posts

Tastes Great, WAY Less Filling -- Hard Sparkling Is Dominating The Alcohol Industry

Drinker’s tastes and priorities are shifting in a major way. […]

Read More
How Social Data Predicted Walmart's Earnings Beat

Here's what LikeFolio data was showing heading into the Walmart earnings report that sent the stock 10% higher.

Read More
How SOCIAL DATA Predicted Today's Big Stock Winner

Nordstrom is the biggest gainer in the S&P 500 today -- here's how LikeFolio data predicted the move.

Read More
1 2 3 19

Related Posts

About LikeFolio

LikeFolio analyzes social media data to accurately predict shifts in consumer behavior. We sell data and insights to professional investors, corporate research teams, and software providers.
© 2024
 LikeFolio. All Rights Reserved.
LikeFolio