Did Social Media Chatter Predict the Rally in KB Home?
This week, Social Market Analytics' (SMA) focus pick is KB Home (NYSE: KBH), a residential homebuilding and financial services company operating in the United States.
The week of June 25 saw the release of Standard & Poor's Case-Shiller Home Price Index data, which showed that average home prices increased 1.3% in the month of April for the first time after seven consecutive months of declines. This favorable economic data, combined with a better than expected Q2 earnings announcement had shares of KB Home rise 12.6% on June 29, its biggest one-day advance since March 2009. The stock was the leader of Standard & Poor's 1500 Homebuilding Index, which also gained 4.8 percent.
At the beginning of the week, SMA's sentiment metrics provided early indication of developing, favorable price movement. As the week progressed, SMA's metrics confirmed positive market sentiment for KBH as the earnings announcement approached and traders integrated the economic data and company news.
From June 25 to June 27, SMA's S-Score for KBH experienced a sharp upward trend into positive territory. On June 27, KBH's stock gaped up at the open and continued to trade favorably, ending the session at $8.61, for a gain of 3%. The behavior of SMA's S-Score measures market trading sentiment and can provide actionable signals for upcoming price movement. In the pre-market of June 28, KBH's S-Score soared to 3.52 (Extreme Positive), the stock closed the day slightly higher at $8.70. This high level of positive market sentiment persisted in the pre-market of June 29, with an S-Score level of 3.58 (Extreme Positive), coincident with a spike up in KBH's S-Volume metric indicating unusual, active social media content. On June 29, the date of the earnings report, the stock opened up 4.8% and traded in a strong intra-day uptrend to end the session at $9.80, for a gain of 12.6%, and up 20.4% net for the week.
Social Media data are noisy and complex. A single metric is insufficient to understand sentiment behavior over time. Our S-Factors are a family of metrics, including volatility, trend and volume measures, designed to provide a complete view of social media signature for each security tracked in SMA's databases.
SMA's processing engine continuously updates our S-Factors, capturing overnight and pre-market sentiment activities. Clients receive sentiment reports prior to the U.S. market open and intra-day sentiment estimates for tracked stocks, on-demand. SMA invites the reader to visit the website; investigate the market sentiment metrics for KBH, other stocks, industry sectors, and market indices; participate in the FAQ forum; and sign up for the Flash Report and Newsletter.
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