History Predicts Twitter, Inc. (NYSE:TWTR) Rally Won’t Last

History Predicts Twitter, Inc. (NYSE:TWTR) Rally Won’t Last

History Predicts Twitter, Inc. (NYSE:TWTR) Rally Won’t Last

Shares of Twitter surged by 15% last Thursday after a record increase in quarterly user growth, but the social media company already has given back some of those stocks gains. That’s not a surprise, according to history, as big Twitter rallies in the recent past quickly reverse.

Following similar one-day moves, Twitter shares are down, on average, near-5% a month later, according to a CNBC analysis of Kensho, a hedge fund trading tool. Twitter shares trade negatively 60% of the time during these one-month periods, which have occurred five times in the past five years.

Monetizable daily active users, or MDAUs, a key Twitter metric, grew 21% to 152 million, beating Wall Street’s expectation of 147.5 million. Its first-quarter revenue guidance was a little light, between $825 million and $885 million, compared with the Thomson Reuters consensus estimate of $873 million.

In the third-quarter earnings, Twitter revenue had come up short and the stock had dropped by more than 20% on a variety of concerns related to its Mobile Application Promotion product, which hurt its ability to target ads and share measurement data with partners.

Fourth-quarter revenue of $1.01 billion was above the $996.7 million expected, but Twitter warned shareholders that the headwinds will “continue to weigh on the overall performance of our advertising business in the near term.”

Twitter CFO Ned Segal told CNBC in a post-earnings interview that expenses will grow in 2020 as a result of recent user growth.

“When you add 26 million people to the service when more than half of it is tied directly to product improvements, you build a confidence to continue to execute against your strategy and the execution we’ve been able to deliver over the last few years,” Segal said.

Segal told analysts on the earnings call that “advertiser sentiment remains strong.”

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 33.32.

The projected upper bound is: 38.34.

The projected lower bound is: 33.14.

The projected closing price is: 35.74.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 48.8012. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 58.34. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 2 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 69. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed down -0.310 at 35.650. Volume was 24% below average (neutral) and Bollinger Bands were 2% narrower than normal.

Open     High      Low     Close     Volume___
36.060 36.270 35.540 35.650 2,612,629
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 34.68 32.54 36.50
Volatility: 93 47 52
Volume: 5,266,646 3,501,896 3,029,972

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

TWITTER INC is currently 2.3% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of TWTR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on TWTR.N and have had this outlook for the last 48 periods.

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