Twitter, Inc. (NYSE:TWTR) Betting On A Sharp Drop

Twitter, Inc. (NYSE:TWTR) Betting On A Sharp Drop

Twitter, Inc. (NYSE:TWTR) Betting On A Sharp Drop

Twitter Inc.’s (TWTR)  stock has rebounded by around 12% since the middle of November, but that may be about to end after the social media company reports quarterly results. Options traders appear to be betting that the stock price declines by as much as 9% following those quarterly results. Meanwhile, the technical chart is flashing some ominous signs.

Earnings are forecast to be very weak when the company reports results on February 6, declining by almost 12%. Meanwhile, revenue is estimated to have increased by nearly 10%. The company saw operating expenses soar in the third quarter as it ramped up its headcount and R&D

Betting On A Sharp Drop

Traders have been betting that Twitter’s stock falls following its quarterly results. The open interest for February 7, 2020, $30.5 puts rose by almost 6,100 contracts on January 27. According to data from Trade Alert, these puts traded on the ASK for about $0.67 per contract on January 24. It would indicate that a trader is betting that Twitter’s stock falls below $29.80 by the expiration date. It would be equal to a decline of roughly 9% from its current price of $32.75 on January 27.

Improving Usage Trends

The company did drive strong monetizable Daily Active Usage (mDAU) growth of 17% in the third quarter to 145 million versus 124 million in the same period a year ago, and up from 139 million sequentially. Over the last few quarters, Twitter has driven strong growth in this segment, mostly from international subscribers, which increased by 18% in the third quarter to 115 million from 98 million a year earlier. Growth in the US has been slower but is showing some signs of acceleration, with subscriber growth rising by 8%, 10%, and 13% in each of the last three quarters on a year-over-year basis, respectively.  

Twitter will have a lot to prove this quarter to get investors excited about the stock again after last quarters’ big disappointment. Anything less could result in the shares moving sharply lower, yet again.

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 32.87.

The projected upper bound is: 34.72.

The projected lower bound is: 32.29.

The projected closing price is: 33.51.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

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 33.3857. This is not an overbought or oversold reading. The last signal was a sell 3 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 56.60. 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 buy 44 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 -9. This is not a topping or bottoming area. The last signal was a sell 3 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 sell 1 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed up 0.640 at 33.420. Volume was 20% below average (neutral) and Bollinger Bands were 47% narrower than normal.

Open     High      Low     Close     Volume___
33.080 33.660 32.855 33.420 2,531,591
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 33.58 31.58 36.59
Volatility: 27 24 51
Volume: 3,506,716 3,073,238 2,986,896

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 8.7% below its 200-period moving average and is in an upward trend. Volatility is 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 38 periods.

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