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Twitter, Inc. (NYSE:TWTR) stock already reflects the website’s upcoming improvements

Twitter, Inc. (NYSE:TWTR) stock already reflects the website’s upcoming improvements

Shares of Twitter (NYSE:TWTR) exploded higher in early February, as the social media company’s impressive fourth-quarter user growth boosted Twitter stock. The company’s Q4 results led investors to believe that its product innovations are improving the experience of its users, driving more users to the platform. Advertisers tend to follow users, so Twitter’s accelerated user growth today should lead to accelerated revenue and profit growth for the company tomorrow.

That’s why Twitter’s shares are up 15% in 2020 and are trading near their highest levels since October 2019. Investors expect the company’s financial growth to accelerate in the second half of 2020.

But, for a few reasons,  I think investors should be cautious about Twitter stock at its current, elevated levels.

First, the company’s revenue growth trends remain sluggish, and increasing competition coupled with easing digital ad market trends suggest that the company’s revenue growth may not accelerate as Wall Street expects. Second, its profit growth trends remain sluggish, and the intensive investments in products and security it will make in 2020 imply that its profit growth will stay sluggish for a long time. Third, the valuation of Twitter stock appears exceedingly full, with little room for gains even if everything goes right for the company.

Given these points, I’m not chasing this rally. Instead, I’m selling Twitter’s shares as the stock rises.

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 33.74.

The projected upper bound is: 40.87.

The projected lower bound is: 35.57.

The projected closing price is: 38.22.

Candlesticks

A white body occurred (because prices closed higher 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 28 white candles and 22 black candles for a net of 6 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with TWITTER INC), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 79.5668. This is not an overbought or oversold reading. The last signal was a sell 6 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 66.22. 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 6 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 83. This is not a topping or bottoming area. The last signal was a sell 4 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 7 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed up 1.150 at 38.060. Volume was 1% below average (neutral) and Bollinger Bands were 23% wider than normal.

Open     High      Low     Close     Volume___
36.820 38.070 36.690 38.060 3,465,392
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 36.33 33.09 36.45
Volatility: 92 48 52
Volume: 5,619,247 3,573,029 3,031,378

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 4.4% above 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 52 periods.

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