Twitter, Inc. (NYSE:TWTR) stock has the long term support it needs

Twitter, Inc. (NYSE:TWTR) stock has the long term support it needs

Twitter, Inc. (NYSE:TWTR) stock has the long term support it needs

When it rains, it pours. Nowhere is that more true right now than the social media industry, which has dealt out massive pullbacks in names like Twitter (NYSE:TWTR), Facebook (NASDAQ:FB) and Snap (NYSE:SNAP). But unlike two of these names, Twitter stock is actually one investors may want to consider on the long side.

Does that mean we hate Facebook and Snap? Not necessarily. Just that, amid the carnage, we find TWTR stock to be the best positioned as an investment.

While Facebook is far more profitable and has a much more robust advertising model, its chart is a disaster. There are calls to separate founder Mark Zuckerberg’s roles as CEO and chairman, while negative news continues to come out seemingly every week. That said, if Facebook’s chart can turn it around (here’s what we’re looking for), it will again become interesting on the long side.

On the other hand, Snap is widely unattractive to me and I’ve been pessimistic on it for quite some time. If the company would quit hemorrhaging money, I could start to consider it. But its valuation still remains high and user engagement isn’t encouraging. In short, we’ll pass.

So that leaves Twitter.

Why Like Twitter Stock?

With a market cap now north of $25 billion, it’s not the attractive takeover target it was when the share price was less than half of what it is today when it was trading around $14. Since then though, a lot has changed.

Twitter stock last hit those lows in April 2017. In the same month, Twitter reported a Q1 revenue decline of 7.8% and earnings of 11 cents per share (beating estimates by 10 cents a share). This year when Twitter reported its Q1 2018 results, revenue growth boomed 21.3% while earnings accelerated 45% to 16 cents a share.

That momentum has not only continued, but accelerated. In Q2 revenue grew 23.9% and last quarter, sales expanded 28.6% year-over-year (YoY). Earnings came in at 21 cents per share, more than double last year’s dime-a-share bottom-line results.

On a trailing 12-month basis, Twitter has generated more than $1.2 billion in operating cash flow and more than $750 million in free-cash flow.

Yes, still not a wildly profitable enterprise. But the numbers are all moving in the right direction and Twitter has one of the most noteworthy platforms which features breaking news, instant commentary and a way for anyone from athletes, to Oprah, to the president to get the word out how they want. There’s value in that model and eventually it will be realized.

Overall, the bias in prices is: Sideways.

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

The projected upper bound is: 35.86.

The projected lower bound is: 29.42.

The projected closing price is: 32.64.

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 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 70.2090. 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 51.52. 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 54 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 68. This is not a topping or bottoming area. The last signal was a buy 1 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 15 period(s) ago.

Rex Takasugi – TD Profile

TWITTER INC closed down -1.100 at 32.560. Volume was 5% below average (neutral) and Bollinger Bands were 49% narrower than normal.

Open High Low Close Volume___
33.280 34.150 32.500 32.560 4,393,757

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 32.09 31.04 34.01
Volatility: 66 67 68
Volume: 4,299,709 4,671,642 5,215,189

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 4.3% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of TWTR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TWTR.N and have had this outlook for the last 3 periods.

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