Twitter, Inc. (TWTR) is probably going to open higher this morning as one sell-side institution raised its price target. Our own Jim Cramer talked about the CEO, Jack Dorsey, last night on his "Mad Money" show. Last week, Twitter replaced Monsanto (MON) in the S&P 500.
Lot's of news flow to consider but let's stick to the charts and technical indicators.
I reviewed the charts of TWTR one month ago, writing that, "TWTR is poised to move higher but further sideways price action would not surprise me and it would actually be good to see further buying and a stronger OBV line. The Point and Figure chart suggests a rally to retest the March highs is possible but a target above those highs would give me more confidence to probe the long side again."
Looking at an updated chart (below), we can see that TWTR traded sideways for a couple weeks last month and earlier this month the March high was tested and broken. Now what?
In this daily bar chart of TWTR, below, we can see that our favorite indicators are aligned on the upside. Prices are above the 50-day moving average line and its slope has turned positive again. The 200-day average line is still bullish and rising.
The daily On-Balance-Volume (OBV) line has risen the past 12 months and has made new highs with the price advance. This rising OBV line tells us that buyers of TWTR have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is rising in a bullish configuration.
In this weekly bar chart of TWTR, below, we can see the 2016-2017 base pattern. Prices are above the rising 40-week moving average line.
The weekly OBV line has been rising since early 2016 and also made a new high to confirm the rally.
The weekly MACD oscillator is also in a bullish mode like the daily time frame.
In this Point and Figure chart of TWTR, below, we now have a higher price target of $65.
Bottom line: The rally from early May is pretty steep so we shouldn't be surprised about a profit-taking reaction or pullback at some point in time. With all our charts and indicators looking bullish, seasoned traders should consider a pullback as a buying opportunity. I would recommend risking below $36 and operating with price targets of $50 and $65.