Twitter Inc. (TWTR) was mentioned during Jim Cramer's "No Huddle Offense" during Wednesday night's Mad Money program. TWTR recently broke out above its early November high to establish a fresh uptrend.
Let's check out the charts and tweets to see how important this breakout is.
In the daily bar chart of TWTR, below, we can see a number of price gaps -- some of them in the uptrend from January to June and also a big downside gap in July. Gaps can be unnerving if one is wrongly positioned so let's just look at the price action from early August.
Many market observers would call this price action from August an inverse head-and-shoulders bottom pattern. I have a number of issues with that idea/observation -- the size, the location and the volume -- the pattern is too small, the location is not after a long decline and the volume does not build through the pattern. However, you may find it easy to "see" the pattern. Let's just forget about name tags and call it an accumulation or bullish pattern. Prices have closed above the 50-day moving average line and the slope of the line has turned positive. This week TWTR closed above the flat 200-day moving average line.
Now look at the On-Balance-Volume (OBV) line, which shows a rise from early August to now telling us that buyers of TWTR have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator has just turned up from the zero line for a new outright go long signal.
This all sounds bullish. Right?
In the weekly bar chart of TWTR, below, we can see that prices just closed above the flat 40-week moving average line. The weekly OBV line has been constructive since August 2017.
The weekly MACD oscillator is right on the zero and ready for a bullish crossover.
In this Point and Figure chart of TWTR, below, we just look at the price action and reversals -- no gaps, no volume, and a clear upside price target of $51.
Bottom-line strategy: The charts of TWTR have clearly strengthened since August. Traders could consider going long TWTR at current levels and on strength, risk a close below $31 while looking for a rally to the $48-$51 area.