I like using Twitter. It’s another great way to connect with people, friends and the occasional celebrity (That’s for retweeting me that one time Jim Cramer!) It’s a fun site and full of information. Some good, some terrible, and every now and then you find a gem! But then again, that’s kind of the internet right? Hopefully, this is one of those gems for you!
Most of you who read the words I electronically type know that I’m not a huge fundamental trader. However, I still have common sense. There are two companies on the market that I specifically think will be sold for scraps in the future to another profitable company.
These two companies are BBRY and TWTR. I really doubt I’ll ever be bullish on them. Let’s face it, BBRY isn’t really relevant any more (aside from their patents) and TWTR just doesn’t make any real money and is facing a similar problem as FB is facing right now: robotic fake accounts cluttering things with spam. TWTR has a big issue with fake followers and people being able to buy fake followers, along with FB and their ‘international like farms’. But I digress.
TWITTER CHART ANALYSIS
Let’s talk chart specifics. 39 price level is a strong support on TWTR. That support was broken with a strong gap down from earnings. Old support is new resistance. The purple boxes represent traders who are trapped from the gap down. I’ll explain trapped this way.
Let’s say you bought shares of TWTR somewhere in the purple boxes. Where would your stop have gone? Well, likely below 39. That means they would be selling their shares. TWTR made all-time low territory today. Making lower lows and lower highs is the definition of a bearish trend. The two black arrows represent strong gaps on TWTR that have not been filled and likely won’t be for quite some time. I’m not going to say that TWTR absolutely won’t fill this gap but I doubt it. I will be waiting for some reversal signals, like a white candle followed by some black candles that create lower highs and lower lows.
KEY LEVELS
Also, if TWTR closes below 37.17 the question becomes, what’s stopping it? The answer is, not much. Think FB, a la July 27, 2012. Stop could be placed somewhere around or above 40 on TWTR. It will be interesting to see how this plays out. Shorting the stock could be a potential, but you might have to call your broker in order to do it. There were some restrictions on shorting TWTR on 4/30/2014. Put options could always be purchased. They go up when the stock goes down. Could be fun, folks!
Enjoy this great risk:reward trade. Let’s see what happens.
RELATED READING
When it comes to investing and making decisions, has human nature changed over the past few hundred years? The Madness of Crowds: The Eiffel Tower Pattern
Read the story in the Spring TraderPlanet Journal.
