Somebody Missed the Tweet that this Company Suspended Guidance
Twitter, Inc (TWTR) advanced nearly 8% on Wednesday, closing at the highest price in over two months. The move occurred on high volume as the consolidation pattern that it’s been trading in since the earnings broke out bullishly.
As you consider the difficult times we’re facing, it’s interesting that companies like TWTR and Facebook, Inc (FB) have done so well. On March 23, 2020, the company withdrew its guidance and missed analyst estimates. However, purchases from Q1 that were recently disclosed by Appaloosa LP have helped the investors gain confidence and may have contributed to the move.
Despite the recent consolidation, the price still has been able to trade in the upward channel that was established in mid-April. Wednesday’s move now has the price butted up against the 61.8% of the downtrend in March. A break of this level is an indication of a full retracement back to its February high near $40.
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The price is currently sitting in between the 50-day and 200-day moving averages. The downward sloping averages is an indication of the overall bearish conditions that are still present in the price of this stock. A close above the 200-day moving average may help further bullish interest.
The near-term target of TWTR is at the upper end of its channel at $34. However, the intermediate-term target is the February high at $40.
Option traders may want to consider a 17 JUL 20 32/33 long call vertical for around $0.46. The max gain of $54 or 117% ROR is established if the price closes above $33 by expiration. Consider closing early if the vertical can be sold for $0.80 or more.