Everywhere You Look, You Get Mixed Signals On Twitter

I developed a couple of scans back in 2008 and the idea behind them was to find stocks that were primed for sharp short-term moves, up or down. I was specifically looking for good trade setups for option trades. I’ve been running these scans every day since and they are still a big part of my investment strategy. I have added some other tools to help me evaluate the bullish and bearish list that are produced each night, but the scans themselves are pretty much the same as they were 13 years ago.

When I ran the scans on June 9, Twitter (TWTR) appeared on the bearish list. If we look at the daily chart we see that the stock has been trending lower since peaking in late February. If we connect that high with the high from April we get a downwardly sloped trend line. I also took the liberty of drawing a parallel line that connects some of the lows from the last few months. The channel does a pretty good job of defining the overall trend for the last four months. It shows the various cycles within the overall downward trend.

My initial thought was this looks like a good bearish setup. The stock is overbought, it is hitting resistance at its 50-day moving average, and it is just below the upper rail of the channel. But I didn’t stop there with my analysis. I also looked at the weekly chart and what I saw painted a different picture entirely.

The weekly chart shows an upward trend that started with the low from March 2020 and connects with the low from last June to form a trend line. The stock dropped below the trend line in May but didn’t close a week below it. Now the stock has rallied over the last four weeks and it looks like the trend is still in place.

We also see that the stock was oversold based on the weekly stochastic indicators and they have since made a bullish crossover.

Turning to the Fundamentals for Clarification

One of the things that I have added to analyzing my scan results is looking at the fundamental indicators as well as the technical indicators. Because of the mixed outlooks from the daily and weekly charts I was especially interested in the fundamentals for Twitter. I went to Tickeron’s Fundamental Analysis screener and low and behold I saw mixed signals there as well. The artificial intelligence trend predictor showed a bullish signal for the next week and a bearish signal for the next month.

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