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Twitter Inc (NYSE: TWTR ) has had its fair share of troubles over the past year, and in keeping with the trend, it finished 2016 on a sour note. TWTR stock tumbled 18.5% between a high on Dec. 9 and a low just two weeks later, and crashed through both its 50- and 200-day moving averages in the process.
The shares appeared to form a base into the New Year and have since attempted to bounce, but they’re not having much luck.
I’m staying away from Twitter stock right now. Let me explain why.
TWTR Stock Chart
Twitter’s rally attempt came early this week when the stock ran up to its 200-day moving average (the red line) on Monday but closed just below it at a two-week closing high.
TWTR stock appeared to be setting up for a breakout when it rallied again on Tuesday, but the shares reversed course and closed the day down 0.75%. That weakness continued over the following days, which indicates that the breakout attempt was a failure.
There are also two other things worth pointing out here.
First, TWTR’s rally effort had been on average volume, suggesting that it would fail once it came face-to-face with resistance at the moving average.
Second, the strength was sector-based, which means that it was more likely a result of a rising tide that lifts all boats rather than buyers showing more faith in the company.
Twitter still has major internal issues that have yet to be resolved, and at this point there’s no resolution in sight.
In the end, this week’s action has wiped out any momentum that TWTR stock had been attempting to build during its brief period of strength. As a result, I’m avoiding it at all costs.
The chart is bearish, and I wouldn’t consider shorting it either given that there’s always the possibility of an announcement — such as a takeover — sending the shares quickly higher.
So in less than 140 characters: Avoid Twitter.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com .
Article printed from InvestorPlace Media, http://investorplace.com/2017/01/twitter-inc-twtr-stock-no-man-land/.
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