This is a "long shot" for me for several reasons:
1. The trend is still down for TWTR based on the trend of "Range Movement" since it has hit a 2-month low.
2. The stock is overbought already. The last time it was overbought it tumbled on its earnings announcement.
3. The average true range is a monstrous 1.53, which is roughly 5% average range per day. Compare this to the S&P500 which has 0.7% per day, so it is 7 times as volatile as the market. It is the same as having the market return levered 7 times. Who needs to trade futures when you get 7:1 leverage by trading TWTR.
4. The trendline across the last two "highest lows" is showing that the sellers appear to be out of the way, so that is a good reason to take a shot here.
5. Earnings are not coming anytime soon - so downside volatility from the last 2 reports are out of the way.
6. It has lagged the "internet" rebound in the past month and we can maybe tighten up the stop to the low of today. This gives us a high probability of getting stopped out, but that is what you have to deal with in trading. If you use tight stops then you will get stopped out more often but live to take another trade. You can always re-enter going back up through 34 if it goes under today's low.
Long: 37-38 target (into the gap), 32.80 stop (.23 under today's low of 23.09)
Tim 34.18 last, +0.85 today Monday 6/9/2014 11:47AM EST
1. The trend is still down for TWTR based on the trend of "Range Movement" since it has hit a 2-month low.
2. The stock is overbought already. The last time it was overbought it tumbled on its earnings announcement.
3. The average true range is a monstrous 1.53, which is roughly 5% average range per day. Compare this to the S&P500 which has 0.7% per day, so it is 7 times as volatile as the market. It is the same as having the market return levered 7 times. Who needs to trade futures when you get 7:1 leverage by trading TWTR.
4. The trendline across the last two "highest lows" is showing that the sellers appear to be out of the way, so that is a good reason to take a shot here.
5. Earnings are not coming anytime soon - so downside volatility from the last 2 reports are out of the way.
6. It has lagged the "internet" rebound in the past month and we can maybe tighten up the stop to the low of today. This gives us a high probability of getting stopped out, but that is what you have to deal with in trading. If you use tight stops then you will get stopped out more often but live to take another trade. You can always re-enter going back up through 34 if it goes under today's low.
Long: 37-38 target (into the gap), 32.80 stop (.23 under today's low of 23.09)
Tim 34.18 last, +0.85 today Monday 6/9/2014 11:47AM EST
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