Twitter's Breakout Over $50 Turning Into A Fakeout?
Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.
Twitter Inc (NYSE: TWTR) shares were trading lower by $1.86 (3 percent) at $49.61 in Wednesday's session. The catalyst for the decline may be a downgrade by Pivotal Research, which downgraded the issue from Buy to Hold and maintained its $51 price target.
At first, the issue shrugged of the downgrade and rallied off the open, but found resistance just above Tuesday's high ($51.79), reaching $51.87 before reversing course.
What may be exacerbating the decline is the trading action as momentum investors piled into the issue as it breached the major resistance level. Traders caught up in Tuesday's buying frenzy are not dumping those positions as the breakout has turned into a fakeout.
So far, the decline has reached $49.31, which is well above Tuesday's low of $48.54. More patient momentum investors may be waiting to see if the issue can reclaim the $50.00 level by the end of today's session before bailing on their long position.
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