PreMarket Prep Stock Of The Day: Twilio

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Just as the share price of Twilio Inc. TWLO appeared to be pausing at the $400 level, an upgrade has altered that scenario.

Monster Return In 2020: After ending 2019 at $98.28, the issue took a tumble with the broad market in March. It bottomed a few days ahead of the S&P 500 index on March 16 at $68.06 and embarked on an incredible rally. That low came in just under its November 2018 low of $69.96.

The issue has traded higher in nine of the past 11 months, taking a slight breather in August and September. For the year, the issue was higher by 244% ($98.28 to $338.50).

Momentum Carries Over Into 2021: While the issue had an impressive January ($338.50 to $359.43), it pales in comparison to this month. At this time, it’s having its best month on a price and percentage basis since the rally began in March. It has been higher every day this month except for one, which was a mild retreat on Monday ($400.06 to $399.51) after making a new all-time high intraday at $407.77.

Weak Close: On some occasions when an issue makes a new a new all-time high and retreats to end red on the session, it may be a signal of short-term weakness or some profit-taking. Since the issue didn't end near the lows for the session, the trading action can't be construed as a key reversal.

That occurs when an issue makes a new high and then closes near the previous day’s low. In this instance, it closed well off Monday’s low ($395.70), which coincided with Friday’s low of $395.68.

JPMorgan To The Rescue: Before the open, JPMorgan upgraded the issue from Neutral to Overweight and raised its price target from $300 to $465. That makes the target second-highest only to Oppenheimer, which has an Overweight rating and price target of $550.

After an open above its previous all-time high, it rallied to $409.57 and reversed course. As of 12:30 p.m. ET, the ensuing decline has found support ahead of Monday’s close ($399.51) at $402.26 and has rebounded back to the highs for the session.

Moving Forward: The upgrade has instigated a new all-time high at $409.77. Investors may want to focus on the issue continuing to make a new all-time high on a closing basis to determine if the rally will continue, especially since that closing high ($400.06) is flanked by the close on Thursday at $399.49 and Monday at $399.51.