Twitter, Inc. (TWTR) shares have risen nearly 15% over the past two sessions amid deal rumors and positive comments from Citron Research. Rumors of a takeover from Salesforce.com, Inc. (CRM) caused higher-than-average call option volume during Friday's session. At the same time, Citron Research – a noted short seller – said that "2018 is the year for $TWTR" in a tweet posted during Friday's session.
While Twitter surpassed analyst expectations last quarter, the company reported revenues that fell 4.2% to $590 million, and earnings per share came in at just 10 cents. This was the third straight quarterly decline in top-line revenue, while earnings per share were about three cents lower than the same period last year. The positive news is that the company's turnaround has been picking up steam and could pay dividends this year. (See also: Prominent Short Seller Bullish on Twitter.)
From a technical standpoint, the stock rebounded from lower trendline support last week at around $22.00 toward the middle of its price channel. The relative strength index (RSI) appears relatively neutral at 58.58, but the moving average convergence divergence (MACD) could see a bullish crossover in the near term if the uptrend continues. The overall price trend has also been higher since late October, when Twitter reported better-than-expected financial results.
Traders should watch for a breakout to R1 resistance at $26.34 or upper trendline and R2 resistance at $28.67 on the upside. If the stock loses momentum in the middle of its price channel, traders should watch for a move lower to the pivot point and 50-day moving average at around $23.00 before a potential move higher. A breakdown from lower trendline support could lead to a move to S1 support at $20.90. (For more, see: Tech Outperformance Won't End Soon: Goldman Sachs.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.