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Stocks Are Weak and Downtrending

“Stocks that are weak (downtrending) tend to get weaker (keep downtrending).”

 

By Corey Rosenbloom

That quote is certainly true for “weak getting weaker” downtrending Twitter (NYSE:TWTR) as price broke to a fresh new 52-week low this morning.

Let’s first start with the larger-picture downtrend (weekly chart) and pinpoint today’s new low:

After an IPO near $25.00 per share, Twitter (TWTR) stock tripled to the $75.00 per share level.

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The Happy Days for Twitter were early in 2014 as price began a stellar and long-term downtrend.

From $75.00, price journeyed lower, supporting at the $35.00 level before breaking lower and resuming the downtrend in mid-2015.

Similarly, share prices stalled above $15.00 into 2016 but now may be breaking into a new sell-swing.

Here’s the Daily Chart and breakdown to new lows, keeping the downtrend going:

We define a downtrend as a “series of lower swing lows and lower swing highs” along with a “bearish orientation in the moving average.”

As I frequently highlight, we only trade in the direction of established trends and DO NOT look to fight or fade trends (we’re not reversal traders here).

Twitter is a good example of our “weak stocks tend to get even weaker” concept of swing trading.

A strong surge higher in February off $14.00 led to an aggressive rally higher but the trend continued through March into May.

We’re seeing a breakdown to a new 52-week low this morning, and if sellers keep up the pressure, Twitter (TWTR) shares are likely to continue even lower.

If you’re trading this stock, focus on the $14.00 per share level and the falling 20 day EMA into $14.70.

Be on guard for a possible “Bear Trap” like the example I highlighted for you in “Apple – Trapple.”