Stocks Are Weak and Downtrending
“Stocks that are weak (downtrending) tend to get weaker (keep downtrending).”
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:
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.”