Twilio (TWLO) - Get Twilio, Inc. Class A Report provides cloud communication platforms for voice and messaging applications. The stock has retraced nearly all of last year's powerful post-IPO high, but more recently has been forming a rounded base and is back above its 50-day moving average. This month the company reported stronger than expected fourth-quarter earnings. With a 33% short interest in the stock, covering of that short exposure could spark a powerful rally.
The daily chart shows the sharp rise and fall of the stock price in the eight months since it became publicly traded, and the rounded bottom that formed over the last several months. Moving average convergence/divergence made a bullish crossover at the beginning of the year and has been tracking higher and is above its center line. The aroon indicator, which is designed to identify early shifts in trend direction, made a bullish crossover this month.
The stock has seen a surge in overall volume recently, and the Chaikin money flow reading suggests it is under heavy accumulation.
Shares jumped over 9% in Monday's session taking them back up to the December 2016 high and breaking above the upper band of a very constricted Bollinger band range. These periods of low volatility reflected in narrow bandwidth are often followed by periods of high volatility, and with the positive price and money flow indications and a large short interest, the path of least resistance is higher.
Twilio is a buy at its current level using a tight trailing percentage stop.