As Twitter Hits New Highs, Bulls Are Looking for More Upside

Twitter is hitting new 2020 highs as J.P. Morgan analysts name it a top pick. Let's look at where the stock can go from here.
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Twitter  (TWTR) - Get Report shares were running higher on Wednesday, up 3% and hitting new 2020 highs.

Not only were shares making fresh year-to-date highs, the stock is now climbing to its highest level since October 2014. However, perhaps there will be more gains to come. 

J.P. Morgan analysts upgraded the stock from neutral to overweight and assigned a $65 price target. From Tuesday’s close, that implies roughly 23% upside.

However, the analysts went further, naming Twitter a top pick for 2021. One reason? Because the stock trades at a discount to its peers like Pinterest  (PINS) - Get Report and Snap  (SNAP) - Get Report, although they were bullish on online advertising overall for next year.

At new highs now, bulls are wondering just how possible J.P. Morgan’s new target may be.

Trading Twitter

Daily chart of Twitter stock.

Daily chart of Twitter stock.

On Oct. 16, I outlined how Twitter stock could rally up to $50 ahead of the election and its earnings report on Oct. 29 after the close.

Shares promptly rallied about 15% leading up to earnings, closing near $52.50 ahead of earnings. Those that punched out at the $50 target were glad they did, as shares dropped 21% after reporting the quarter.

Shares bottomed the next day after tagging the 100-day moving average and have been chugging higher ever since.

Twitter stock climbed in 23 of the next 31 trading sessions, with two of those losing sessions clocking losses of less than 0.2%. Not that that is overwhelmingly relevant, but it highlights that the buyers have been strong and steady over the past six weeks.

Last week, Twitter shares struggled with the 161.8% extension, which is near where it previously topped out. This week though, the stock pushed through this mark and used it as support on Monday and Tuesday.

Now clearing this area again, look for the 161.8% extension near $51.75 to act as support. Further, bulls want to see the 10-day moving average act as support when it is eventually tested.

If Twitter can clear Wednesday’s high at $56.11, look for a possible run to the two-times range extension up at $59.28. Above puts $60-plus in play, as well as J.P. Morgan’s $65 price target.

Below the 161.8% extension and 10-day moving average will put the 21-day moving average in play, and/or the $48 to $48.50 area, whichever comes first.