Shares of Twitter (TWTR) - Get Twitter, Inc. Report are getting slammed in after-hours trading. The stock is down over 10% following the company's third-quarter earnings report. This damaging breakdown is a sharp reversal from the bullish action during Tuesday's session. For Twitter investors, a frustrating period is likely ahead.
Since the initial surge off the Oct. 2 low, Twitter has had trouble making further headway. The stock has been bumping up against heavy resistance near the $31.50 area for the last three weeks. During this phase, upside trade picked up dramatically, and with Tuesday's high-volume gain, the stock has posted more above-average daily gains in October than any other month this year. On Tuesday, Twitter closed at its best level since July's close on very heavy trade. Investors were certainly showing a great deal of confidence ahead of earnings.
The bullish action on Tuesday will lead to more pain in the near term. Despite leaving behind multiple support levels, the downside momentum unleashed Wednesday morning will likely push Twitter back down to its August low. Well above this level, set back on Aug. 24 at $21, is the stock's October low of $24.35. A hold here should be viewed as a major accomplishment by the bulls.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long Twitter.