The Fibocall: Twitter

This article originally appeared on RealMoney.com on Sept. 4, 2014 at 9:48 a.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.

Last night we filtered through our long-term overbought list, and landed on the chart ofTwitter (TWTR) . The stock is quite interesting for the long term, yet there may also be something for the shorter-term trader.

On Aug. 26, Twitter stock generated a long-term overbought condition on August 26, with no downside momentum.

Then, on Wednesday, the stock opened higher -- at $51.83 -- and closed below the Sept. 2 low of $49.90 for an outside reversal day. This reversal, combined with the trigger of the long-term overbought signal, means we should look to sell into any Twitter rally at this juncture.

For any short-term traders, use a close above $51.85, the Sept. 3 intraday high, as a sh

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ort-term cover.

For longer term traders or portfolio managers, the long-term selling zone is $52.12 to $57.45. We've calculated that zone based on Twitter's decline from $74.73 and $29.51 between Dec. 26, 2013 and May 6, 2014.

Also note that Twitter has an initial support level of $46.56, based on the rally between the May 6 low of $29.51 and the Sept. 3 high of $51.85.

All long-term signals are not the same, but the Twitter December 2013 long-term overbought signal did precede a stock slide of more than 60%. That's something any potential buyers might want to think about.

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At the time of publication, Berman had no positions in the stocks mentioned.

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