Juiced by takeover rumors, Twitter’s steepening rally looks like it’s just getting warmed up. Yesterday’s gap-up opening not only exceeded a clear Hidden Pivot resistance at 20.59, it also blew past a daunting ‘external’ peak at 20.32 recorded back in March. The result is a fresh impulse leg on the daily chart sufficiently powerful to imply than any sharp reaction in the weeks ahead be regarded as a buying opportunity. I’ve always viewed the company as little more than hype, and I’ve yet to be persuaded that one can grow a business with tweets. Twitter may be useful to Justin Bieber, Kim Kardashian and their respective fans, but that’s a far cry from being truly useful. Anyway, we’ll know soon enough whether some company loaded with cash covets Twitter enough to buy it. If Yahoo can sell itself — with serial-flop artiste Marissa Mayer as part of the package — then yes, Twitter is bound to find a buyer stupid enough to believe it’s worth even more than it’s selling for now. _______ UPDATE (August 17, 7:36 p.m. EDT): If buyers hit 20.42 with an upthrust today it would put a 21.99 target in play. Here’s the pattern on the 30-minute chart: A=19.01 (8/12); B=21.10 (8/15); and C= 19.90._______ UPDATE (August 19, 1:42 a.m): The stock’s retrenchment is becoming punitive for bulls who bought near 21, but more punishment is evidently what it will take to set up another big rally. For now, use the 18.55 target shown (see inset, a new chart) as a minimum downside target. If it’s exceeded by more than 5 cents, the next Hidden Pivot support likely to produce a tradable bounce would be 18.21. Accordingly, you can bid 18.23 for 400 shares, stop 18.14. ______UPDATE (August 23, 9:50 a.m.): TWTR has turned from 18.52, three cents from the higher of the two targets given above, missing our niggardly bid. I didn’t want to risk having you attempt bottom-fishing in two separate spots, and that’s why I used only the worst-case low to get long against the downtrend._______ UPDATE (August 25, 1:30 a.m.): If you bought at 18.23, hold rigorously to the stop-loss, since, strictly speaking, this was not a ‘mechanical’ entry. That’s because the ‘D’ target of the pattern has already been reached. _______UPDATE (August 25, 10:46 p.m.): The 41-cent rally on the opening bar was good reason to take a partial profit, since the gain would have amounted to six times the seven cents that was risked initially. I am not tracking this position officially, but because it would have been entered two cents off Wednesday’s low, you should be in good enough shape by now to manage it yourself.
