In 2016, Donald Trump single-handedly created a new foundational engine for financial markets: his Twitter messages (NYSE :). Some fund managers, even those with respected reputations, openly said that all you need to do to act effectively is Trump's tweets.
Bloomberg even enabled his terminal to provide compilations of data and graphs that plot and evaluate how Trump's tweets affected the market.
President Trump using his Twitter account to convey his opinions, policy positions, and even hiring and firing updates to his more than 88 million followers, generated massive publicity for the social media platform, not to mention a significant user growth. So it wasn't much of a surprise when Twitter lost $ 5 billion in market value on Monday after being permanently suspended}} the president of its platform after markets closed on Friday for inciting violence in the Capitol last week and possibly fueling future mafia attacks.
On Monday, Twitter's shares closed more than 6%. Is this just the start of a deep dive for the stock? Maybe not.
Mark Shmulik, internet analyst at AllianceBernstein says the sale is "a little overreacting". Right now, he notes, "most advertisers will have nothing to do with Trump." In other words, the current sell-off could be hurt for longer term gains in the short term.
In addition, Shmulik adds, although Trump increased the ad views of the platform traffic, his removal means that he will no longer dominate the conversation. Additionally, advertisers are likely to feel better about Twitter as a safer place for their brand. Shumulik considers it "net positive for the business."
Whatever your opinion of the current president and Twitter's decision, charts indicate that this sell-off is nothing more than a glorified correction within an uptrend.
To begin with, there was a significant dip buy earlier yesterday. In fact, a 12.2% free fall was cut in half, eventually becoming a 6.4% decline.
Second, the price found support at the 100 DMA – tracing the bottom of a rising channel, confirming its technical significance. The price is trading in an uptrend, framed in an upward channel since the March bottom.
Between the lowest point in March and the highest point in December, the price rose 180% but not in a straight line. Rather, it accelerated through peaks and troughs.
On October 30, the share plummeted by 21.1% after {{erl-44334 || earnings showed weak user growth. Nonetheless, the stock didn't just recover after that, it added 5% to hit a record.
It is true that the Trump ban angered conservatives, which could exacerbate the same user growth concerns that weighed on stocks in late October, but the fact that the price found support by the 100 DMA then, and now, and along the same uptrend line – then and now – suggests there is enough demand to push prices up again and brave its all-time high. Perhaps especially when the outlook for additional fiscal stimulus will only stimulate investors' willingness to seek risk. the uptrend line, then wait for a retest to get closer access.
Moderate traders can wait either at the base or at a greater distance from the uptrendline.
Aggressive traders could buy in now, provided they understand and accept the risk of an unconfirmed position and act accordingly.
Here's an example:
Trade Sample
Admission: $ 47
Stop Loss: $ 45
Risk: $ 2
Target: $ 57
Reward: $ 10
Risk: Reward Ratio: 1: 5
