Not All Tech Stocks Are Down This Quarter

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Most people know technology and communications stocks are having a rough quarter. But not every stock is going down.

Twitter (TWTR) rose 21 percent between September 30 and yesterday’s close. That made it the second-best performing company in the entire S&P 500 over that time frame. Only Red Hat (RHT), which is getting acquired, is up more.

TWTR jumped on October 25 after earnings and revenue beat estimates. Perhaps more important, the company seemed to show signs of a turnaround by purging bogus accounts and adding new advertisers. The report starkly contrasted with Facebook’s (FB) revenue miss the following week.

Twitter (TWTR) chart with levels and moving averages.

Chart watchers may also like a few things about TWTR. First, it’s back above its 200-day moving average and is pushing the top of an apparent channel that’s formed since the summer. Second, it’s recently found support at its rising 50-day moving average.

Third, its 50-day moving average may soon rise through its 200-day moving average. That would create a so-called “golden cross” bullish reversal pattern.

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Next, TWTR had a big price gap on July 27. If it enters that space, some traders may expect it to “fill the gap” back toward $42.

Value hunters may also like the name because it has 12.4 million users per every $1 billion of market cap, while FB only has 5.5 million.

In conclusion, TWTR’s shining despite its peers lagging. It’s shown positive results and some very bullish options activity. Traders may want to keep an eye on this name.

Disclosure: This post is intended for educational purposes only and shouldn’t be considered a trade recommendation.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.