Why? Simply because it is in an ending diagonal and has already bumped 5 rails on the way down as counted below. Wait for the throw under with this pig. Wait for the 5-3-5 shape of wave 5 to play out. Once that is done, pile in heavy because the shorts have to cover. It can result in a very rapid a-b-c to the prior 4th wave or even higher. Again TWTR is basically worthless as a driver of economic value but it was just up at $75 for a reason: people want to gamble and get into momo stocks. And so they all got creamed by this tumble while sucking in plenty of heavily leveraged shorts along the way.
I think we are not far from the bottom. $3 maybe 4 or even $5. At the rate this is headed nearly straight down it will not take many trading days to bottom and when it does I expect a right swift partial recovery. TWTR might indeed be worthless but nothing, not even TWTR, goes straight up or straight down. Mind you, I am talking about trading here, not buy and hold. Buy and hold is dead. The extreme volatility makes this so. Wait until the Dow goes lower than it did in 2009 and then people will begin to understand what all of this means. The fake money supply is dying and it is manifesting itself as volatility.
Captain, at what price point/range do you think it's a good idea to buy TWTR in the anticipation of a quick bounce back up?
ReplyDeleteThanks, J.T. Marlin
JTM, As you know, from my perspective the price is not as important as the wave count. Still, in the blog post that you are commenting on I wrote,
ReplyDelete"I think we are not far from the bottom. $3 maybe 4 or even $5. At the rate this is headed nearly straight down it will not take many trading days to bottom and when it does I expect a right swift partial recover."
Of course, that was just a gut estimate. Today it went from $31.80 down to $29.40 before catching a bid. I don't think it is done yet. A wild flier like TWTR should have a bigger throw under than this IMO.
Having said that, I think today's action was just the end of 3 of C. It was just strong enough to break below the lower rail, something that you would expect from a 3rd of C wave. Now look at the volume chart. 72mn shares traded in what is clearly panic selling, last one out the door is left holding an empty paper bag, etc. Seriously you have to look at that volume spike and know that a strong near term bottom is not far off.
2 of C was a vee and so I expect 4 of C to be sideways. Then 1 final wave down, perhaps on falling volume as the market runs out of sellers of every kind, including short sellers who should now be in the sights of traders. Those shorts all have to cover because maybe TWTR will BK some day but not soon. They will be taking profits as soon as a base is put in and that should lead to a very strong rally.
Tomorrow we will know more. Why? Because off the low of today I count a clear 3 wave move up. Tomorrow will tell us if it was a-b-c or 1-2-3. The dream scenario would be sideways action for a could of days and then one more wave down of the same size as 1 of C (which I believe was ~$6). So perhaps a small rally to $32 and change and then another $6 plunge to complete the C wave.
I hate to throw out price targets like this but if pressed I would call it $26 for 5 of C. The subsequent short covering rally should bounce back to perhaps $45.
We should not forget that this selling was really kicked off due to shares of insiders coming off of lock up.
http://www.nytimes.com/2014/05/07/technology/twitter-stock-drops.html?_r=0
A strong short covering bounce is nearly assured once the wave count bottoms.