The stock rose more than tenth in early trading Tuesday after beating earnings and topping sales estimates for its first quarter. That move conjointly pushed Twitter out of bear market territory, currently less than twentieth off its 52-week high.
Matt Maley, equity strategist at Miller Tabak, aforementioned that Twitter still seems like the social stock with the most upside even with Tuesday’s surge.
“Even although Snap and Facebook have seen a series of nice higher highs and higher lows, they’re obtaining much extended and much overbought,” Maley said.
Facebook has added nearly fortieth this year, whereas Snap has rocketed 117% higher, compared with Twitter’s thirty five gains.
Twitter has “been stuck in a sideways range for 6 months currently and you really have to return to June before it was really rallying in any vital way,” Maley said Monday on CNBC’s “Trading Nation.”
Twitter had ping-ponged in a tight range between roughly $26 and $35. It had not traded above that level since mid-2018 till Tuesday once it broke out above $38.
It currently needs to hold that level through to the close, said Maley.
“If it can hold above that range ($36.25 is the top of that range on a closing basis), it’s going to be quite positive,” Maley said in an email on Tuesday. “It hasn’t attracted any ‘momentum money’ for ten months. If it continues to break higher than that range over the approaching days, it’s going to attract some of that momentum cash (much like FB did once they reported their fourth quarter earnings).”
Twitter led the XLC communications services sector ETF higher Tuesday. The ETF has added twentieth in 2019, outpacing the sixteenth gain of the S&P five hundred.
However, Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, says to steer clear of the group.
“We would avoid this altogether,” Morganlander said on “Trading Nation” on Monday. “In fact, due to the concentration risk concerning fortieth of this sector is based off of 2 companies and the other tops ten, it’s basically seventieth.”
Alphabet has the biggest weighting in the XLC, contributing twenty fourth, and Facebook chases with a nineteenth weighting. The next 3 components – Disney, Comcast and Netflix, contribute more than fifteenth.
“Our viewpoint is that the social media companies as well as some of the search companies are stretched at this inflection point,” said Morganlander.