Twitter Inc.’s stock has been going nowhere in recent months as the social-media company’s merger battle with Elon Musk plays out, but after a long downtrend doing nothing has been enough to produce a rare bullish chart pattern that suggests that a new uptrend may be starting.
A “golden cross” pattern, the first in a little more than two years, appeared in Twitter’s stock chart Wednesday
a day after the company’s shareholders voted overwhelmingly, by a 109-to-1 margin, to approve the agreement to be acquired by Tesla Inc.
Chief Executive Musk.
The pattern appears when the 50-day moving average (DMA), a widely watched shorter-term trend tracker, crosses above the 200-DMA, which is viewed by some as a dividing line between longer-term uptrends and downtrends. Many Wall Street chart watchers see a golden cross as marking the spot where shorter-term bounces graduate to longer-term uptrends.
The patterns aren’t always good market timing signals, given that they are well telegraphed. But they can help provide historical and technical perspective for a stock’s recent performance.
On Wednesday, Twitter’s 50-DMA rose to $40.48 from $40.41 on Tuesday, according to FactSet data, while the 200-DMA fell to $40.41 from $40.44.
The stock slipped 0.3% in afternoon trading Wednesday, after rising 0.8% on Tuesday despite a sharp selloff in the broader stock market. The stock was trading above both moving averages, suggesting a bullish technical lean.
The last golden cross appeared on July 14, 2020. The stock ran up 125.8% after the pattern appeared, until it peaked at a record close of $77.63 on March 1, 2021.
The one before that surfaced on April 25, 2019, and the stock climbed 18.0% before topping out at a 14-month high of $45.42 on Sept. 6, 2019.
The golden cross also follows a “death cross,” or when a 50-DMA falls below the 200-DMA, that popped up on Oct. 26, 2021. The stock has tumbled 32.2% since that bearish pattern appeared, while the S&P 500 index
has lost 14.0% over the same time.