Summary:

• US500 trading in a narrow range ahead of US session
• Twitter called to open sharply higher after posting 1st ever profit
• Could SNAP follow Facebook’s lead?

Looking at the US markets ahead of their cash session one can see that so far today has seen some small gains after Wednesday put at least a temporary halt to the latest recovery. The markets seem to have calmed down a little after the erratic moves seen at the start of the week but the question now is whether the declines are over or are we set for at least a retest of the lows around 2530. 

 The US500 has bounced strongly off the lows but Wednesday’s red candle could mark the end of this move higher. Source: xStation

Taking a fib retracement of the fall it is apparent that despite yesterday’s trade brekaing above the 50% level at 2704 the market failed to hold on to these gains and end the day above there. The intraday high of the inverted hammer comes in at 2728 and longs will want to see a clean move above here, or possibly a close above 2704 before they can grow in confidence that the worst of the declines are behind them. On the downside 2647 is a level to watch but if price breaks below here then the 23.6% at 2611 and the low at 2528 could be set for a retest. 

 Twitter is called to open higher by more than 20% and above the 30 handle after posting its latest results after the bell last night. Source: xStation

Twitter’s share price has jumped by more than 20% in the pre-market after what chief executive Jack Dorsey called a “strong finish to the year” that saw the firm post its first ever profit. The tech firm posted a 2% increase in revenue to $732M in Q4, beating the $686M forecast by analysts. Following on from a net loss of $167M in the same quarter of the previous year the firm this time out posted $91M in profit. 

The positive news for Twitter comes just a day after SNAP reported some upbeat numbers which saw the stock soar during Wednesday’s session. The trajectory of SNAP could be seen to resemble that of an early day Facebook where the stock went public in a whirl of enthusiasm that saw price gain from the IPO before tumbling back sharply lower. In July 2013 Facebook reported a set of positive results that saw the market jump above its 200 day SMA before setting off on a face-ripping rally in the next 4 and a half years. 

 Facebook rallied in July 2013 after a positive earnings release and the move triggered an incredible rally over the next 4 and a half years. Source: xStation

The price action in Facebook back in July 2013 could be seen to have been replicated of late by SNAP. Source: xStation

To put the move back in the summer of 2013 in perspective for Facebook let’s look at a weekly chart. After the market gapped above the 200 day SMA price took off on a strong uptrend which saw the market rally from around 27 to a high of 195 in just under 5 years – an incredible gain of more than 800%!