DailyPlay – Twilio (TWLO) –  December 13th, 2021

View TWLO Trade

Market Outlook:

Equities were able to stage a strong recovery last week with both the SPY and QQQ rallying to their respective resistance areas at $470 and $400. Momentum remains strong and this could lead to a break above these levels should the macro picture remain positive. While the Omicron variant is still an unknown, markets have brushed that to the side and continue to focus on strong earnings that are still providing tailwinds for equities as we approach the new year. We saw significant sector rotation last week with more sectors such as Real Estate, Staples and Utilities rotating into the leading category and providing broadening leadership for equities. Small caps continue to remain on the back foot despite a strong rebound for IWM at $213. Price posted a 2nd consecutive day of declines as small caps continue to underperform against the large-cap names. Bonds have also sold off as the Fed shifts to a more hawkish undertone. Overall, the outlook for equities remains positive until the year-end. 

TWLO Bearish Trade Idea:
Our bearish trade idea today is Twilio (TWLO). From a technical perspective, TWLO broke below the major support area at $280 with strong bearish momentum and has recently retested this area. Price action is bearish which is in line with our view that $280 is acting as resistance. This provides a good risk/reward bearish opportunity for a move lower with the next area of support at $220. Both 1M and 6M trends are bearish and with a technical score of 3 (out of 10), TWLO is a weak stock that will likely move lower. 

As this is a credit spread, look to take profits at 50% gain and cut losses at 100%:

• Take Profit: $3.50 Debit
• Stop Loss: $14.00 Debit

View TWLO Trade