Twitter stock (TWTR) is up over 20% today on volume over 72 million shares traded. From a headline I never thought I would ever wake up to. It involves the richest man in the world, Elon Musk…or sometimes Elona Musk when he changes his Twitter name.

Twitter stock is going bonkers as Elon Musk is now the largest outside shareholder of Twitter. The billionaire now owns  73,486,938 shares of Twitter which represents a 9.2% stake in the company. He now owns more than quadruple the shares of Twitter’s founder, Jack Dorsey.

Based on Twitter’s Friday closing price of $39.31, his stake is worth $2.89 billion. Based on today’s price, you can add 20% to that. Well worth over $3 billion now.

This news comes as a bit of a surprise because Musk has recently been criticizing the social media giant for a failure to uphold the tenets of free speech. He even hinted at developing his own social media platform. This is what he tweeted about two weeks ago:

“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” Musk tweeted. “What should be done?”

In typical ‘buy the rumor, sell the news’ fashion, investors are betting that Elon Musk does a bit more. Even though he has said his stake is a passive stake, given his comments on developing his own social media platform, investors/traders think he could do a bit more. Maybe this leads to straight up acquisition or a buyout. I know the meme crowd is excited because they expect more frequent sh*tposting from Elon, and he won’t get in trouble for it.

Those from the investing side of things might not be too pleased. Many say Elon Musk has manipulated the stock price of Tesla and other assets via tweets. When he tweets such things as “Tesla stock is too expensive imo”, he causes massive moves in the share price. His ‘pumping’ of Dogecoin and other crypto’s has been a hot topic in the past few months. If Musk does go for a buyout there will definitely be some drama and unhappy people. I wonder how many people would leave Twitter as a protest.

The most exciting thing for me as a trader is the fact the charts told us some big news was coming. Now I know many remain skeptics, but in my many years of trading, especially on the Forex side, you can tell if good news is coming down the pipeline just by watching price action. Spooky sometimes, but I do believe we live in a world with imperfect information. Word gets leaked out, and people take positions. Position themselves in a way that would not look like insider trading. I guess this is easier to do on the forex side of things given the large volume. Nonetheless, a lot of human emotions and psychology can be gauged just by looking at the chart.

My theory might sound incredulous to some, but it is part of my market structure. All markets move in three ways: uptrend, range and downtrend. My readers and discord followers know we look for basing/ranging markets after a long downtrend. We then wait for a breakout of this base to enter long and ride the uptrend. Usually this happens because of some news as a catalyst. But we prepare ourselves before news even hits the tape.

Recently, we have seen many stocks turning just like Twitter. Especially on the technology side, which could coincide with the Nasdaq and other stock market indices beginning to reverse.

Twitter developed a basing pattern between $32-$38. Instead of making lower highs and lower lows to continue the downtrend, we ranged, indicating an exhaustion of selling pressure. A big key was the huge green candle known as an engulfing candle printed on February 22nd 2022. A very bullish sign.

One could have entered a position on the break above $36, but we play the safe game. We wait for the major resistance to be taken out at $38. We got that and the price briefly popped over $40 before pulling back to retest the breakout zone. Typical breakout price action as we expect a pullback to retest the zone we just broke out of. Remember this. Too many new traders sell out on this pullback. The real sell signal would be if the price closed back below the resistance zone. That would then be a false breakout or fake out.

Breakout traders had a chance to enter on March 31st and April 1st. Would have been rewarded with a nice 25% gain. So what now? $50 could provide resistance being an important psychological zone. However, I think the $53 zone provides better resistance. Technically, as long as Twitter remains above $38, we are in a new uptrend and should expect buying on pullbacks. We have also developed a HUGE gap which also is very bullish and will be supportive.