Last time Twitter saw this kind of a rally, the stock hit pause before falling 20 percent

Twitter got the blue checkmark when it joined the S&P 500 last week, but its big gains have raised some technical flags for one chart watcher.

"I like Twitter long term but it's really extended here right now," Frank Cappelleri, senior equity trader at Instinet, told CNBC's "Trading Nation" on Tuesday. "Right now Twitter is 35 percent above its 50-day moving average."

Twitter cut above its 50-day moving average in early May after holding mostly below that level through April. It has not broken below its longer-term 200-day moving average since October.

"It has the third highest [premium to its 50-day average] we've seen in its entire history," said Cappelleri. "It happened actually in February of this year and then we saw a pause. That's what I think Twitter needs to do now is pause and hopefully do it above this breakout point" of around $36.80 seen in mid-March.

Twitter traded as high as 45 percent above its 50-day moving average on Feb. 8, entered a consolidation period through most of March, and then tumbled more than 20 percent. From its intraday peak on Feb 8 to an intraday low of $26.60 on April 4, shares fell 24 percent.

"There's no reason to chase Twitter here but I would be comfortable buying weakness going forward," said Cappelleri.

It's not just its stock price that looks stretched, according to Gina Sanchez, CEO of Chantico Global.

"If you look at valuation of Twitter, especially relative to the S&P, it is over 80 times P-E and that's probably the biggest knock we have against it," Sanchez said on Tuesday's "Trading Nation." "Even more fundamentally, if you look at free cash flow, they are burning cash at a rate of five times current revenue. … We need a lot of good revenue news in order to really justify where you are."

Analysts surveyed by FactSet anticipate 21 percent sales growth for Twitter's June-ended second quarter and its full year.

Twitter shares are up 25 percent in June, putting its stock on track for its best month since February 2015.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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