Yes, I like Twitter (TWTR). Just for the record, yes, I was the same guy who warned investors back on Jan. 2 that Twitter stock was overvalued and due for major pullback.

I also was the same guy who suggested back on April 30 that TWTR — even after the 38% pullback since my Jan. 2 warning — had still not hit bottom. Sure enough, Twitter stock has fallen another 16% since my second caution, spurred by slowing growth and then the end of the lockup period.

But I didn’t write this to gloat (too much). No, I’m revisiting TWTR today to let you know I’ve come full circle, and am now bullish on Twitter stock.

Yep.

I might have hated Twitter at $67 per share, but at $31, I’m changing my tune.

Don’t get the wrong idea. I still believe Twitter has a boatload of long-term growth challenges ahead of it; these hurdles are ultimately rooted in the company’s flawed assumption about just how well the microblogging platform can get and keep people interested. But I also believe last quarter’s slowdown — and investors’ protest of that slowdown — was something of a wake-up call that should finally effect some needed tweaks of the company’s primary product.

That’s only one of three reasons why I’d be willing to wade into a long position on TWTR stock at its current price, however.

Tuesday Was a Capitulatory Day for Twitter Stock

Ever heard the cliche about things looking darkest right before dawn? It’s true more often than not, even in the stock market.

And with Tuesday’s 18% post-lockup plunge coming on the heels of a 41% pullback over the thirteen weeks prior to the one-day plunge, there’s no way to deny that Twitter walked right into a “from bad to worse to plain awful” situation.

The upside to that strong selloff is, anybody who wanted out has likely gotten out of their position by now, leaving only the diehards — the folks who aren’t going to sell no matter what — in their Twitter trade.

From here, even if they trickle in slowly, the interested market is mostly made up of would-be TWTR buyers.

The clue that puts the finishing touches on the notion that the last of the weak holders are now out is Tuesday’s enormous spike in volume. We saw 134 million shares of Twitter stock trade hands that day — roughly seven times the norm.

The Market Now Collectively, Almost Universally, Hates Twitter Now

Yes, I’m a contrarian at heart, but only because being a contrarian is enormously fruitful.

Case in point: Even posing the possibility that Twitter stock could be overvalue and overestimated in early January set off a small firestorm of, shall we say, “colorful disagreements.” Yet TWTR stock hit a slightly higher high the very next day, then spent the next four months losing 54% of its value.

How did I know this wildly loved stock was headed for such a huge degree of trouble? Because it was so wildly loved.

I distinctly remember looking for others’ pessimistic views on Twitter around that time. I don’t recall finding any. Even the red flags that would normally send traders scurrying were being ignored or explained away when it came to TWTR.

When retail investors, institutions, analysts, and the media are all so incredibly, uniformly certain about a stock, it almost always signals that trend has run its course.

Fast-forward to today, and it’s the exact opposite situation. The vast majority of the market’s participants have witnessed a devastating implosion, and fearing their calls — and their trades — losing any more ground, they’re all jumping on the bandwagon, looking to step into the apparent trend.

Big mistake.

For the same reason excessive bullishness on the stock was a problem in early January, rampant pessimism on Twitter stock now is a bullish contrarian clue.

Twitter Got a Wake-Up Call

It was already mentioned, but the idea deserves some fleshing out.

Last year, in the wake of the Twitter IPO, the fact that this uber-cool web-publishing platform was distracting enough that investors weren’t interested in holding the company’s feet to the fire. Traders aren’t going to stay distracted forever, however, particularly when the very growth rate that traders fell in love with in the first place begins to wane. The realization of … well, reality, was the driver of TWTR’s 54% implosion.

There’s a silver lining to that big pullback, however — it sent a message to Twitter’s management team that changes must be made, and soon.

It’s better to get that message now rather than later. Otherwise, Twitter could end up being the next MySpace … a social networking platform that started out cool, but ultimately flopped because it didn’t see it had a problem until it passed the point of no return. That overhaul will gives the bull something to latch onto.

Bottom Line

None of this is to say Twitter stock won’t stumble here and there in the foreseeable future, nor is it a guarantee that the stock won’t hit a significant long-term wall again once the trading pendulum swings all the way back in the other direction.

For the time being though, the risk-vs.-reward ratio favors being in TWTR rather than being out.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.