The Bizarre Bullish Breakout for Yahoo YHOO
In our current environment where “bad news is good news,” Yahoo! (YHOO) gives us another example – and opportunity – to trade wacky outcomes to news.
News broke that the Yahoo! corporate board will be meeting (news links via Fortune and the LA Times) to consider spinning off their internet business, arguably the core of their company (and what most people associate with Yahoo!).
Despite this, its stock surged with a breakout and bullish trend day, giving opportunities to traders who can completely ignore logic.
Let’s chart the breakout and future opportunities for this news-driven candidate:
While others speculate on the news and future prospects, let’s focus on the stock and key developments.
Yahoo (YHOO) shares are likely in the process of completing a trend reversal.
A positive divergence with bullish volume on the rally from October could set the stage for additional bullish price action.
Today’s breakout on … interesting… news did send the share price surging to a fresh new swing high.
The upside chart target for now extends to the underside of the falling 200 day SMA near $38.30 per share.
Watch the $35.50 level as your key bull/bear pivot.
A return under $35.00 opens a downside play toward $33.00 again.
Should share prices in the future break through the 200 day SMA at $38.30, it would set in motion a bullish series of trades (and price action) higher.
Here’s the structure on the Weekly Chart:
2015 has been unkind to shareholders in Yahoo as price fell from the $50.00 level almost 50% lower toward $28.00 per share.
Like the Daily Chart, we’re seeing the potential for a Bullish Trend Reversal develop under $30.00.
Our Weekly Target includes the underside of the falling 50 week EMA at $37.37.
Ultimately, if share prices can continue their bullish rally, it opens a future bullish pathway higher.
Once again, use $38.00 as your “Bull Above; Bear Beneath” price pivot.
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Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
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