Yesterday on Monday morning I have decided to act on Yahoo! (YHOO). After following the stock closely for about a week and deciding to hold back because of the unclear technical outlook, I decided to act on a possible opportunity. The stock made a huge bearish move since reaching a 52 week high of 33.61 at the beginning of May. Facing strong competition and suffering through the market turmoil, the stock hit a deep decline. Although, the outlook shows a very real possibility of losing further market share to the giant we know as Google, Yahoo has been very active with acquisitions and upgrades to their existing services. It is practically an all-out race in the digital age for acquiring growing communities, networks, and market share for ad revenue, one that includes Microsoft (MSFT).
Well, the aforementioned bearish trend looks like it has formed a double bottom around the 25 dollar mark. Shortly afterwards, YHOO has marked seven consecutive sessions of gains with the 20 day moving average rapidly approaching the 50 SMA. The momentum looked good and on Monday morning, I anticipated this breakout with a buy order that was filled at 26.01.
Shortly thereafter there was a quick move up to 26.40 (within the hour). I decided to wait it out as I anticipated a bigger move. In fact the breakout of the 20 over the 50 SMA wouldn't be confirmed until we had a close. There was a further run-up to 26.65 on Tuesday and it was probably a good time to close out the position as I don't want to remain it for too long. There's also too much speculation about Microsoft's relationship with the large social network, Facebook. The market is also jumpy. It is now off its highs.
Given current market conditions, we have to be careful in letting the gains ride. Although, I would put the ultimate limit order at 1.2750, near the 200 SMA, I might not want to wait that long. However, YHOO still looks steady on its way to the 200 SMA so I'll ride it out a little longer.
