The technology sector has been one of the hottest plays for
investors in 2013, and right now there is one tech firm that has the market's full attention.
Over the last 12 months Yahoo! Inc. (TICKER: YHOO) has seen
tremendous growth increasing 135% in value from its $17.00 low, surging to a high of $40.00 per share. Many analysts are saying that the company is still cheap and expecting a continuation of this rally in price. Plausible? <<Get My YHOO Trade setup FREE>>
It all comes back to revenue and YHOO is certainly headed in the right direction. The company has been making significant adjustments in its core business model which is very "ad driven". As a result they are seeing higher click through rates, which translates into revenue.
Additionally, YHOO is one of the most trafficked sites on the
web and owns a number of highly trafficked websites such as Flicker, and has acquired a stake in Alibaba.com (IPO expected 2014)…. All of this has had a direct impact on the bottom line leading to increased profitability. Expectations for Alibaba's IPO looks quite bullish, which could lead to another
bullish pop for YHOO if all goes according to plan. Many are anticipating that Alibaba's IPO results will be similar to that of Facebook's IPO.
The fundamentals for YHOO look great, but that is only part of
the story. Now lets take a look at the technical, which are just as impressive. YHOO has obviously been in a strong uptrend, and the "intelligent investor's" will be looking to join the rally by buying the pullbacks into support.
The Trade Set Up
The key when trading is to allow the trade to come to us rather
than chasing after it. There is an area of support that has my eye, but it will require a little bit of a wait to get the price I want.
I am looking at a long as price retests support at $39.08, with
a stop at 38.74 and an initial target of $40.00 where I plan on shaving half of the position. The purpose of this initial move is to eliminate trade risk and then the second half of the position will be used to milk profit out of the trade.
Here is a quick look at the chart:
For those of you looking to play YHOO, keep in mind that the
company will be releasing earnings sometime during the last week of January 2014. That to say, it is always prudent to use those protective stops just to prevent any trade from getting away from us around those "big news" events.
Wishing you the best in this new year!
Your top-down market strategist,
Justin Burkhardt | TradeTrends.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.