<<what's going on with YHOO today?>>
This may not be what you want to hear, but . . .
It is very obvious from looking at the entire e-stock sector that volume has been diminishing dramatically. On that there can be no doubt. I would like to hear some different opinions on the drying up of volume.
I suppose it could be taken as a positive sign that this sector, with YHOO as one of the leaders (2nd largest market cap after AOL), is going through a correction to get back onto the trend from 4th Q 1998. That would be the positive scenario. It means that YHOO at 200 was too high a price for now, but it is still achievable in (late) 1999.
Another interpretation is that this sector is in deep trouble. I have been tracking ATHM, AOL, AMZN, EBAY, EGRP, LCOS, XCIT, YHOO, and some smaller e-stocks. Most of them seem to be making Head & Shoulders patterns. AMZN appears to have already completed the pattern, which is usually a sign of a major reversal. Major reversal would mean that the long uptrend is over for now.
The recent mini-rally on weak volume fits rights into head & shoulders pattern. YHOO seems to have broken out of a weak triangle, on the downside, which is not nearly as bearish as the H&S. The downside potential is great for the entire sector. Certainly, there are many technical analysts in the industry who also see these chart patterns. It is typical for volume to disappear in the late stages of development of H&S patterns.
H&S is consistent with "those in the know", including major insiders, selling off large amounts of stock. In particular, selling on the rallies.
None of this says that these companies are not good companies or that they may not eventually turn out to be good investments. However, the easy money is over in this sector. The "double a month" club is history. A lot of people seem to talk "long-term", but they really invest with very short-term horizons. I think that when more figure out that the quick and easy money is no longer there, that increasing numbers will sell. |
