<re: my unusually ambivalent prognosis for YHOO>
Kosmo,
Well, to answer your question, a few things "are wrong with it", IMO. This is from the perspective of someone who's currently neither long nor short, but has spent a lot of time and effort trading this stock both ways in both daytrade, and swingtrade mode since it first captured my interest last fall:
First of all, YHOO has "trained" both traders and investors "I run up like crazy into earnings, then sell off like crazy after earnings". This has become a self-fulfilling prophecy. Did you see all the posts on this thread "I'm going to sell at/after earnings"? Case closed. The institutions short-term trade these things too, and they are not immune to this sort of fire-in-the-theatre thinking.
Second, if you take YHOO's .11/share earnings number apart, it isn't all that pretty. There is some truth to what Ableson was saying, and there certainly is some "smoke and mirrors" to the management's reporting of earnings - as there are at many companies. However, I'd have to knock YHOO's management a bit for not doing a little more to defend their stock - look at the chart - it's a mess (a lot of it due to their own selling and hedging)! They could put their company in real jeapordy if this thing gets taken down below $100, it could STAY there. I'd be counseling them to do any one of a number of reasonable things that they could do, to insure the stock doesn't get into a big slide again.
Third, the entire internet sector is acting sick (again). It wasn't just YHOO that was weak today, it was "everything" net. There are plenty of 'things' to blame -- bad press in Barron's, EBAY having an outage Saturday, continued negative post-earnings sentiment, etc. The important thing to note from today was, it wasn't just YHOO that was weak - it was the whole net sector. That good if you're long YHOO. A weak YHOO in a strong net sector - now that, would be scary for the longs.
I've short-term and day traded in and out of this stock almost every day for nearly a year now. For some reason, today's action felt more like a "lack of bidders" selloff than like a genuine, hard sell-off. It's hard to describe the difference or to quantify, but there's a difference. Simply, no one is stepping up to the plate right now, and bidding for the internets. So, they fall! I realize this is kind of hard to reconcile with the fact that it sold off on heavy volume today; that's another topic though.
If YHOO continues to fall below $150, the next major support (we know from many prior trips through these price levels) is $140. If it gets below $140, even intraday, then it's in serious trouble again. I don't expect to see it there, but wouldn't be surprised. Sometimes I can get a strong handle on where this stock is going, other times it's more difficult to read (like now). There is an excellent technical analysis on it posted at www.intelligentspeculator.com; however trading the weekly charts mean more risk than I can stomach with this one (or most of the nets).
What's a little disconcerting here is, YHOO is down to $150 while the S&P index and Dow hover at all-time highs. Just think what would happen if the broad market went into a substantial correction, as it could easily do at any time... we'd see sub-$100 YHOO in a hurry (not hoping for that, just observing a strong likelyhood). The Dow is extended here, Put/Call ratios are screaming for a correction, and Wall Street pros are beating their chests with Bullishness and optimism (almost the perfect contrary indicator).
On the other hand, I'd go long this stock if it showed some real strength (more than two strong, successive 30 min "up bars" on high volume) with a trailing stop. If you look at the chart, it's been knocked down hard for five consecutive days, so I'm stalking it for signs of a true intraday reversal (thought I had one today, but was stopped out). When a stock gets knocked down like this, it can "recoil" in the opposite direction very strongly, giving you quite a ride. So far though, YHOO is just acting very limp.
There is some truth to the Bears claims that this is just a hyped-up stocks trading on emotion, completely decoupled from fundamentals! I like the company, the product, the stock, the free email, the directory (search engine), EVERYTHING (I YHOO!!!) but to deny that it's one of the most extrodinarily overpriced stocks in the history of mankind is to be... in denial! That's why I just trade it, don't invest in it...
Good trading, and I hope everyone working hard enough at it to be here, makes money at it...
-Steve
PaloAlto_trader@yahoo.com
www.tigerinvestor.com "Palo Alto Trader" |
