Sell Yahoo If It Rallies

YHOO flashed a buy signal, but this should result in nothing more than a shallow rally


Yahoo! Inc. (NASDAQ: YHOO) — This large-cap information technology giant had been trading within a very narrow zone since early 2009.

Then, in early April, YHOO in a very convincing run broke from a channel downtrend jumping from $16.50 to $18.50 in less than two weeks.

But “the big breakout” turned into a false breakout, which was confirmed by a death cross. By June, it was clear that YHOO had resumed its downward bias.

The stochastic recently flashed a buy signal, but for a stock in a steep downtrend this should result in nothing more than a shallow rally that can be used to either sell the stock if you are long, or short sell it. Short sellers will want to put a stop-loss on YHOO at $16.

The downside objective for the stock is $11.

YHOO Stock Chart
Chart Key

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