Will This Rally Last In Yahoo!

Yahoo (YHOO) stock is up over 20% since it has new CEO Marissa Mayer who is the fifth CEO in almost 5 years. Tech giant has also spent $1 billion to buy back its stock and it is believed among investors that most recent move in its share price is due to this.

However, there are some fundamental concerns about this stock which can hold its phenomenal stock movement of 32% since it made its low in August. Yahoo has decreased its footprint in the fastest growing economy China by reducing its stake in Alibaba which earned it $4.3 billion.

Company revenue in its third quarter has also declined year-over-year in seven of the past eight quarters and this is concern for Investors who are holding this stock and wondering how company can sustain its growth by reducing its footprint in the fastest growing economy of the world. Yahoo is also struggling like others in terms of their advertising revenue due to move in media age where the screen size has gone much smaller from desktop size PC to mobile devices.

Investors are more eager to listen something more solid from its CEO who reported in its October earning “Yahoo would renew its focus on its search business, modernize its home page, mail and messenger services, develop a mobile presence and seek out 'double-digit million-dollar' acquisitions." There are also rumors that Mayer is trying to boost employee morale by giving free lunches and phones, Android devices and Windows powered phones to employees.

Analyst Recommendations
There are currently 4 buy recommendation by analyst which is same as 1 months ago, 22 hold which is same as one months ago, 4 Outperform down by 1 from 5 a months ago.

Performance
Stock is up +3.67% on week, +13.85% up for the month , +57.34% for the quarter and +17.23% YTD.

Comment
The RSI is trading above 70. This could mean that either the stock is in a lasting uptrend or just overbought and that therefore a correction could shape (look for bearish divergence in this case). The MACD is above its signal line and positive. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at 17.73 and 16.67). Yahoo is currently trading near its 52 week high reached at 19.16 on 27/11/12.

Range YTD
52 weeks range $14.35-19.16

SMAs
SMA 20: +6.65%
SMA50: +13.42%
SMA 200: +20.82%

Volume
Average Volume: 22.7M

ATR
0.35

Support zones
Zone 1: 17.41-17.14 (Aggressive investor)
Zone 2: 15.91-15.60 (Conservative investor)

Resistance Zone
Zone 1: 19.16-18.74 (Aggressive investor)

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DISCLOSURE AND DISCLAIMER: The Above Is For Informational Purposes Only And Not To Be Construed As Specific Trading Advice. Responsibility For Trade Decisions Is Solely With The Reader.

By Naeem Aslam