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Has Yahoo! Inc. (NASADAQ:YHOO) Lost Its Mojo?

Adam Hewison - MarketClub

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The stock of the Yahoo (NASDAQ:YHOO) has had enjoyed a spectacular rise under the leadership of Marissa Mayer over the last 2 years. After chopping around the $12 to $13 level for much of 2009 to 2011, Yahoo took off on September 5, 2012 from $16.37 and stayed in a strong uptrend. It made a high of $41.72 on January 8, 2014.

This analysis of Yahoo! Inc.(NASDAQ:YHOO) is not to say the stock can't go higher, perhaps later in the year, but rather noting certain technical elements that are falling in place that do not look good for this stock.

What Does This Company Do?

Yahoo! Inc.(NASDAQ:YHOO), a technology company, provides search, content, and communication tools on the Web and on mobile devices worldwide.

Something Does Not Feel Right

How would you like to work for just one year and earn $109 million? I'm sure we would all say yes to that, but that's exactly what happened to Henrique De Castro, who Marissa Mayer lured away from Google to be her second in command at Yahoo. This was Ms. Mayer's first major hire and she fired him because he wasn't producing the ads and revenue that was expected of him.

Yahoo, in my mind, is an old school internet website that serves to be everything to everybody. This was fashionable on the Web before the dot-com bust in 2000, but it is way out of date now. Who really uses Yahoo to search for anything? Besides that, Yahoo doesn't do its own searching, that is relegated to the Bing search engine from Microsoft. It appears that the only real value Yahoo has is its stake in Alibaba, which is the Chinese e-commerce company. Without this company, Yahoo would be significantly lower in price.

It also seems to me that this run-up from $13 to $41 may have run its course. I don't think Yahoo has a second act and it is too late, in my opinion, for Yahoo to redefine itself. The love affair that the market has had with Ms. Mayer is coming to an end and everyone is going to be looking at Yahoo through binoculars and not through rose-colored glasses.

Technically Yahoo! Inc.(NASDAQ:YHOO) is still in an uptrend, with both the weekly and monthly Trade Triangles in agreement, but it seems to be running out of momentum. A move below the $38 level would trigger some major technical damage to the stock.

I could potentially see Yahoo move down to the around the $26.00 area, which meshes with a 50% Fibonacci retracement.

Bottom Line

Both the MACD and Parabolic indicators are negative. I am also seeing negative divergences on the RSI indicator. I am waiting for a red weekly Trade Triangle to show me the way. Key level to watch on Yahoo is $39.30, which could trigger today.

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