Every so often, PremierMarkets.com will profile a day trade for short-term traders. In a market environment that has been rather dull lately, I look to the Internets for things to liven up. One thing that has me looking for a day trade in Yahoo (NASDAQ:YHOO) is the daily bullish action we've seen in the Russell 2000 (RUT.X) and just recently the Dow Industrials (INDU). Both of these indexes have broken above their 50-period MA's on their 60- minute charts and I'm looking for some stocks where I can find some pattern recognition where a positive outcome was found. I've found that in shares of YHOO and look to play that on a break at $20.15.
Yahoo Inc (YHOO) - 60-minute interval
The 60-minute chart of YHOO will look bullish to me if the stock can trade the $20.15 level. This should break the downward trend I have drawn on the chart. Back on May 16th, similar technicals were found and a break above downward trend saw the stock make a nice move higher. Day-traders shouldn't be looking for 20% gains on an hourly basis, but simply looking for $1 to $2 pops in stocks and trying to capture some short-term momentum. PremierMarkets.com is profiling a bullish day trade in shares of YHOO at $20.15 with a day trade target of $21.50. We'd start the trade out with a stop at $19.25 to give the trade some time to work. I like to then begin following a bullish day trade with a stop just under the recent hourly low. This morning's low on YHOO was $19.60. Current interval low is $20, but we feel we need to give the stock a little more room that that.
CBOE Internet Index (INX.X) - 60-minute interval
PremierMarkets.com also like to use sector analysis when lining up its trades. The CBOE Internet Index (INX.X) has edged above its 50-period MA much like the Dow Industrials (INDU) has in the past hour from the 11,000 level. If the INX.X were to be able to get back above the 220 level, it is our feeling that shares of YHOO should be doing its part to the upside.
Yahoo Chart - $0.50 and $1 box
Stock analysis wouldn't be complete without some type of supply/demand analysis being done on a stock. The institutional perspective has me observing that YHOO is still trading in an upward channel from April lows and a move to the $23 level is not out of the question. The recent sell signal at $17.50 is in the back of my mind, and PremierMarkets.com is only looking at YHOO right now as a trade until the end of today's session or $21.50 whichever comes first. We will of course set an alert on YHOO at $24 and the triple top. A trade at $24 would be considered bullish for YHOO and we'd want to know about that.