Google “cup and handle” — you’ll probably see a chart of Yahoo! (YHOO) (October 30, 2014)
I want to look at Yahoo ( NASDAQ:YHOO ), the big owner of Alibaba ( NYSE:BABA ),which seems to be doing pretty good. We’ll look at Yahoo ( NASDAQ:YHOO ), this is a really interesting pattern because it’s really bullish. You can say, I guess, it’s a cup and handle pattern, but this is one heck of a handle. Here’s the cup, a dip right down along the 50-day moving average and then you get in some zigzags here. It’s really hard to look at this last little break out here and say, “Wow! That’s sure going to keep going.” You just kind of get the sense that the stock is due for a rest, it really needs to rest some.
What I’m suggesting is, if this does drift sideways or hopefully sideways to down. Look at what’s happening, the 50-day moving average is coming up to meet it. In the past the 50-day moving average was support then it defined resistance, now it’s back, it’s support here. So the time to be buying this stock is on these pullbacks to the 50-day moving average. Right now this is at 40.52, in a couple days it will be $41.00, so you can really get as much as a 10 percent pullback on Yahoo ( NASDAQ:YHOO ).
What I would suggest doing, if you want to own this stock, I just have a hard time saying buy it right here, it just so looks over bought, but you could take a little position here. Then if the stock pulls back, I’ll say to 42.00, 41.00, something like that, that’s when I think you really want to start buying more of this stock. I think this is going to work for you, not as a short-term trade but as the kind of thing where you’re going to look at it next summer and say, “Gosh, Yahoo is at $60.00, I wonder if I should sell it or just hang on to it?” That would not be a bad trade, you could Google that and find that that’s actually a good trade.
Free Chart