Online urban city guide Yelp, Inc. (YELP) just flashed a buy signal. Here is what I am seeing;
On December 4th I opined right here (http://investorplace.com/247trader/jump-on-the-short-side-of-yelp/) that Yelp, Inc. (YELP) was then offering a good risk/reward short-side trade for the quicker hitters. Two days later and 8% lower the stock came within 50 cents of reaching my final target (near $17) and given the daily candle the stock left on December the 6th, it was prudent to take either full or at least partial profits in the trade.
Ever since the December 6th lows the stock has displayed respectable strength, which now looks like the stock has another 7% upside.
Yelp, Inc. (YELP), which went public in the first quarter of 2012, has had a choppy trading history so far as a public company. Starting with the rally off the November lows and the ensuing consolidation however, the stock formed a nice bullish triangle. On January 2nd the stock rallied along with the broader market on the fiscal cliff jubilee and broke out of the triangle.
Looked at it a different way, on a daily closing basis the stock found support twice near $18, which coincides with the 61.80% Fibonacci retracement of the rally that started on November 15th. Since finding support at $18 the stock has rallied strongly and is now bumping up against the late November highs at $20.60.
Given the general chasing higher of the market, the stock (along with the broader market) should have enough strength in it to push pas the resistance point at $20.60 sooner rather than later. A simple 23.60% Fibonacci extension of the November lows up to $20.60 gets us to an upside target around $21.50, or 7% higher from yesterday’s close.
All in all, it’s very early in the year and since I am not one to force trades I see no reason to over-trade in the early innings. Plenty of high probability setups will come our way again in 2013, patience is a virtue.