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Analysis of Stock Prices of Yahoo! Inc. Company (Essay Sample)


Technical Analysis of a company trading in NYSE


Analysis of Stock Prices of Yahoo! Inc. Company
Analysis of Stock Prices of Yahoo! Inc. Company
This study focuses on a Technical Analysis and appraisal of Yahoo! Inc. Company's stock trading at the New York Stock Exchange in the United Sates. Yahoo! Inc. Company is a major player in the Technology sector, internet industry. The paper looks at speculative trends in share price movements of Yahoo! Inc. as shown by the Company's Stock Charts below. The company's data used is the latest and therefore it is reliable in making this study particular. As a Multinational Corporation based in the U.S, Yahoo! Inc. has become one of the prevalent technological companies in the world, recording a number of acquisitions and substantive investments.
Technical analysis represents a reliable tool for business people around the world in making financial decisions. It has developed over time to become an essential business model that employs the study of charts by use of a common denominator of a financial nature. The following charts contain financial information of Yahoo! Inc. Company stock trading over a period of the past years, months and days.
1 Candlestick Chart Analysis.
190501905The major trend since the last quarter of 2013 to date is increasing, even so a focus on the company's near term trend- the past 10 days, shows a downward trend and an evident resistant zone. The target price is noted to be way below the 40 mark with the end of the chart characterized by Bullish Candlesticks which give indication for the stock moving upwards. Nevertheless, the resistance (consecutive closes being higher than opens) concentrating between the 35 and 37 marks witnessed for the most part of the week call for a Sell of Yahoo! Inc. stock. The Dow Theory puts emphasis on the consecutive Upper Ends of the candlesticks. There is little occurrence of Support levels for the same end period of the chart (1st week, February 2014).
The Candlesticks chart analysis indicates a possible explosion or upward trend realization in terms of share value concerning the fact that the recent downward trend was a result of speculations about recent investments in other companies by Yahoo! Inc. hence the Bullish Engulfing pattern.
The company proves to be strong in the wake of turbulent market forces of competition from firms like Google and Apple Inc. but the trends indicate it is still realizing profits from its portfolio of investments. The forecasting is however likely to be affected to some extent by the discretion of management to announce plans of the firm once the Alibaba Company (in which Yahoo! Inc has invested considerably) goes public. This is in consideration of the fact that the firm (Alibaba Company) records more revenue than American firms Amazon and E-bay combined.
2 Moving Averages (EMA- Exponential Moving Averages) Chart Analysis
The EMA line has for the most part remained above the signal line. The chart indicates average share values for the company's depicting positive outcomes in share appreciation for coming periods with a general upward trend that has been maintained steadily. This depicts a desired Primary Trend that facilitates optimism as indicated in the year 2013. The company in all probability recorded significant profit margins for the same year (2013).
Come 2014, the two lines come to a close before the EMA line is surpassed by the Signaling line at close of 7th February 2014, making the EMA line to head below zero mark. This offers a clear-cut signal to sell the Company's stock. The shifting demand and supply for the company's stock from time to time ought to be the cause of slight reversals on the general trend. Even so, the averages have little deviations from each other, indicating a level of stability in the movement of overall price movements. In addition, the trends so far indicate the possibility of attaining increased market value for the firm's stock. However, the considerable drop by the commencing of February poses the challenge of poor prediction of future trends of the stock considering one of the company's most notable investments in China's Alibaba will most likely be affected when the company (Alibaba) goes public in the near future.
Exponential Moving Average (EMA) reduces the lag (of moving averages as indicators) since it emphasizes on more recent prices, a reason this paper deemed meaningful to cause its use over Simple moving Average (SMA). The above chart records a relatively short period for Yahoo! Inc. (20).
3 Bollinger Bands (BB)
The Bollinger Bands in this case follow a likely normal distribution, the upper and lower limits of share price movements are as a function of standard deviation. The normal-like distribution makes investment in the company's stock less risky and so it remains a viable investment decision where the distribution stands at optimum, say October and December 2013. At the close of business in the first week of February 2014, the BB is at a peak but on a reducing trend. The trend of the stock price seems to have persisted constantly leaving a possibility for a buy option at the moment. Also, the pattern drawn from the Bollinger Bands is however not ambiguous even though it indicates that the market has frequent fluctuations of supply and demand, a tricky scenario to determine the target price level despite a comprehensible buying signal by the end of the first week of February 2014.
The momentum oscillator shows a sizeable pessimistic trend as revealed by moving averages of fast speeds in relation to response in share prices peaking over 1.5. Even so, the lines come to cross the signal line in the close of January 2014. Anyway, for Yahoo! Inc. stocks, the MACD analysis seems ineffective to influence...
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