YHOO shares have been on a steady downtrend for quite some time but it looks like an opportunity for a bounce is materializing. Price is finding support at $30/share and might retreat to the moving averages on the 4-hour time frame.
The next resistance is around the $32.50/share level, which might keep further gains in check. A larger correction could last until the 100 SMA around $35/share before the selloff resumes. The 100 SMA is below the 200 SMA anyway, which suggests that the path of least resistance is to the downside.
RSI is on the move up though, hinting that buying momentum is starting to build up. Similarly, stochastic is pointing higher so YHOO shares could be in for some gains in the near term.
YHOO Shares Outlook
Spinoff concerns related to Yahoo’s Alibaba plans have been flagged by the IRS which is stepping up its scrutiny of similar transactions. According to the institution, this might be intended to cut tax obligations by spinning off the company’s 15% stake in the Chinese company to save around $9 billion.
The IRS has specified that they “are most concerned about transactions that result in the distributing corporation or the controlled corporation owning a substantial amount of cash, portfolio stock or securities, or other investment assets, in relation to the value of all of its assets and its qualifying business assets.”
These concerns have been weighing on YHOO shares and the company outlook since May, with many analysts predicting that CEO Mayer won’t be able to complete the deal. Although the statement issued by the US Treasury and IRS earlier this week didn’t specifically indicate Yahoo, investors became increasingly concerned that this spinoff might open the company to more risks and the stock to further downside.
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