Jerry Yang After Saying "No" to Microsoft's Offer

This is a guy who sucked so many eggs, that he decided to say “no” to Microsoft’s buyout offer, even though they were offering a MASSIVE premium to Yahoo’s stock price.

Just so you know, that offer was to buy Yahoo for over $40 a share. At the time of the offer, it was trading under $30 a share. Today, Yahoo trades at $12.

It’s not that shocking that Jerry Yang was compelled to give up his position at Yahoo. After all, he lost shareholders one of the most lucrative paydays ever (right as the economy was plummeting).

But believe me when I say that Jerry Yang leaving is good news. Just take a look at the chart below to see why I think that…

What’s interesting about this chart is that Yahoo prices bottomed right as Jerry Yang was leaving Yahoo (he resigned on November 18th).

After that announcement, shareholders took Yahoo stock up over 40%. And since then, Yahoo has continued to make higher lows in an attempt to rally past $14 a share.

Adding strength is the fact that the Slow Stochastic (at the bottom of the chart) is oversold right now.
Oversold means just what you think it does – something has been sold too much. And if something has been sold too much, then eventually buyers will swoop in and snatch up shares at the more attractive, lower prices.

If you notice, the previous two times Yahoo was oversold, it went on to rally at least 15%.

While it is oversold, we also see Yahoo hitting the bottom of its newly formed support channel. And lastly, we see Yahoo starting to use its 50-day moving average as a support, not resistance.

This means Yahoo shares are primed for a climb over the next two weeks. Buying shares is a great move, but buying call options is a better one.