Friday, May 04, 2007

YHOO and Money Flow on the Rise

Despite the recent sharp drop in Yahoo! stock (YHOO; blue line) taking us back below $30/share, notice that money flows (pink line) have been on the rise of late. YHOO is trading significantly higher in pre-opening trade (over $32/share), thanks to talk of a merger with Microsoft (MSFT). Let's see if money flows during the day today confirm investor optimism regarding that merger. I'll update later in the day.

Update 8:55 AM CT - YHOO started the day with negative money flow readings, which actually improved (but stayed negative) through the early minutes of trade, as the stock fell about a dollar from its pre-opening highs. The improving flows as the stock dropped have led to a bounce in price, but flows remain negative and are actually deteriorating a bit as I write.

Update 2:12 PM CT - Money flow in YHOO has remained negative all day, dropping below the opening levels *prior* to the big spike down in price (which only made flows more negative). We've since bounced from this spike down, but it seems clear that--at least for today--investors are using strength in YHOO to lighten up positions. At no time during the day has buying interest exceeded selling. This strikes me as important information in determining whether to buy or fade an opening gap to the upside.