Chart Review: Back Into Puts As Yelp.com Fails to Establish New Highs

In about one month, Yelp.com (YELP) doubled from its all-time lows to a retest of its all-time highest close. Along the way, Apple (AAPL) made the following announcement on June 11th:

“…local search includes information for over 100 million businesses with info cards that offer Yelp ratings, reviews, available deals and photos.”

YELP did not announce anything on its website (or at least I cannot find it now), but this news was enough to break the stock out of its last downtrend. The chart summarizes the setup.


YELP fails twice to establish new closing highs
YELP fails twice to establish new closing highs

Source: FreeStockCharts.com

Note well how YELP failed twice to break through resistance formed by the stock’s highest close set during March 28th’s blow-off top. This was my strong cue to get back into puts as resistance seems confirmed. The initial downside target is the 50DMA which is now starting to turn upward. Next earnings are not until August 2nd. YELP lost 11% on May 3rd after reporting its first earnings results ever as a public company.

Be careful out there!

Full disclosure: long YELP puts

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