Special Report! Yahoo and the S&P

I wish this crummy Google blog program would let me post a chart but you can go to: http://finance.yahoo.com/q/hp?a=10&b=29&c=1999&d=11&e=12&f=1999&g=d&s=yhoo to follow along with me. Mon 11/29/99 (18.5M) : Yahoo opens at $229 runs to $234 and closes down at $224 Tues 11/30/99 (24M): Opens at $223, goes down all day closes at $210 (Y2K paranoia?) S&P announces adjustment at night inclusion day will be 12/7 Wed 12/01/99 (52M): Opens at $230, runs to $234 but closes at $228! Thu 12/02/99 (39M): Opens at $230, up and down, closes $228 Fri 12/03/99 (40M): Opens at $249, runs to $258, close $253 So not much effect at first, people took advantage to exit (p/e 900, not everyone was an idiot) but on Friday it looks like they ran out of sellers. The volume went up 250% so it makes sense that you use up a week’s worth of sellers in 2 days… Notice the pop on Friday, this will be the sign we look for in Google but it will be a compressed timeframe! Mon 12/06/99 (64M): Open $253, up all day to $282! They didn’t have pre-markets then like we do now… Tues 12/07/99 (265M): Open $296, high $353, close $348!!! Fund managers aren’t all stupid, most did not want to wait until Friday. Weds 12/08/99 (99M): Open $324, drifts down to $319 Well these 99M are smarter than yesterday’s group! Thur 12/09/99 (45M): Open $319, high $341, close $340 Some laggards still gotta have it. Fri 12/10/99 (38M): Open $346, low $334, high $357, close $353 The people that left it until Friday got played! So we see that our best chance to get out is on the big volume day but, realistically, the 30% spike on Tues should have given you a clue. So with Google we are going to look for (and we only have 6 sessions) maybe 2 flat days and a big day on Tuesday or Wednesday. I’m picking up whatever calls are $1.50 or less on the dips so I have the $440 calls for $1.10 and the $430 calls for $1.50 so far. This is light buying until I get the impression they are out of sellers when I will probably double up at whatever cost once it clearly trends up. Google is a bigger percentage add to the S&P than Yahoo was at the time and there is nowhere near enough stock for it to pull more than 40M shares in a day so this will be very interesting. So far (12) there have already been 10M shares traded and it is my opinion that they are already running low on sellers (which led me down the road to this research). Like I said this morning, it is still possible this is such a bad company that the other funds may bail but I think greed will win out and, since they have S&P index funds by the cajones, they will ride it up through Friday and dump next week (if they are going to dump). I imagine that if it were my fund I would be looking to get out at $475 but I would have my finger on the trigger starting around $430. In the irrational Yahoo model you could be looking at Google $510 but I have to believe people can’t be that dumb twice in one decade! Just remember that every one of those dollars is a little lottery ticket that has only a slightly better chance of paying off only at much lesser odds so don’t spend more than the lottery money on this one. Goog luck! – Phil