YELP- Opening Drive Play

YELP
Opening Drive Play
SMB Junior Trader
05/6/16
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No relevant positions
Please note: Hypothetical computer simulated performance results are believed to be accurately presented. However, they are not
guaranteed as to accuracy or completeness and are subject to change without any notice. Hypothetical or simulated performance
results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading.
Since, also, the trades have not actually been executed; the results may have been under or over compensated for the impact, if
any, of certain market factors such as liquidity, slippage and commissions. Simulated trading programs in general are also subject
to the fact that they are designed with the benefit of hindsight. No representation is being made that any portfolio will, or is likely
to achieve profits or losses similar to those shown. All investments and trades carry risks.”

Big Picture
The Company:
• Yelp Inc. operates a platform of customers reviews on businesses that connects people with local businesses
primarily in the United States. Its platform covers various local business categories, including restaurants,
shopping, beauty and fitness, arts, entertainment and events, home and local services, health, nightlife, travel
and hotel, auto, and others categories. Customers can quickly see what past customers think about a business
on YELP.
The Catalyst:
• Reported Q1 adjusted EPS of $0.08, $0.24 better than the analyst estimate of ($0.16).
Revenue for the quarter came in at $158.6 million versus the consensus estimate of $155.57
million. Yelp sees FY 2016 revenue of $690-702 million, versus the
consensus of $691.4 million.

Intraday Fundamentals
● ATR: 0.87
● Avg vol: 2.44m
● RVOL (relative volume): 25
● Short float: 12.71%
● Float: 66.22m

Trade Strategy Notes from SMB
•Breaking out on Daily Charts so a significant technical trigger present
•Gapping up for good price confirmation of strength
•Full Year Guidance better than expected so a news catalyst behind us
•A history of squeezes and spikes to the upside adding to long thesis
•Buy intraday support and sell into strength on the open
•Dust off Opening Drive PlayBook and look for support areas to get long
–Opening print
–AH and PRMKT support
–Support on the Open on the tape- held bids, areas where it cannot trade lower
–Consolidation areas on the open that hold

Trade Strategy- Opening Drive
- YELP announced earnings Thursday AH and broke out of consolidation. YELP held above 23
in AH and held higher in the pre-market. This is a huge sign of strength. Now I have 3 checks
in my favor:
1) Positive Catalyst which changes the fundamentals of the stock.
2) Gapping higher and holding above a key LT level on the daily chat.
3) Holding higher in the premarket than it did in the AH.
- I therefore had a long bias for the stock. I was looking for a pullback on the open to a near
support level; 23.5 as it was resistance in AH and support in the pre market. Would get long
near this level and look for an opening drive to 25 - next key level of resistance on the daily
chart.

SPY Intraday
204
support.
ADP Nonfarm employment change:
Actual 156k vs. 194k
ISM non-manufacturing
employment (april) 55.7 vs
54.5
Oil inventories.
SPY holding above 204 so far
today. Saw SPY leak through in
the pre market upon release of the
jobs number, which was bearish.

SPY Daily
Increase in volume.
Paying the offer.
Prints of 5k +
Huge buying
momentum
Coming into
Wednesday:
Crude trended lower
on tuesday:
- Dollar
strengthen
- Rising middle
east output
- Fears over
China’s
economic
health
Weakness in the market the past
week has seen SPY trend lower and
now test 204 Support.
Some reasons for weakness:
- Concerns over China’s
economic health.
- OIL: rising middle east
output.
- Weak job reports this week.
- Record increase in crude oil
inventories.

YELP Daily
Got long when it
got above intraday
resistance.
Added when
the stock had
no problem
getting above
43, with
volume still
increasing,
Took off half when i
saw volume drop off
a little bit and stock
coming into another
resistance level.
Got flat.
Key level of
support.
SPY
starts
reversing
Number came out.
Short 31.97
against 32.
DVN was considerably weaker
than XLE and /CL before/after the
number. DVN had a small
pullback relative to CL and XLE’s
after the initial down move at
10:30.
Flat 31.65
Short into trendline resistance.
XLE moves lower.Shorted
against 32.
Flat 31.63
MUR Showed relative weakness to XLE
today. I waited for weakness in the
market to pull MUR lower. Once the
stock failed to hold 31 i got short against
the level. Took off 20% of my position at
30.85 when XLE showed signs of a
pullback. Got flat at VWAP - 30.77.
First target / resistance level
= 25
Gapped out of
consolidation and
holding above intraday.

YELP AH/PM Action
Key to notice after the stock gaps up, it holds the
high in the AH and then holds higher in the PM.
This is a strong sign of strength and buyers clearly
in control.

YELP Trade Management
Stock pulls back to premarket
support, bids immediately step up
and spray the offers.
Long at 24.10. Stock spent no time
below support level. Volume increased
significantly. Buyers are clearly in
control.
Add when we trade higher
than the opening spike.
Sell half into the
whole number / long
target 25. See volume
spike. Buying could
be exhausted for the
open.
Flat when i have confirmation
from this wick. Opening drive
buying has been exhausted.

Trade Review
•Great trade if I love the news catalyst of the trade. In this case, great trade if I loved the full year
guidance news catalyst.
•Need to be aggressive with this trade and not hesitate at all.
•If I see the setup, then just pull the trigger.
•Know exactly where to exit if I am wrong.
•Record how I do PnL with this setup.

YELP- Opening Drive Play

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