YELP- Opening Drive Play

YELPOpening Drive Play

SMB Junior Trader05/6/16

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Big PictureThe 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

Economy & Finance

Transcript of YELP- Opening Drive Play