Yandex Stock Is Set Up Perfectly for an Advance

Yandex StockYNDX Stock: Testing Support

I am really enamored with Yandex NV (NASDAQ:YNDX) stock, and the reason is quite simple. Aside from “Yandex” being the dominant search engine in Russia, my appeal for YNDX stock strictly has to do with its price chart. The price chart is set up in such a way that applying a technical trading strategy would not be a difficult task. In order to set up a trading strategy, an investment view needs to be established. This article outlines how I would go about developing an investment view on Yandex stock.

A quick heads up for anyone who is unfamiliar with my work, I use technical analysis to generate my investment views. This method of investment analysis is based on the notion that historical price and volume data can be used to discern trends and forecast future prices. I have been using this method to generate investment views for nearly two decades and have become proficient in analyzing price charts as a result.

My analysis usually begins by looking at the price chart on a long-term basis in order to discern the predominant long-term trend.

The following long-term Yandex stock chart illustrates the developments that are suggesting that the predominant trend is to the upside.

yandex

Chart courtesy of StockCharts.com

The current trend is bullish, but that was not always the case.

In January 2014, Yandex shares peaked at $45.42 and a bear market quickly ensued. This trend toward lower prices contained the quintessential characteristic of a bear market that consisted of lower highs followed by lower lows. This bearish trend is defined using a simple downtrend line, which is easily created by connecting the peaks on the price chart.

This downtrend line contained the price of YNDX stock for a little over two years and, as long as YNDX shares were trading below this trend line, the bear market was still intact. This bear market resulted in Yandex shares losing 78% of their values from peak to trough.

It wasn’t until April 2016 that this downtrend line was finally broken. This event is highlighted on the price chart above as a “breakout.” The broken downtrend line served to suggest that the bearish trend had finally concluded, and it opened up the door for a bullish advance to commence.

The view that the bear market had concluded and a new bullish advance had begun was supported by the moving average convergence/divergence (MACD) indicator located in the lower panel of the above chart. MACD is simple, yet effective trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum.

Shortly before the breakout occurred, a bullish MACD cross was generated, suggesting that bullish momentum was propelling Yandex stock, and therefore the path of least resistance was geared towards higher prices. This indicator helped fuel the breakout that finally concluded the bear market.

This MACD indicator is currently still bullish, which continues to suggest that an advance is underway. Knowing that the long-term trend is bullish acts as a buffer in case an entry into a position is ill-timed.

The following YNDX stock chart illustrates the indicators that are now supporting the advance.

yandex1

Chart courtesy of StockCharts.com

The bullish advance that began off the January lows is easily defined using a simple uptrend line. This line is created by connecting the troughs on the price chart. Using this uptrend line as as tool is as easy as it was to create. As long as Yandex shares are trading above this uptrend line, I can only assume that higher prices are likely to prevail and that the bull market advance is intact.

This trend line currently coincides with the 200-day simple moving average (SMA). The 200-day simple moving average is the dividing line between stocks trading in a bull market and stocks trading in a bear market. When the share price is above the moving average, it is bullish. When the share price is below the moving average, it is bearish. In a bull market, it is common for this moving average to act as a level of price support.

The uptrend line and the 200-day SMA are currently united at one price point. This price point is currently being tested by the stock and, in order for a bullish advance to continue, this level must hold. The fact that two metrics have united at one price point serves to suggest that support at this level is significant, and it increases the likelihood that YNDX shares will remain above it.

The following Yandex stock chart illustrates the technical price pattern that has developed above support.

yandex2

Chart courtesy of StockCharts.com

The pattern that has developed just above support is a pennant. This pattern contains two converging trend lines, and as the pattern progresses, the range between support and resistance begins to shrink. This contraction of space causes momentum to build within the pattern, which will eventually be released when the pattern is completed. The resolution of this pattern will determine the next direction YNDX stock will be headed in.

I am leaning toward a bullish resolution because Yandex stock is currently sitting above price support and indicators continue to support an advance. The resolution will be confirmed when Yandex shares close above resistance at $23.00 outlined by the pennant.

Bottom Line on Yandex Stock

I am bullish on Yandex stock because the indicators continue to support the view that an advance is underway. YNDX stock is currently testing an important level of price support, and its ability to remain above it will reinforce the notion that higher stock prices are likely. I will continue to hold a bullish view on Yandex until there indications on the price chart that suggest another view is warranted.