Shares of Yelp Inc. (YELP) were downgraded at UBS today, but the YELP chart has been in a downtrend since its peak around $100 in early 2014. This fundamental news may be considered late, but the bears are still in control and a turn to the upside is not in sight.
In this chart of YELP, above, one can see a temporary price low was made in the August/September/October period, but the recovery off this low failed by early December. Many individual stocks declined sharply in January, but YELP showed poor relative strength with its downward slide a month earlier.
Prices eventually slipped to a new low in February. YELP rallied off this February low to briefly test and close above the 50-day moving average. This strength didn't last long. The On-Balance-Volume (OBV) line has remained depressed, which tells us that buyers of YELP have been unenthusiastic. In the lower panel of this chart, we see no meaningful bullish divergences between the lower price lows and a higher momentum reading. In other words, the rate of decline in price is not slowing.
In this longer-term chart of YELP, above, we can see the long slide lower, the downward sloping 40-week moving average and the declining OBV line. There is a bullish divergence in the lower panel between the lower lows in price in August and February and higher lows from the momentum study on this time frame. We will probably check what is being said on Yelp about a new restaurant, but we'll take a rain check when it comes to investing in YELP.