Yahoo! has managed to outperform the sinking market today, thanks possibly in part to an upgrade from Merrill Lynch. The brokerage giant lifted its rating on the shares to buy from neutral, citing increased year-over-year asset value. Covering analyst Justin Post noted that Yahoo! is at an attractive entry point and is in a better position to monetize its own inventory.

Post established a target price of $33 and expects 2007 earnings of 44 cents per share and 2008 earnings of 48 cents per share. Across Wall Street, the average full-year earnings outlook is calling for 43 cents per share in 2007 and 54 cents per share in 2008. Ahead of this upgrade, YHOO already boasted 10 strong buy ratings and 1 regular buy, along with 14 holds and just 1 (strong) sell.

After a 5.5% jump higher on Friday, YHOO has edged up a fraction so far today. This combined gain has buoyed the equity back above its 10-day moving average, though the 20-day (and the 160-day) still loom overhead, with the latter trendline of resistance perched right above.

Additionally, options-related resistance threatens from overhead. In the December series alone, there are more than 200,000 open call contracts between the 27.50 and 37.50 strikes. Schaeffer's put/call open interest ratio (SOIR) for YHOO currently weighs in at 0.55, with short-term calls outweighing short-term puts nearly 2-to-1. This reading isn't terribly extreme, however, resting in the 42nd annual percentile of the past year's worth of data.