The white space between the red-and-candle stick chart started to diverge, near late November, before the tax friendly deal was announced.
After baba shares collapsed after the Q4 results, the strength of yhoo vs baba was fairly obvious. Yahoo's revenue started to stabilize, and grew yr-yr last quarter. IMO, the rise in value of yhoo vs baba was reflecting this. (And at times, observing the chatter, I felt like the lone supporter to the core biz.)
Today the gap was removed apparently thanks to a comment by an IRS official that the spinoff rule *may* change. (Emphasis on the word "may". And I guess the right people were in this conference that they told enough people about this turn of potential events that yahoo became one of the most actively traded stocks 15 minutes prior to the market close. Go figure. Anyone think the SEC has authority over the IRS? Surely yahoo want the only stock affected by the comments.)
Regardless of the extra billions in tax savings from SpinCo, yahoo strategy remains and so long as there is consistent revenue growth, the core business will appreciate in value. The other tail wind is baba itself. As it appreciates from here, so will yhoo.