Hi GottaRun,
I see no good news yet in EBAY.
After a topping formation in December, in mid-January EBAY failed at the 200 sma with a professional gap down:
stockcharts.com[h,a]daclyyay[dd][pb50!b200][vc60]&pref=G
This was followed by a lower low, lower peak, and a bear cross.
EBAY therefore satisfies my criteria for a stock being in a long-term downtrend. Usually, for stocks with decent volume trading at least, once such a trend is established it stay in place for at least a year, often longer.
In April EBAY traded down to a V-bottom reversal in late April.
EBAY seems to like the 30 sma; it has repeatedly found support there in happier times, but has been turned away from that level when it became resistance:
stockcharts.com[w,a]daclyyay[dd][pb30!a38.50][vc60]&pref=G
Last month, EBAY powered right through that level along with the general market rally, only to be turned away in a zone of chart resistance at about $38 - $39 (red line in chart above). At that time it was very overbought.
Technical sell signals at that time occurred, and EBAY has traded down ever since. There are no hints of reversal yet in the momentum indicators.
139.142.147.218
Note that EBAY has become one of the weaker stocks in the market now. Generally, it is best to look for long positions in stocks that are either very strong, or trending that way (relative strength compared to the relevant benchmark index).
I think EBAY will most likely continue down to test the 30 sma at $35.81.
stockcharts.com[w,a]daclyyay[dc][pd20,2!b30][vc60][iLk14!Lyb20,2.0]&pref=G
If it fails there (likely, IMHO), then it will move lower to test the lower BB rail, which is currently at $34.81 and rising and contracting. This would in turn make EBAY highly susceptible to expanding the contracted BBs by pushing on the lower rail, and thus moving downward from there.
Bottom line, I see no rationale for a long position at this time. A short position makes more sense, keeping in mind that the test at the 30 sma could possibly be successful, so caution from there on would be indicated.
T |
