eBay Looks Like a Lousy Bet Here

by Serge Berger | April 19, 2013 1:41 am

eBay Looks Like a Lousy Bet Here

Serge Berger is the head trader and investment strategist for The Steady Trader[1]. Sign up for his free weekly newsletter here[2].

eBay (NASDAQ:EBAY[3]) — After reporting earnings Thursday (the company beat on earnings slightly but outlook fell short of expectations), the stock tumbled almost 6% on the day, confirming the April highs as an important medium-term top. Both the longer- and shorter-term charts are now flashing warning signs.

04 19 13 ebay multi year 300x208 eBay Looks Like a Lousy Bet Here
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The stock’s all-time high occurred in December 2004, at $59 and change. This month, it came within roughly $1 of those highs, which, from where I sit, counts as a retest.

The longer-term chart looking back to 2009 shows a stock that behaved well technically — moving off its lows, slowly but surely basing at higher levels, and subsequently breaking out past those resistance levels.

In early 2012, EBAY broke out past a key resistance level and has been in a stellar uptrend ever since.

04 19 13 ebay daily 300x276 eBay Looks Like a Lousy Bet Here
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Closer up on the daily chart, the stock’s marginal breakout to new 2013 highs earlier this month ended up being a classic breakout-fake out for those giddy enough to chase a stock into the stratosphere. Thursday’s post-earnings breakaway gap lower confirmed the April top.

From here, while immediate-term oversold, EBAY likely will be steering toward its 200-day simple moving average, which, more importantly, coincides with the stock’s longer-term steep uptrend. The reaction around the $50 mark will thus be of great importance.

Given these points, I am staying away from the long side of the stock, and if anything, may be looking to play it from the short side.

Endnotes:
  1. The Steady Trader: http://thesteadytrader.com/
  2. free weekly newsletter here: http://forms.aweber.com/form/42/1636996642.htm
  3. EBAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=EBAY

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