Shares of eBay (Nasdaq:eBay) fell sharply last week after the company latest quarterly earnings report failed to impress investors, and increasing concerns of investors from the accounting allocation of fresh capital to stocks. Through the lens of technical analysis, items on eBay last week, left behind what we call a bearish outside reversal candle, which, as the name indicates must specify the stock to lower levels.
As I always highlight especially in the period of reporting in this column, the stock reaction to the news is more important than the news itself. Another way to put this is that price is the ultimate arbiter for traders investors.
Concerns about growth prospects on eBay has been around for some time, although, looking at the share price, pushing to fresh highs as recently as early February, it was easy to cheat.
On eBay stock charts
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Moving averages legend: red – 200 a week, blue – 100 a week, yellow – 50 a week
Keeping in mind that the correlation between stocks, in particular, within any sector and industry group is high, it should not surprise you that I saw a rally items on eBay to new highs in late January/early February, together with other technologies associated with inventory. Please note that this rally in stocks also pushed him over a longer trend. From the point of view of the pulse measured and the MACD oscillator at the bottom of the chart, the stock is also significantly overbought since his testimony coincided with overbought levels, previously seen in September 2016, which was then headed by the warehouse for correction.
Last week’s “ bearish reversal” items on eBay, now sits on the zone of confluence of technical support, consisting of a simple support line (lower dashed line), and the yellow 50-day simple moving average. However, as we can see on the daily chart, this support area, could easily break and see that the stock slides much further down.
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Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 days
On the daily chart, we see that eBay stock is forming a series of lower highs since topping in early February. After a report last week, the earnings, the stock gapped down and fell markedly on April 26 and still have not been able to recover. Support levels on the daily chart the black support line and the red 200-day simple moving average.
As I see it, the second lower high that eBay Stock formed in mid-April, and then last week, after the income gap-down, does not Bode well for the stock. And action, of course, can rebound and go back and fill in a few around the current levels, I see it as an opportunity to leg into a new swing trade short position of about $38-$39 area with a downside target in the medium $30, while any strong bullish reversal day could serve as the stop loss.
Check Serges Daily market review for April 30.
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