Lousy Long-Side Risk/Reward With Ebay

eBaY Inc. (EBAY) after reporting earnings yesterday tumbled 5.50% on the day, thus confirming the April highs as an important medium term top.  Both the longer and shorter term charts are now flagging warning signs, let us take a closer look.

The stock’s all time high occurred in December 2004 at $59 and change.  As such, the April highs came within roughly $1 of the 2004 all time highs, which from where I sit counts as a re-test.

The longer term chart looking back to 2009 shows a stock that behaves well technically.  eBaY Inc. (EBAY) behaved well off its 2009 lows, slowly but surely basing at higher levels and subsequently breaking out past those resistance levels.  In early 2012 eBaY Inc. (EBAY) broke out past a key resistance level and has been in a stellar up-trend ever since.

Much closer up on the daily chart, the stock’s marginal breakout to new 2013 highs earlier this month ended up being a classic breakout-fakeout for those giddy enough to chase a stock into the stratosphere.

Yesterday’s post earnings breakaway gap lower confirmed the April top as investors decided to take the high road.  From here, while immediate term oversold, eBaY Inc. (EBAY) likely will be steering toward its 200 day simple moving average around $200, which more importantly coincides with the stock’s longer-term steep up-trend.  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.



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