Is it time to bid on eBay (EBAY)? (March 25, 2013)
EBAY
I’m Dan Fitzpatrick at StockMarketMentor.com on Tuesday, March 26th. I recorded a video yesterday on eBay that cut-off at the end. A lot of people were saying, “What were you saying on eBay ( $EBAY eBay Inc )?” So I will go ahead and redo this video. Look, Monday’s decline here I think was significant and here’s why. If I just draw this trendline here loosely connecting these last several lows you can see that eBay ( $EBAY eBay Inc ) still bounced off of this trendline, the last time, which was great, but in the past it’s always printed these higher highs, every single time. Then it printed a lower high, then so far, a lower high still. So this is, in my view, kind of a bearish indication. It’s also concerning to me that while the stock fell below the 50-day moving average several times here, here, here and then here, it always rebounded pretty quickly. This time it really hasn’t and it’s as close to the 200-day moving average as it’s been in a while, you can see it was super close here. So I’m wondering, this was on high volume, I’m wondering if this is a shot across the bow, such that it really marks the first time that eBay’s ( $EBAY eBay Inc ) likely to roll over. Is it a shot across the bow or did it actually hit the hull? That’s really what’s going on here, at least in my mind. If you look at the weekly chart you can see, look, the uptrend is intact so this is not a stock that’s just destined to move lower, this is more just me thinking out loud because it was nice that the stock bounced off of the 200-day moving average, here the 40-week moving average, not so nice that it had previously bounced off of this middle Bollinger Band which is the 20-week moving average. So this is a potential problem. What I’m suggesting is this; eBay’s ( $EBAY eBay Inc ) kind of setting up as a short, the stock is stabilized, today, and if it does move a little bit higher but fails to push above this level I think it sets up a really nice short, a low risk short. Why would it be low risk? Because you have a clearly defined, oh crap I’m wrong level, and that would be on any move into this green box, that’s when you would buy to cover. You would just cover your short and say, “Well, perhaps eBay ( $EBAY eBay Inc ) is going up higher after all.” And then you can either reinitiate a short at a higher level or take a lickin’ and keep on tickin’; it’s a short that didn’t work. What you really want to be striving for in your trades, specifically your losing trades, is to have them all be unremarkable, in other words you never want to be in a position where you’re ruing the day that you made such and such a trade because it caused you such a big loss. Don’t do that; don’t put yourself in that position. Only take trades that have a clearly defined level at which, if the price moves you will know you’re wrong and you can exit that trade and then just make sure that if that clearly defined level is hit, the loss that you take will be one that is acceptable to you; not happy about it, I hate taking losses but it’s a part of the trading game, so I’ve become used to taking losses, and I take a lot of losses, I just can’t remember a time that I’ve taken a big loss. You just don’t want to put yourself in a position of taking big losses. Anyway, I hope this works for eBay ( $EBAY eBay Inc ) but like I said, this is a real issue here with me, this lower high, if it is not surpassed by this bounce I think this is going to be a really, really good short setup. I hope this helps and again sorry for the glitch where the video stopped near the end of it yesterday. Free Chart