Back on February 1st shares of EBAY soared nearly 14% with the help of a huge bump in trade. This powerful earnings inspired surge extended the stock’s major rally off the November lows to a 38% gain. EBAY has struggled, along with the broader market, since then and at today’s early low has fallen 10% from last week’s high. We believe this pullback is setting up as a very low risk entry opportunity for patient investors.
Last Thursday’s massive breakout left behind a very solid support zone. The top band is marked by the stock’s January peak($41.35). Just below is the Feb. 1st breakout gap($41.10). The lower band contained last week’s low at $40.20. If EBAY can stabilize near this area as selling pressure continues to ease a solid base could develop. A close back below $40.00 would indicate a more drawn out bottoming pattern is on the way.
At time of publication we are long EBAY in some managed accounts.