This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

eBay's Share Price Weakness Is Your Buying Opportunity

NEW YORK (TheStreet) - eBay Inc (EBAY - Get Report) shares are down nearly 20% since setting an all-time intraday high at $59.70 on Feb. 28. The stock has a reasonable 12-month forward price to earnings ratio of 18, which matches the P/E ratio of the S&P 500. eBay is cheap versus the retail-wholesale sector P/E at 26.

The downside for eBay accelerated following the company's first-quarter earnings report. eBay reported earnings per share of 58 cents on April 29 beating analysts estimates by a penny.

The same day TheStreet's Antoine Gara wrote, eBay's $3 Billion Tax Charge Clouds Strong Earnings Growth. The next day the stock gapped below its 200-day simple moving average, now at $53.41.

Investors did not appreciate the tax charge, and shares continued to tumble to as low as $48.14 on Wednesday. The stock is now cheap enough technically to buy.

Courtesy of MetaStock Xenith

The daily chart shows that eBay ($48.90) shows the gap below its 200-day simple moving average that occurred on April 30. The stock is below its 21-day, 50-day and 200-day SMAs at $50.71, $52.25 and $53.41 and the 12x3x3 daily slow stochastic shows an oversold condition with a reading below 20.00 at 16.92.

So the stock is technically cheap following the decline from an all-time intraday high at $59.70 to its 2014 intraday low of $48.14 on June 11.

Courtesy of MetaStock Xenith

The weekly chart for eBay is negative but oversold with its five-week modified moving average at $51.35, which makes weakness to its 200-week simple moving average at $42.25 a buying opportunity.

Investors looking to buy eBay shares should consider using a good 'til cancelled limit order to buy weakness to a weekly value level at $46.62, and then add to the position at the 200-week SMA.

Investors looking to sell eBay shares should consider using a good 'til cancelled limit order to sell strength to a monthly risky level at $52.10. A semiannual risky level is at $56.00.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

>>Micron, Kodiak Oil & Gas, 2 Others Are Momentum Stocks to Watch

Richard Suttmeier is the chief market strategist at ValuEngine.com.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
EBAY $57.13 -0.95%
YHOO $44.13 -0.69%
AAPL $124.25 -0.14%
FB $81.66 -0.67%
GOOG $542.56 -0.99%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs