Selling On eBay 101
Published May 10, 2017
On May 5, 2017, the eBay Inc (EBAY) 150 day moving average crossed below its 200 DMA. Historically this has occurred 14 times and the stock drops a minimum of 1.483%. It has a median loss of 6.923% and maximum loss of 25.517% over the following 27 trading days..
When we take a look at other technical indicators, the relative strength index (RSI) is at 54.5317. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading has the stock in the neutral realm, potentially negating major price swings. The RSI has been trending lower since July 2016. Even though the RSI typically cycles between overbought and oversold levels, that has not necessarily been the case with this stock. Overall the RSI is failing to make newer highs which is another significant signal of downward movement. This overall downtrend should continue as long as the RSI stays below this trendline.
The true strength index (TSI) is currently -2.5244. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is down. This indicator has always been trending down and failing to make new highs since August 2016. The overall price should continue to trend lower as long as the TSI remains below this trendline.
The positive vortex indicator (VI) is at 0.9946 and the negative is at 0.9559. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. Currently the stock has been stock in a tight channel since early March with neither the positive or negative indicator breaking out. This congestion may prevent major swings in the price.
The stochastic oscillator K value is 84.9079 and D value is 80.6932. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. Currently the indicator is in overbought territory and the downtrend will begin soon.
Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall direction appears slightly mixed, but down is doable. Based on historical movement compared to current levels and the current position, the stock could drop at least 2% over the next 27 trading days.
DISCLOSURE: I currently do not have positions in the stock mentioned above. I do not plan to enter a position within the next 72 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.