Stalking eBay for an Entry Point

 | Dec 28, 2012 | 7:00 AM EST  | Comments
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Stock quotes in this article:

ebay

Overall, the stock market is vulnerable because of the failure to clear the Dec. 19 high in the S&P futures that I have posted on this site before. With that being said, I'm still going to stalk a buy setup in eBay (EBAY). If it's not any good, then we should not see a buy trigger against it. Let's take a look at the daily chart, as far as Fibonacci time and price parameters are concerned.

 

EBAY Daily
DynamicTrader

 

First, on the daily chart, we are looking at a larger bullish pattern of higher highs and lows in this stock. Price is also currently above the 200-day simple moving average and the 50 SMA. As far as price is concerned, I have two standout price support clusters. The first one comes in at the $48.52-$49.53 area. The second one comes in at the $46.66-$47.88 area. So far, the low has been made at $49.67, which is close enough to look for buy triggers.

As far as timing is concerned, I'm seeing some beautiful symmetry in time, as I have counted the days that the prior corrective declines have taken recently. These declines have lasted 17 to 19 trading days in the past. These are illustrated on the daily chart. The recent decline from the Dec. 3 high so far has lasted 17 trading days into the Dec. 27 low. This is obviously very similar to these prior declines. This is why I am stalking eBay for a possible buy entry.

The most aggressive entry for a swing trade would come with a moving-average crossover to the upside on the 15-minute chart. With the markets being so vulnerable with the fiscal-cliff soap opera, however, I do not want to use an aggressive entry here. Actually, this would be a good time to wait for the daily crossover using the 5/13 EMAs from the daily charts. Of course, you as a trader can make your own choice.

Please refer to my prior article with the handy guidelines for more of an explanation of the intraday triggers that you can use. A trigger is essentially price action that tells you it is worth placing a bet against the support cluster. So we have a trade setup ... now all we need is a trigger!

Now if both of these key support decisions are violated instead? Then faghetaboutit. ... the trade is a bust!

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