Specialty Retail is coming out of the ashes. Check $EBAY and $BABA – January 11, 2023
I want to look at a couple of retailers. First of all, I was looking at eBay ( NASDAQ: EBAY ) today, for various reasons. I noticed that this thing, for the first time in a long time, is back above the 200-day moving average.
I would not say that you are going to get this kind of move, I don’t think there is that much demand for it. But I do see this, and I see a lot of these things, this inverse head and shoulder pattern. Where you get a series of lower lows, and then at some point you get a higher low. And this higher low is really only kind of confirmed when the stock runs above the last high.
The reason I say that is because this is the last high, right? So we could see the stock go down and ultimately keep going and then suddenly that is not a lower low. That is just a low but the next low is here. What I am saying is, this is the kind of thing that you really do need to see confirmation. You really need to see confirmation that this stock is reversing and it sure looks like it is.
They don’t report for a month, about 6 weeks or so, or something like that, so you might want to watch this stock. As long as it stays above the 200-day moving average I think this could be a nice little swing trade for you. I am not looking for anything more than a swing trade. Maybe it will turn into something but that would be that.
And then Alibaba ( NYSE: BABA ); this is a much better deal. I have a small bit of this, but I will be perfectly honest, I chased it. This is exactly what you are looking for. You are looking for a breakout of a stock above key moving averages, here, the 200-day moving average, which has been above this for God knows how long? Probably since we’ve heard from Jack Ma. So this has been a really big drag on the stock but you will see now it is just about flat. The stock is just breaking out to the upside and so I think this stock has further to go.
Now, this is the way that I would trade it if I were you, I wouldn’t buy it here. If you just get the “can’t help it” buy a share, but I wouldn’t really buy it here. What I would look at is this, this is the squeeze. Then Phase 1 of a 3-part move is this, Phase 1 is the initial breakout. Stocks don’t go up forever, at some point that stock is going to start pulling back. And when it pulls back, that’s Phase 2.
Hopefully, it doesn’t go down to there, but if it pauses anywhere in this level or above it is all good. But let’s say it pulls back to $100.00, okay, you don’t buy until the stock rebounds above $100.00. So you are buying the stock on the bounce after the rebound and then you are putting your stop right there.
This is a safer way to trade this stock and to trade this kind of pattern. It really works very, very well. But I do get it, I chased this and bought it a couple of days ago. I will admit it, I’m not perfect, but I wouldn’t buy it now. I would just wait and say, well we’ll see if Dan holds onto his or if he is going to sell it for a teeny tiny profit and so what he says to do, which is, wait for the pullback and then buy it for a bigger move.
Anyway, that’s that on BABA ( NYSE: BABA ) and eBay ( NASDAQ: EBAY ).
Free Chart