Wednesday, September 27, 2006
Here is a highly condensed weekly bar chart of E-bay. This is the first time I have commented on this stock and the reason is easily seen from its chart.
During a bull market one wants to own stocks that are keeping pace with or even outperforming the averages. But E-bay made its bull market high in January of 2005 when the S&P was trading around 1215. It has dropped substantially since then while the S&P has rallied to 1340. I think this underperformance will continue for a while and will drop E-bay to 15 or so.
Notice how the current situation contrasts with that of the 2001-2002 period. During those two years E-bay managed to rally in the face of a big bear market drop in the averages. This overperformance predicted the big bull run in E-bay which carried it from 15 to 58 during the next two years.