eBay, just like many other stocks, bottomed in March 2009 and has been under the bulls’ jurisdiction ever since. Prices managed to climb from slightly above $10 per share six years ago to almost $60 in 2014. And while this impressive rise may convince you eBay is a good stock to invest in, the Elliott Wave Principle recommends a rather cautious approach. The chart below visualizes eBay’s path during the last six years as well as the most probable wave count.
As the chart clearly shows, eBay’s uptrend looks very much like a five-wave impulse, where wave (5) is still in progress. According to the theory, after every five waves there is a three-wave correction in the opposite direction. So, if this is the correct count, we should expect a bearish reversal, once wave (5) is over. Typically, it is supposed to exceed the top of wave (3). In our opinion, instead of being over-confident, investors should be getting out, when the $60 mark is reached, because the bears would probably take control of the situation soon.
