A tale of two pandemics for these shares
The pandemic has affected both these companies in different ways. Our chartist studies the numbers.
17th November 2020 09:40
by Alistair Strang from Trends and Targets
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The pandemic has affected both these companies in different ways. Our chartist studies the numbers.
DS Smith (LSE:SMDS) & eBay too
We're interested in the differing potentials of each of these shares. Essentially, packaging supplier DS Smith (LSE:SMDS) look very capable of an increase in share price, doubtless reflecting the massive increase in online shopping during the pandemic.
Online shopping giant eBay (NASDAQ:EBAY), on the other hand, appear to be suffering, thanks to repeated speculation of a Covid-19 cure.
This conflict of signals certainly justifies some scepticism for the long-term future with DS Smith. We're inclined to emplace a 'safe' trigger level against the share, essentially saying 'only if the share price gets above this level shall we be convinced bottom is "in".'
For DS Smith, presently trading around 341p, this implies a need for the share to exceed 376p to trigger a scenario where longer-term recovery toward 462p calculates as possible.
Should such a level be exceeded, our secondary calculates at 543p and almost certain hesitation in any growth cycle.
For it all to go wrong, utterly wrong, the share needs to retreat below 267p as this opens the gates toward 179p initially, with secondary, if broken, at a bottom (hopefully) of 78p.
We've received a few emails regarding DS Smith and unfortunately we're a little concerned due to their share price behaviour since 2018.
Thus far, Covid-19 and increased demand for packaging appears not to be helping the price.
Source: Trends and Targets Past performance is not a guide to future performance
eBay (Nasdaq:eBay)
It's always tempting to use the term ‘auction site’ when discussing eBay but the reality nowadays is quite different. Instead, we suspect most people use eBay as a convenient place to shop from online retailers.
A recent personal experience with ‘eBay checkout’ resulted in an eclectic range of purchases, comprising of joint supplements for dogs, worktop joining clamps, a Toyota key fob battery, a solid state hard disk and classical guitar strings.
Not one of the purchases involved the thrill (aka inconvenience) of an auction, instead reflecting the results of a to-do list. Prior to Covid-19 it's likely four of these five items would have been purchased from conventional retailers, with only the laptop hard disk being sourced online.
With the threat of a return to normality, eBay’s share price is already showing signs of nerves, doubtless due to fears the public shall urgently embrace the joy of visiting shops.
The situation at eBay looks like weakness next below $45 (£34) risks reversal to an initial $42 with secondary, if broken, calculating at a bottom of $33.
To be fair, if this reversal cycle commences we'd hope for a rebound before the $33 mark appears, ideally around the $37 price level. The share price needs to move above $52 to cancel this scenario.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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