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Charts Suggest Ebay Could Sell Off 30%, Post Earnings

Of all the earnings reports coming this week, we’re hearing eBay may warrant close attention. So says top technical analyst Abigail Doolittle of Park Theories Research as she examines the stock’s chart patterns.

“It’s trading in a long-term diamond pattern,” she says, “a sideways pattern. And this is typically a bearish pattern.”

And she thinks comments from the company when they report the earnings on Wednesday after the bell, could provide the catalyst to send the stock lower.

But here's the important part if you're a trader.

Doolittle says when the long-term diamond pattern breaks, it breaks hard. “If it breaks we’re looking at a move toward $20,” she says, “about a 30% slide.”

As if that’s not bearish enough, she goes on to say, it could generate broad selling in the Nasdaq and the market as a whole.

Immediately after hearing Doolittle’s analysis, trader Patty Edwards admitted that she wanted to scale down her position.

“Given what Doolittle just said, I’m selling some of my position. Over the long-term I believe in the story but in the short-term I have a profit and now I’d like to take some off the table and look at the stock again – later,” Edwards explains.

Trader Joe Terranova is on the other side.

He thinks the Street could get some impressive results from Ebay’s PayPal unit. “We could hear good things about PayPal payments surging and that would generate a tailwind - not selling.”

*Watch the video above to see the chart used in Abigal Doolittle's technical analysis

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Trader disclosure: On January 17, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long V; Terranova is long CSCO; Terranova is long TRLG; Terranova is long JNPR; Terranova is long DECK; Terranova is long NFLX; Terranova is long XOM; Terranova is long SBUX; Terranova is long AXP; Terranova is long EMC; Terranova is long MUB; Terranova is long IBM; Terranova is long UNG April $5 puts; Scaramucci is long GOOG; Scaramucci is long JPM; Scaramucci is long GS; Scaramucci is long IBM; Edwards is long PM; Dicker is long Vale; Dicker is long CHK

For Anthony Scaramucci
Anthony Scaramucci is one of 8 national finance chairs for Mitt Romney campaign
SkyBridge Capital Is A Fund Of Funds Manager
Scaramucci held a fundraiser for Mitt Romney and contributed to the Romney campaign

For Patty Edwards
Trutina is long Apple (AAPL)
Trutina is long SPDR Gold Trust (GLD)
Trutina is long MSFT
Trutina is long EBAY
Trutina is long T
Trutina is long INTC
Trutina is long PM

For Abigail Doolittle
No disclosures

For Camilla Sutton
No disclosures

For Chris Danley
Market Maker: JPMS makes a market in the stock of Intel.
The following analysts (and/or their associates or household members) own a long position in the shares of Intel.: Shaon Baqui.
J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Intel.
J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Intel.
J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Intel.
J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Intel.



CNBC.com with wires.