MichaelKahn

New York (MarketWatch) — Since the golden age of technology and Internet stocks, there are a handful of very notable survivors. Online auction and commerce company eBay is one of them, and for the second time since the bubble burst in 2000, the stock recovered more than it lost in a bear market and still looks ready for more.

In the early days of the “new economy,” many companies were born on a steady diet of online commerce. Order fulfillment, payment taking and online customer support were growing like mad, but I recall one pundit saying there was really only one pure online business model — eBay EBAY, -0.57%

Booksellers and pet-products purveyors still had to have warehouses and trucks. They still needed armies of humans to move products through their systems. Only eBay conducted its business completely in the online world, matching buyers and sellers together, taking a fee and never once touching the actual goods transacted.

The market rewarded investors in the company’s stock, and eBay landed on Business Insider’s 2011 list of the top 11 Initial Public Offerings of all time. Of course, that was long before social media created overnight billionaires when those companies went public in recent years.

While eBay got decimated to the tune of 79% during the post-tech-bubble bear market 15 years ago, it quickly got back on its feet. Indeed, it handily outperformed the broad stock market during the early years of the bull market that began in 2003. EBay actually started to rally in 2002 and gained nearly 300% by 2004 (see Chart 1).

Unfortunately, profit problems sent the stock sharply lower in January 2005, and it once again collapsed, this time by 83% into the market’s March 2009 low. The stock was no longer on quote screens, and it was a has-been to investors everywhere.

Of course, when nobody is watching, stocks tend to surprise them. It took another four years, but the stock made it back close to its 2004 high — where it just got stuck for the following two years to today. Short-term charts show a volatile trading range with little net change (see Chart 2). Only short-term traders would have enjoyed the large ups and downs that appeared, and even activist investor Carl Icahn and news that the company would spin off its PayPal unit only caused more volatility, not sustained trends.

But looking at the chart this month, we see something interesting — and bullish. A technical indicator designed to uncover strength within sideways trading ranges — stochastics — is rising. It set a higher low last year even as prices threatened to break the range to the downside. In technical lingo, that is called a bullish divergence. Price and indicator went in different directions and more often than not it is price that turns around.

Indeed, eBay is trading at the top of its long-term range with good short-term momentum and volume flows. It spent late February and early March in a tight short-term range and even made an attempt to break out to the upside on March 5. Should it be able to hold above 59 for several days it would be considered a short-term breakout.

Should it hold above 60, which would be just over a 1% move through resistance, then it would be on its way to a long-term breakout. If that happens, the upside could be to the 70 level over the next few months, which is a target based on the height of the two-year range projected up from the break.

This Internet-bubble darling has fallen and recovered many times, and it is still standing on the verge of yet another profitable move higher.