Take advantage of the technical U-turn in Netflix, Inc. (NASDAQ:NFLX) stock and shift gears with a bearish bet today
Sometimes the market plays like a version of Fast & Furious. But rather than get mad, investors should focus on making profits and leave the ego in the rear view mirror. And right now, the Netflix (NASDAQ:NFLX) stock chart is telling bulls to move over and let the bears take the driver’s seat. Let me explain.
I’ll admit it, I was bullish on Netflix stock not so long ago. In fact, just a few sessions ago I wrote up an overall upbeat assessment on the company and how investors were in position to purchase NFLX shares with less risk and increased profit potential. Crash and burn!
In a nutshell, caution at the time wasn’t thrown into the wind. Still, the streaming video giant’s top (and squiggly price) lines outweighed hazards such as NFLX’s rich price multiple, storied and growing cash burn and ever-apparent competitive threats from the likes of Apple (NASDAQ:AAPL), Walt Disney (NYSE:DIS) and others. And again, I was wrong. Well, at least as far as the Netflix stock chart is concerned.
I still view Netflix as a buy … for the right price. But as a trading vehicle in today’s volatile market, it’s time to get past the mental roadblocks and let a bearish bet on Netflix stock be your road to profits in the short-term.
Rather than steer clear of price action that has been maddening for investors, the big picture of the weekly chart points to getting back in the driver’s seat … as a bear.
The same daily chart price action which stopped our previously discussed long in Netflix stock has formed a confirmed weekly chart hangman pattern candlestick. The price action is bearish in its own right. But combined with an overbought stochastics and shares failing at the less-followed 76% Fibonacci retracement level, it looks even worse for NFLX bulls.
And with Netflix stock also running into price resistance at a pair of key topping candles during NFLX’s late 2018 market correction, the situation looks well-situated for investors placing short bets today.
My technical takeaway is we’ve just finished watching the first part of a large “W,” or double-bottom, base in NFLX shares. Bearing this in mind, the weekly hangman is a mid-pivot high that preceeds another corrective leg.
If we’re correct, Netflix investors can expect a challenge of the December low in the coming months. And bottom line, even if you harbor longer-term bullish designs on NFLX, the current technical risk tied to the mid-pivot means big profits for shorting Netflix stock today!
Overall, the bias in prices is: Upwards.
The projected upper bound is: 388.38.
The projected lower bound is: 346.09.
The projected closing price is: 367.24.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 3 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 46.5467. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 55.84. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 49 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 34. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.
Rex Takasugi – TD Profile
NETFLIX INC closed up 10.400 at 366.960. Volume was 34% below average (neutral) and Bollinger Bands were 53% narrower than normal.
Open High Low Close Volume___
359.000 368.330 358.510 366.960 7,036,097
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 363.06 353.35 340.09
Volatility: 47 38 56
Volume: 7,575,934 8,289,765 11,619,513
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NETFLIX INC gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NETFLIX INC is currently 7.9% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of NFLX.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on NFLX.O and have had this outlook for the last 3 periods.