Here’s how you buy (and hold) Netflix (NFLX). (October 05, 2017)
I want to look at Netflix ( NASDAQ:NFLX ); this could be a short video. I think you have got to buy Netflix ( NASDAQ:NFLX ). Let’s look at this in a little more detail. The stock hit an all-time high. The company announced, that they are going to bump up their subscription rates. I remember several years ago when, I forget the guy’s name, I don’t really follow CEOs, that they are going to split off their divisions. They are changing some things around and the stock absolutely tanked, like “Oh my gosh, what are you doing?”
Well, this time around it is a little bit different deal. Everybody is cutting the cord. By the way, if you haven’t done that it is really liberating. It is amazing, it is almost like house cleaning. Left, right, wherever you are on the political spectrum, no politics whatsoever, you get rid of so much stuff by just cutting off your cable and just watching whatever you want to watch on Netflix ( NASDAQ:NFLX ), Apple TV. Go to YouTube, set up your own channel, it is really easy. Anyway, what a difference a decade makes. Folks are doing that more and more and using Netflix ( NASDAQ:NFLX ) more and more. I think this stock goes a lot higher, but we are not talking about later we are talking about now.
You can see the trend here. This stock has traded sideways, basically for a year and a half. Then it finally broke out. Then, it runs up here, trades sideways for how long? Less than three months, and now it is breaking out again. It can be kind of a tough stock to hold but you should be holding it. Here was your tell today: Right out of the gates the stock opens up for trading and you get a nice run-up. It can be easy if you are looking at this, particularly if you are trading options as I sometimes do on this, where you look at this, it is 11:00 the stock starts to drift down and you are thinking, “Oh no, I have got to get out. I have got to sell my stock because this is the end. It is reversing,” and that is that. So you wind up selling only to see the stock move up without you.
Now, here is how you can get away from doing that. It really just comes from looking at things from a slightly different perspective, and it is simple. You have got almost 20 million shares traded today. A lot of them were first thing in the morning. You can look at the volume bars here, a 5-minute chart; you have got 700, 600 thousand shares traded on those bars.
So what you have to do right out of the chute is say, “Alright, who is doing the buying?” There is only one group of traders that can move a stock like Netflix ( NASDAQ:NFLX ), that would be Apple ( NASDAQ:AAPL ), Amazon ( NASDAQ:AMZN ), Google ( NASDAQ:GOOGL ), any of those. The one group of people that can move those big stocks is institutions. Institutions don’t day trade, they don’t day trade. So you see this stock jumping up here first thing in the morning and it does not reverse first thing in the morning. It doesn’t do this. It just does this, kind of moves around a little bit and then ultimately breaks out above these resistance levels. This is like somebody telling you, “Hey! By the way, institutions are buying this stock all day today. They will be around all day. So if you want to sell them some stock there is a market for that.
It is like getting that kind of call. When the stock goes up on big volume, does not pull back very much at all, and then ultimately keeps moving higher. That is what you know; institutions are buying this stock. They are not going to buy it until 10:00 or 10:30 and then start selling it to where you see the stock start to fall. They just don’t do that. Unless there is something weird that happens on this planet that is not something you are going to see happen. You are going to see a stock, a large-cap stock like this, if it gaps up a bit, starts moving up on huge volume, doesn’t pull back very much. That tells you that institutions are buying they are not selling. They are not going to change their mind at 10:30 or 11:00. They may push away from the desk and not be buying for a while but they are not going to smash the trend.
When you see something like this you get long and you stay long or you are going to be wrong. That is it for this video on Netflix ( NASDAQ:NFLX ). Again, I think you have just got stay long this stock; it has been trending sideways for a while. Hey, why not just ride it up and make some money for a change?