After Disney announces that they’ll be aggressively competing with Netflix, Is (NFLX) now a House of Cards? You’ll be surprised. (November 13, 2017)NFLX PGP NFLX DIS NFLX
Let’s look at Netflix ( NASDAQ:NFLX ) today; the reason is because I think the stock is at a pretty good low-risk buying opportunity. Now, I don’t think you are going to make bitcoin type money in the next week or two. But then you are probably not going to lose bitcoin money either in the next week or two.
Here is the thing: The stock has been trading sideways for a while, about a month or so. You can see the uptrend here, 50-day moving average marks that. The stock has been pretty volatile, kind of drifty, I guess, as opposed to back here where it was just kind of more of a smooth, relatively speaking anyway, kind of a smooth uptrend. Not exactly like IPGP ( NASDAQ:IPGP ), which is one of our growth stocks, it has been there for the last month, but it is still pretty good. On something like this you want to wait on the right entry and you also want to see if you can get some kind of edge in what is happening.
To me, the edge comes from Disney ( NYSE:DIS ). They announced that they are going to have a product that is going to compete aggressively with Netflix ( NASDAQ:NFLX ). When I read that they are going to compete aggressively with Netflix ( NASDAQ:NFLX ) I couldn’t help but think about A Few Good Men with Demi Moore and Tom Cruise; where she is objecting and the judge overrules and then she goes, “I strenuously object.” There is no such thing as a strenuous objection versus an objection. There shouldn’t be any such thing as competition that is not aggressive competition. If you are going to compete, compete. If it is not an aggressive compete it is a sure defeat.
So when I see that kind of stuff from Disney ( NYSE:DIS ), great. You guys need something because you are ESPNers. But in the meantime Netflix ( NASDAQ:NFLX ) pulls back a little bit and then it rallies. So clearly (there are not that many things in the market that I would refer to that as), clearly the market is not anticipating a real Netflix ( NASDAQ:NFLX ) buster from Disney ( NYSE:DIS ), at least for now.
Now, if you recall, those of you that can go back about 10 years, when Netflix ( NASDAQ:NFLX ) first opened for business, so to speak, let’s look back here, somewhere around in here. When they first opened for business Blockbuster was a big deal, right? They opened for business and if I recall correctly that was about the time Blockbuster peaked. And so, just somebody coming into your arena to play is a negative for you because it is not like you are going to take market share from them, they have no market share. Any market share they take they are going to take to you. So the best you can do is take it back. That is a problem.
The fact that Disney ( NYSE:DIS ) is coming in, you don’t want to be against Mickey, that’s for sure. That big-eared dude has been around for a long time. But, you have to pay attention to Netflix ( NASDAQ:NFLX ), they are having new releases all the time, they are all B movies. Every movie that I think, “Oh I think I want to watch such and such,” I go to Netflix ( NASDAQ:NFLX ), it is not there, it is a bunch of stuff that I don’t want to watch, but I still pay the subscription fee. And when they raise it, if they haven’t raised it already, I will pay that too. Disney ( NYSE:DIS ) is going to have a tough time competing with that.
So we look to Netflix ( NASDAQ:NFLX ), we buy it here. We keep a stop like 4 percent. Because sometimes we get these little shakeouts, you keep a stop about 4 percent below where your entry is. Your thesis is that you are going to make money at least from here up to 200.00, that is about a 1:1 risk. You may be actually risking a little bit more than you would expect to make if the stock only went to 200.00. But what you are anticipating is that it is ultimately going to break through 200.00 and at least hit an all-time high of 204.00. So that is how you would trade Netflix ( NASDAQ:NFLX ). Good luck with that.