Netflix (NFLXs the stock to watch tomorrow. Here are some thoughts. (April 21, 2014)

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Discussed in this article: Netflix Inc. ( $NFLX )


I want to look at Netflix ( NASDAQ:NFLX ); after-hours the company announced earnings and the stock has popped quite a bit, so let’s look at how we trade this. First of all, this is not that; you’ll notice here when this stock popped way up last year in response to some pretty stellar earnings, it was an obvious short. If you bought the stock at the open, well, actually you’re probably not listening to this video because it’s time for you to be getting on the night shift there at the Circle K.

Let’s look at it on the 5-minute chart, it’s up at 372.00; you can see it went up right away, so it’s trading at 372.00 now. Let’s go back out to the daily chart and look here, okay 372.00, where’s resistance for this stock? There really isn’t, I mean this is so far back it kind of doesn’t matter; instead you want to look at this, if the stock is just going to stay within the Bollinger Bands, which I suspect, though I can’t guarantee that it will, the top is 381.00, so just from a statistical standpoint, not from a “Gartmanian” standpoint, I would have a hard time thinking that this stock is going to get up above the upper Bollinger Band, because it would have just had to span so much distance from bottom to top that you just have to assume that profit-taking is going to come in, and that kind of leads me here.

The stock, from the very bottom here at 312.00, now it’s up at 372.00, that’s a 20 percent increase since April 15th, that’s a 20 percent increase. If you were the guy that bought the stock here, or you were just watching the stock, 20 percent in such a short period of time looks pretty good to me. I’ll be watching for it tomorrow, certainly it’s going to gap up in the morning during regular hours, my suspicion is that ultimately it will probably sell down a little bit, but I cannot pound the table on this, as far as the selling goes, because I’ve seen stocks like this, they just gap and run.

Well okay then Dan, tell me what the heck I’m supposed to do, make your call, my call is, watch the stinking stock, don’t make a call, don’t make a prediction; you can see the stock is trading here, it’s not huge volume, two thousand shares traded, great. The stock is trading sideways, what you want to do, and this is “59-Minute Trader” stuff, watch and see where the stock opens up, wherever it opens up, you know 375.00, although lately the way things have been going it will probably open up at 365.00, and this is all short-covering, but wait and see how the stock opens up; that’s your reference point. As long as the stock stays below that level over the next half hour or so, you don’t want to be long this stock, because it’s obvious that the selling pressure is pushing the stock lower.

On the other hand, if the stock instead runs up and then just kind of stays above that level, then you want to be long the stock, because you know that what you’re dealing with here is a gap and run. The whole idea is this, don’t sit here and try to predict which way stocks are going to go. Charts, believe it or not, and you can quote me on this, are not predictive, there is no predictive value in just looking at a chart. Charts are informative, and if, when you look at a chart like this, you’re not looking at predictable lines, but instead you are looking at the emotions, the actions, the buying and selling commitment of traders.

Now all of a sudden this starts to make sense to you, and like I said then, if it opens up here then those folks that have watched this run are sitting on a pretty nice return, they’re going to look to take profits. Also, those folks that brought down here and have been in pain, what do you think they’re waiting for? They’re waiting for the stock to come up and ease their pain, so either way you’ve got to look at this as ripe trading grounds for selling first thing in the morning. Rather than short, you wait and see, wait for the next 5, 10, 15-minutes, and then which ever way the stock is trading, relative to the opening print, that’s the way you want to take this stock.