Still waiting for the movie about Pamplona to start on Netflix ($NFLX) (April 20, 2022)NFLX COUP FGB FB
I want to look at Netflix ( NASDAQ: NFLX ) today. As you know, if you trade anyway, Netflix ( NASDAQ: NFLX ) absolutely took it in the butt. There is no other way to say it, it was essentially prison raped. The stock is down 36 percent, it opened down, I think about 27, something like that. I guess maybe a little bit more according to my cursor but we will just say it opened close to 250.00.
Typically, on something like this you kind of look for a snapback, and here is why; I actually posted it on the cesspool line, otherwise known as Twitter ( NYSE: TWTR ), that it was right at a point where you would expect a rebound and I will tell you why. Here are three standard deviations, these Bollinger Bands. Stock is not supposed to trade three standard deviations, one way or another. It is kind of like it’s breaking the law.
Now, these days you are not going to get arrested for this. Nobody gets arrested for anything so maybe it’s okay that this is going to continue to trade lower. But I am just telling you, at some point, this is setting up for a pretty decent rally. But as somebody mentioned in the forum today, it was kind of a combination thing, I mentioned that this is not looking like Coupa ( NASDAQ: COUP ).
When Coupa ( NASDAQ: COUP ) fell down again below this third standard deviation I bought it very close to the bottom. Awesome, awesome entry, crappy sell. I sold it, I would say, a little bit too early. But what I am saying is, though, this stock fell down and then just started recovering really nicely. On the other hand, “Faceplant” ( NASDAQ: FB ) here, did not. Facebook ( NASDAQ: FB ) here, fell and it just kept ongoing. Personally, I don’t even think it’s done going down but we will see.
The point though is, like Coupa ( NASDAQ: COUP ) fell down third standard deviation and then started moving up, Facebook ( NASDAQ: FB ) fell down and just kept falling, just more and more selling. We could certainly see that with Netflix ( NASDAQ: NFLX ) but my approach has not changed. And the reason is that my approach does not involve predicting or forecasting. My approach involves watching.
What you want to watch for, and this may not be your trade at all, but what you want to watch for is evidence that the selling is done. Not because you think it’s done, not because you translate and interpret what I am saying as, oh, I think it’s done, not at all. If you see that the selling has ended, I will tell you how you can know that in a second, if you see that it has ended, then you can put yourself in a position to at least ride it northward a little bit. How much is it going to go? I don’t know.
If Megan and Harry Markle were to come out tomorrow and say that they are, in fact, going to earn their 20 million, I don’t know, after a while, it doesn’t even matter, does it? But they are going to earn that money and actually do some kind of show or something that shows real value to Netflix ( NASDAQ: NFLX ), then we could see this stock run-up like that. However, since pigs could fly out of my butt playing violins as a more likely scenario than those two doing any work for Netflix ( NASDAQ: NFLX ), I kind of don’t think that is going to happen.
Instead, my bet is, that the stock is going to slowly kind of stabilize. I think, after this much selling and it just kept going, you kind of have to think that there is going to be some overhead supply here. There is going to be, in this area, or it is just kind of in this area, there is going to be traders that held on and were hoping for a bounce. And then it didn’t come and so by this time they are going, crap, I can’t sell now I’m selling at the bottom. I can’t sell now I’m selling at the bottom. I definitely can’t sell now I’m selling at the bottom. And then if the stock ultimately comes up here they are going to go, okay, now I am selling. And so I think you are going to see that kind of overhead supply.
But what you look for is pretty simple. Don’t try to catch the exact bottom. I think you look for a break out above 245.00, that was today’s open. If you see the stock start to break out above 245.00 then you should be able to get a pretty nice run for 5 or 6 percent, maybe more. But that is all I would really look for on this.
Now, you could say, well, right now the stock is trading down here and you are going to tell me I am going to wait 21 points before I buy the stock? No, I am just telling you that this is one way to look at buying the stock. You could go VWAP crazy and just wait for the stock to start trading above the volume-weighted average price line. You just wait for the stock to start trading above there and then buy it.
But that is kind of more of a day trade, I am just talking about a swing trade where you are catching the stock as it kind of washes out all of the sellers. It’s like a bear puke fest and then at that point, the stock will start to run higher. It could happen tomorrow, but it could happen next week. I just know that ultimately it will happen and of that I am certain. When it happens, I am not putting myself out on the line like that.