Here’s your trade on Netflix ($NFLX) – March 7, 2023


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I want to look at Netflix ( NASDAQ: NFLX ) today. This stock has been a really stellar stock for the last several months. You can see, I have previously drawn these trading lines that it has been trading within. And that has been very, very consistent for quite a while, until, magically, right at the time when it crosses below the 50-day moving average. It is also the time when it really breaks this trendline.

So is this the time to buy Netflix ( NASDAQ: NFLX )? Absolutely not. The reason I am pointing this out is, this has had a heck of a run from the bottom. It is up over 100 percent, 130 percent, it is still up 85 percent. But does that really matter to you? I love it when these commentators will say that. They will say, hey, such and such a stock is up 80 percent this year. But hey, it is still up 32 percent, wow, isn’t that great? Well, not if you bought it when it was up 50.

The point is, not what is the stock doing but what is the stock doing to you. And so right now, as I look at this, I see this as a potential short. What I would like to see, you don’t want to short it on a big down day because that is when dip buyers are coming in. What you want to do is say, okay look, I think this stock is broken.

It has had a heck of a move, it’s broken. It had a pretty decisive breakthrough the 50 here on this high volume, there has been no volume to match it since that time. So this is selling and it has not been recovered or reversed through buying. It has still just been this gradual decline.

What would really be wonderful is if there was some kind of news, maybe just a strong market that brings this thing up just a little bit closer to the 50-day moving average. And if it gets up there, that is when you want to be looking to short the stock. Right up there as close as you can. And then you keep a buy stop just maybe 2 or 3 percent, no more. 2 or 3 percent above that level and that gives you your short, and you are looking for this kind of move down.

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