Emphasizing the Netflix Buy Side

 | Jun 14, 2013 | 1:00 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

nflx

My bullish case in Netflix (NFLX) is as follows:

First, the price is currently above both the 200- and 50- simple moving averages. For buy-side stocks at which you are looking, you will be ideally above both these key averages.

Second, the most recent low made at $205.75 was at the coincidence of at least five Fibonacci price relationships. These relationships included retracements of prior swing low to highs, along with Fibonacci price extensions and 100% projections of prior swings. The levels came in between $202.28 to $205.33.

Note that the most recent low was made at $205.75 which is less than a dollar away from this zone. This was followed by a healthy upside reversal in Thursday's session. Besides the key price support that we are currently holding above, there is also some time "symmetry" at the recent low. What I mean by symmetry is similarity or equality when comparing swings in the same direction. In this case I'm talking about swings in time. Note on the daily chart below that I've labeled prior swings in time that were similar between seven and nine trading days. The recent low was made nine trading days down from the last minor high.

Besides what I'm showing on the daily chart, I'm also seeing intraday  Fibonacci timing at the last low in NFLX as the key support was tested.

Bottom line, I like NFLX against the first zone discussed above ($202.28 to $205.33) where the 6/13 low was made slightly above. If price continues to hold above here, I see upside potential to the $260 area. If this same key support is taken out, there is one more price cluster zone I would consider an entry against on the buy side. That Fibonacci price cluster comes in at the $190.64 to $195.05 area.

If both of these zones are taken out, however, I will exit the long side and consider this trade idea a bust. I'm all right with being wrong a trade, as long as the risk/reward is good and there is clear definition as far as the parameters are concerned. The maximum risk can be defined $1.00 below the low end of the cluster zone you are placing a bet against.

 

 

Columnist Conversations

TrueCar, Inc. (TrueCar) is a data-driven online platform operating a technology infrastructure, powered by dat...
Financial Planning magazine reports that... The Internal Revenue Service is considering regulations to limit t...
MMM is rolling over. Early last week the stock began to fall out of a steep bull channel before retestin...
Higher tariffs are a sign of increased floating inventories that will be available for immediate withdrawal on...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.